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HomeMy WebLinkAbout2011-11-28 - Finance-Accounting Committee Meeting Agenda Packet Yorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING Monday, November 28, 2011, 4:00 PM 1717 E Miraloma Ave, Placentia CA 92870 COMMITTEE STAFF Director Ric Collett, Chair Ken Vecchiarelli, General Manager Director Robert R. Kiley Stephen Parker, Finance Director 1. PUBLIC COMMENTS Any individual wishing to address the committee is requested to identify themselves and state the matter on which they wish to comment. If the matter is on this agenda, the committee Chair will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on this agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to five minutes. 2. ACTION CALENDAR This portion of the agenda is for items where staff presentations and committee discussions are needed prior to formal committee action. 2.1. Financial Statements for Quarter Ending September 30, 2011 Recommendation: That the Committee recommend the Board of Directors receive and file the Financial Statements for the Quarter Ending September 30, 2011. 2.2. OPEB Liability Pay Down Recommendation: That the Committee recommend the Board of Directors authorize staff to deposit $263,810 ($317,979 less actual retiree costs through November 2011) to the California Employees' Retirement Benefit Trust (CERBT) for Fiscal Year 2011112. 2.3. Purchasing Card Recommendation Recommendation: That the Committee recommend the Board of Directors authorize the General Manager to sign the Addendum to State of California Purchase Card Program Master Services Agreement with the State of California and US Bank, and allow staff to proceed with implementing a Purchasing Card Program at the District. 2.4. Adopting a Public Investment Policy Recommendation: That the Committee recommend the Board of Directors adopt a resolution setting forth a Public Funds Investment Policy and rescinding Resolution No. 11-08. 3. DISCUSSION ITEMS This portion of the agenda is for matters such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Committee members. This portion of the agenda may also include items for information only. 3.1. September 2011 Debt Service Ratio 3.2. Investment Report for Period Ending October 31, 2011 3.3. October 2011 Budget to Actual Results 3.4. Status of Strategic Plan Initiatives 3.5. Future Agenda Items and Staff Tasks 4. ADJOURNMENT 4.1. The next meeting of the Finance-Accounting Committee will be held on December 27, 2011 at 4:00 p.m. Items Distributed to the Committee Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items and are distributed to a majority of the Committee less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District's internet website accessible at http://www.ylwd.com/. Accommodations for the Disabled Any person may make a request for a disability-related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. ITEM NO. 2.1 AGENDA REPORT Meeting Date: November 28, 2011 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: N/A Prepared By: Delia Lugo, Senior Accountant CEQA Compliance: N/A Subject: Financial Statements for Quarter Ending September 30, 2011 SUMMARY: Presented are the Financial Statements for the Quarter Ending September 2011 for the Water and Sewer Funds. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors receive and file the Financial Statements for the Quarter Ending September 30, 2011. DISCUSSION: For the quarter ending September 30, 2011 the staff is presenting a consolidated unaudited statement in the CAFR format. This is a new approach by presenting the quarterly statements on an accrual basis, and we believe that this is a more transparent presentation of the District's overall financial position for your review. Water Operating Revenue, as presented, is 30.6% of annual budget, which puts us less than 3% behind pace of making our current year's budget. Other Operating Revenue is 45% of annual budget. This is primarily due to receiving un-budgeted revenue relating to the Vista Del Verde Project. Sewer Other Operating Revenue is well over budget due to the un-budgeted Vista Del Verde Project hitting revenue in the first quarter of the fiscal year. Sewer Other Non-Operating revenue is also well over budget, primarily because of receiving $264,000 from the City of Yorba Linda for the Sewer Transfer. The one major reporting item to note this first quarter is that the District recorded the fair market value of the sewers that came from the City of Yorba Linda. The value, calculated by staff and reviewed by the District's auditors, is recorded at more than $17 million and is recorded on the income statement as contributed capital. ATTACHMENTS: Name: L) esczipio : uype: FY 2012 1st Qtr Balance Sheet.xlsx 1 st Quarter FY 2011/12 Unaudited Financial Statements Backup Material YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF NET ASSETS September 30, 2011 ASSETS Water Sewer Totals CURRENT ASSETS: UNRESTRICTED ASSETS: Cash and cash equivalents $ 18,959,413 $ 2,476,449 $ 21,435,862 Accounts receivable - water and sewer services 4,181,512 207,164 4,388,676 Accounts receivable - property taxes 102,192 - 102,192 Construction advances & deposits 13,920 - 13,920 Accrued interest receivable 21,983 - 21,983 Inventory 249,910 - 249,910 Prepaid expenses & other deposits 387,806 - 387,806 TOTAL UNRESTRICTED ASSETS 23,916,736 2,683,613 26,600,349 RESTRICTED ASSETS: Cash and cash equivalents 8,851,480 - 8,851,480 Accrued interest receivable 282 - 282 TOTAL RESTRICTED ASSETS 8,851,762 - 8,851,762 TOTAL CURRENT ASSETS 32,768,498 2,683,613 35,452,111 NONCURRENT ASSETS: Bond issuance costs 748,247 - 748,247 Capital assets: Non-depreciable 7,736,861 277,846 8,014,707 Depreciable, net of accumulated depreciation 151,357,197 40,566,372 191,923,569 TOTAL NONCURRENT ASSETS 159,842,305 40,844,218 200,686,523 TOTAL ASSETS 192,610,803 43,527,831 236,138,634 YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF NET ASSETS (CONTINUED) September 30, 2011 LIABILITIES Water Sewer Totals CURRENT LIABILITIES: PAYABLE FROM UNRESTRICTED CURRENT ASSETS: Accounts payable 3,985,570 422,477 4,408,047 Accrued expenses 110,462 - 110,462 Compensated absences 258,032 - 258,032 Customer and construction deposits 238,818 59,862 298,680 Deferred revenue 416,525 - 416,525 TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS 5,009,407 482,339 5,491,746 PAYABLE FROM RESTRICTED ASSETS: Accrued interest payable 966,343 - 966,343 Certificates of participation - current portion 890,000 - 890,000 TOTAL PAYABLE FROM RESTRICTED ASSETS 1,856,343 - 1,856,343 TOTAL CURRENT LIABILITIES 6,865,750 482,339 7,348,089 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue 14,297,711 - 14,297,711 Compensated absences 774,109 - 774,109 Other post-employment benefit (OPEB) liability 109,048 10,810 119,858 Certificates of Participation 42,293,870 - 42,293,870 TOTAL LONG TERM LIABILITIES (LESS CURRENT PROTION) 57,474,738 10,810 57,485,548 TOTAL LIABIITIES 64,340,488 493,149 64,833,637 NET ASSETS: $ 128,270,315 $ 43,034,682 $ 171,304,997 YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the period ended September 30, 2011 Water Sewer Totals OPERATING REVENUES: Water sales $ 8,109,156 $ - $ 8,109,156 Sewer revenues - 357,834 357,834 Other operating revenues 310,446 83,386 393,832 TOTAL OPERATING REVENUES 8,419,602 441,220 8,860,822 OPERATING EXPENSES Variable water costs 4,667,323 - 4,667,323 Personnel services 1,559,417 232,254 1,791,671 Supplies and services 695,065 103,539 798,604 Depreciation and amortization 1,339,117 269,159 1,608,276 TOTAL OPERATING EXPENSES 8,260,922 604,952 8,865,874 OPERATING INCOME/(LOSS) 158,680 (163,732) (5,052) NONOPERATING REVENUES (EXPENSES): Property taxes 45,107 - 45,107 Investment income 66,639 3,709 70,348 Interest expense (476,565) - (476,565) Other nonoperating revenues 124,081 259,443 383,524 Other nonoperating expenses (9,466) - (9,466) TOTAL NONOPERATING REVENUES/EXPENSES (250,204) 263,152 12,948 NET INCOME/(LOSS) BEFORE CAPITAL CONTRIBUTIONS (91,524) 99,420 7,896 CAPITAL CONTRIBUTIONS 16,537 17,044,889 17,061,426 CHANGES IN NET ASSETS (74,987) 17,144,309 17,069,322 NET ASSETS - BEGINNING OF YEAR 128,345,302 25,890,373 154,235,675 NET ASSETS - FOR PERIOD END SEPTEMBER 30, 2011 $ 128,270,315 $ 43,034,682 $ 171,304,997 ITEM NO. 2.2 AGENDA REPORT Meeting Date: November 28, 2011 Budgeted: Yes Total Budget: $317,979 To: Finance-Accounting Committee Cost Estimate: $317,979 Funding Source: Operating Funds From: Ken Vecchiarelli, General Account No: 1-2010-0550-00 Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: N/A Prepared By: Joann Gitmed, Accounting CEQA Compliance: N/A Assistant II Subject: OPEB Liability Pay Down SUMMARY: The District budgeted $217,979 for the FY 2011/12 Annual Required Contribution (ARC) for Other Post Employment Benefits (OPEB) expenditures. The Board also approved a financial reserves policy in June 2011, designating $100,000 to be set aside for an Employee Liability Reserve. In January 2011, the Board authorized staff to pre-fund OPEB costs through the California Employees' Retirement Benefit Trust (CERBT), managed by CalPERS. Funding beyond the ARC at any time reduces the District's Net OPEB Liability (of approximately $122,000 as of June 30, 2011) and reduces the long-term costs of paying the District's Unfunded Actuarial Accrued Liability (of approximately $1,267,000 as of June 30, 2011). A reduction of the current liability will effectively result in a 7.6% interest earning in a one-year period of time, as the unfunded liability is assessed an annual interest charge of 7.6% per year by the current actuarial assumptions. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors authorize staff to deposit $263,810 ($317,979 less actual retiree costs through November 2011) to the California Employees' Retirement Benefit Trust (CERBT) for Fiscal Year 2011/12. DISCUSSION: The District's budgeted Annual Required Contribution (ARC) for Other Post-Employment Benefits (OPEB) for 2011/12 is $217,979. Prior to fiscal year 2010/11, the District had paid retiree benefits on a pay-as-you-go basis (PAYGO), which has resulted in an underfunding of it's annual OPEB costs. In June 2011, with the adoption of the current Reserve Policy, the District established the Employee Liability Reserve, calling for $100,000 to be set aside annually to pay down our OPEB liability. The District's current Net OPEB Liability is approximately $122,000 as of FY 2010/11. This amount will be assessed a 7.6% actuarially assumed interest charge annually, but by paying down the OPEB Liability, the District will effectively save $7,600 on the following years' interest charge. In addition, during the fiscal year ending June 30, 2011, the CERBT earned its investing agencies a 24% yield. At the same time, the District's average yield hovered slightly above 1 Funding the CERBT with Employee Liability Reserve money makes prudent financial sense and complies with the purpose that the reserve established. On June 23, 2011, the Board authorized staff to deposit the difference between our budgeted OPEB expense plus the $100,000 from the Employee Liability Reserve less actual retiree costs paid by the District. This year, staff propose that we pre-fund the CERBT with the same expenses submitted last year as well as actual retiree costs that will be paid by the District throughout future months in this fiscal year. By pre-funding the CERBT, the District can submit for reimbursement for actual retiree costs for the periods of December 2011 through June 2012, but take advantage of the CERBT's superior investment rate of return in the meantime. Staff is planning to submit those reimbursement requests at the end of FY 2011/12. PRIOR RELEVANT BOARD ACTION(S): On January 26, 2011, the Board authorized the President to execute a CERBT Program Agreement and Election of YLWD to Pre-fund Other Post Employment Benefits through CalPERS. On June 23, 2011, the Board authorized staff to deposit $162,817.77 to the California Employees Retirement Benefit Trust for Fiscal Year 2010/11, to pay down a portion of the District's Other Post Employment Benefits liability. On June 23, 2011, the Board approved Resolution No. 11-09 adopting the current budget that included $217,979 set aside for OPEB expenditures and the Board approved Resolution No. 11-12 adopting a financial reserves policy that included an annual funding of $100,000 for an Employees Liability Reserve. ITEM NO. 2.3 AGENDA REPORT Meeting Date: November 28, 2011 Budgeted: N/A To: Finance-Accounting Committee Cost Estimate: $0 Funding Source: N/A From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: Pending Prepared By: Stephen Parker, Finance CEQA Compliance: N/A Manager Subject: Purchasing Card Recommendation SUMMARY: After meeting and discussing with ten prospective service providers who presented twelve purchasing card options over the last nine months, staff has reached a conclusion as to a recommendation for the Board. The recommendation would allow for the least amount of change to the current purchasing approval process, but still get the advantage of reduced staff time and a cash rebate for paying vendors that are willing by credit card. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors authorize the General Manager to sign the Addendum to State of California Purchase Card Program Master Services Agreement with the State of California and US Bank, and allow staff to proceed with implementing a Purchasing Card Program at the District. DISCUSSION: In February, staff met with American Express to consider using that vendor for a purchasing card program that would allow the District to receive financial benefits for paying vendors via credit cards. When the recommendation was presented to the Finance-Accounting Committee in March 2011, the Committee recommended that staff explore other options besides American Express. Since that time, staff has been in contact with American Express, Bank of America, Bank of the West, Comerica Bank, Commerce Bank, First Bankcard/Union Bank, JPMorgan Chase, PFM, US Bank and Wells Fargo Bank, who presented 12 purchasing card options. After 14 meetings with representatives of these various banks, staff has reached a conclusion as to a recommendation for the Board. Staff recommends establishing a purchasing card program with US Bank through their CalCard program. There are many advantages to a program with US Bank and the CalCard program. Some of those include: . There are no costs to the program regardless of how much or little it is used . The best rebate offered at the first dollar charged to the card (only two other choices offered a rebate under $1,000,000 in annual spend) . The District's current approval process could remain the same (only offered by two other choices) . The program integrates with the District's accounting software, GreatPlains (only offered by four other choices) . There is no contract term (while the State of California has an agreement with US Bank through October 2013, the District could add or drop the program at any time with no penalties) . Rebates would be received quarterly (only one other option was more often than annually) Staff believes that over time the District will be able to charge more than $1,000,000 annually on credit cards to pay vendors in the regular course of business. At that level of spending with the CalCard program the District would receive a rebate of more than $9,000 a year. This would be a new revenue source and would be perpetual. In actuality, the recommendation to the Board is not a purchasing card program in the traditional sense. A purchasing card usually requires a different approval process. What staff explored with this program was a way to integrate our current approval process and still be able to show the Board the list of vendors for approval prior to the majority of vendors receiving payment. This allows the PO process to remain the same, but at the time that checks are to be cut, the vendors that accept payment by credit card would be processed in a different manner. One additional unique advantage to the CalCard program through US Bank is that the option allows the integration of this program and a traditional purchase card program should the District desire to head that way in the future. The approval and integration with GreatPlains process will take approximately two months before the card could begin to be used. This process cannot begin until an authorized representative and legal counsel approve the Addendum to State of California Purchase Card Program Master Services Agreement - see attached. PRIOR RELEVANT BOARD ACTION(S): On June 9, 2011 the Board adopted the 2011-2013 Strategic Plan, which included FR 3-13 - Review Opportunities to Earn "Cash-Back" on Operating Expenses through Commercial Credit Card Accounts. ATTACHMENTS: fame: 1. osci'ip pion: o ype, Local Agency Addendum.doc Addendum to CalCard Program Backup Material ADDENDUM TO STATE OF CALIFORNIA PURCHASE CARD PROGRAM MASTER SERVICES AGREEMENT (DGS MSA 5-06-99-01) This Participating Agency Addendum ("Participating Agency Addendum") is entered into, by and between U.S. Bank National Association ND ("U.S. Bank") and the Participating Agency identified herein and executing this Participating Agency Addendum as "Participating Agency", and constitutes an addendum to and modification of the State of California Purchase Card Program Master Services Agreement (DGS MSA 5-06-99-01) dated October 19, 2006 (the "Agreement") between the Department of General Services ("DGS") on behalf of the State of California, and U.S. Bank. The Master Services Agreement DGS MSA 5-06-99-01 and its amendments are incorporated by reference and made a part of this Participating Agency Addendum. This Participating Agency Addendum shall become effective upon signing by or on the behalf of U.S. Bank ("Effective Date") and supersedes any previous and like addenda with Participating Agency. RECITALS: A. DGS has entered into the Agreement for the purpose of making available the Purchasing Card Program as described in the Agreement for use by for Participating Agencies; and B. The Agreement contemplates the inclusion of Participating Agencies by a process of voluntary execution of an addendum; and C. The Participating Agency has received a copy of the Agreement and after thorough review of the Agreement desires to become a Participating Agency as that term is defined in the Agreement. AGREEMENT: NOW THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by reference, the mutual promises and covenants set forth in the Agreement, which is incorporated herein by reference, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Participating Agency, and U.S. Bank agree as follows: 1. The Participating Agency agrees to accept and perform all duties, responsibilities and obligations required of Participating Agency as set forth in the Agreement. CAL-Cards shall be issued to employees of the Participating Agency upon execution of this Participating Agency Addendum by the Participating Agency and U.S. Bank. U.S. Bank shall submit invoice(s) to the Participating Agency at the address indicated herein. 2. U.S. Bank is authorized to place the seal or logo of the Participating Agency on the CAL-Cards issued to employees of the Participating Agency for the sole purpose of identifying the card for official use only. Such seal or logo shall be subject to use limitations as apply to the State seal on Page 3 of the Agreement. 3. The Participating Agency shall make monthly payments as provided in the Agreement to U.S. Bank of the full amount of the official monthly invoice by causing a check or checks or a warrant or warrants to be issued payable to the order of U.S. Bank on demand or by use of an Automated Clearing House or Electronic Data Interchange to make such payment to U.S. Bank. 4. The Participating Agency shall provide U.S. Bank with a copy of its audited financial statements within sixty (60) days of completion and, upon request of U.S. Bank, such other financial information as may be reasonably requested. 5. Either party may terminate this Participating Agency Addendum at any time by giving thirty (30) days written notice to the other party, whether or not such other party is in default. 6. The Participating Agency declares that CAL-Cards shall be used for official Participating Agency purchases only, and shall not be used for individual or consumer purchases nor to incur consumer debt. The Participating Agency warrants that it possesses the financial capacity to perform all of its obligations under the Agreement and this Participating Agency Addendum and the Participating Agency will not allow purchases to be made with CAL-Cards or incur any other financial obligation hereunder or under the Agreement prior to determining that existing appropriations available therefore are sufficient in amount to pay for such purchases or such other financial obligations. 1 7. The contact notice address for the Participating Agency is: Program Manager Name Participating Agency Name Mailing Address City, State, Zip Email Address 8. The agreements of the Participating Agency set forth in this Participating Agency Addendum and the Agreement constitute valid, binding and enforceable agreements of the Participating Agency and all extensions of credit made pursuant to this Participating Agency Addendum and the Agreement to the Participating Agency will be valid and enforceable obligations of the Participating Agency in accordance with the terms of the Agreement and this Participating Agency Addendum. The execution of this Participating Agency Addendum and the performance of the obligations hereunder and under the Agreement are within the powers of the Participating Agency, have been authorized by all necessary action and do not constitute a breach of any agreement to which the Participating Agency is a party or is bound. The signer of this Participating Agency Addendum further represents and warrants that he or she is duly authorized by an applicable constitution, charter, code, law resolution or other governmental authority to enter into transactions of this nature. Participating Agency represents and warrants that this transaction is within the scope of the normal course of business and does not require further authorization for Participating Agency to be duly bound by this Participating Agency Addendum. This Participating Agency Addendum requires approval as to form by the Attorney for the Participating Agency. If this Addendum is not approved as to form by the Attorney for Participating Agency, the completion of the attached Certificate of Authority is required and must accompany this Participating Agency Addendum. In witness whereof, the parties have, by their duly authorized representatives, executed this Participating Agency Addendum. Dated this day of 20_ by: Dated this day of 20_ by: U.S. Bank National Association ND Legal Name of Participating Agency (Signature of Authorized Individual) (Signature of Authorized Individual) Steven R. Kehr (Printed Name of Authorized Individual) (Printed Name of Authorized Individual) Vice President (Printed Title of Authorized Individual) (Printed Title of Authorized Individual) Approved as to form: (Signature of Attorney for Participating Agency) (Printed Name of Attorney) 2 ITEM NO. 2.4 AGENDA REPORT Meeting Date: November 28, 2011 Budgeted: N/A To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: Pending Prepared By: Stephen Parker, Finance CEQA Compliance: N/A Manager Subject: Adopting a Public Investment Policy STAFF RECOMMENDATION: That the Committee recommend the Board of Directors adopt a resolution setting forth a Public Funds Investment Policy and rescinding Resolution No. 11-08. DISCUSSION: The California Government Code says "the treasurer or chief fiscal officer of a local agency may annually render to the legislative body of that local agency and any oversight committee of that local agency, a statement of investment policy, which should be considered at a public meeting." As such, the attached resolution is being presented to the Finance-Accounting Committee for review before being submitted for consideration by the Board. This year a change was made to allow investments in Negotiable Certificates of Participation (which the District previously invested in, but was not specifically named as an authorized investment), along with some language clean-up in the Obligations Issued by Federal Agencies area. The key change in the current investment policy, however, is the removal of dollar limits that are allowed to be invested in LAIF, CaITRUST and the Orange County Treasurer's Commingled Investment Pool. The policy previously placed no limit on the percentage of the total portfolio that could be placed in those categories, but had a $10 million plus bond proceeds limit. The California Government Code offers no percentage of total portfolio or dollar restriction on any of those three items (with the exception of LAIF, which itself has restricted investments to a maximum of $40 million). If the Finance-Accounting Committee desires, the policy could be kept the same, requiring investment techniques to change to spread the District's investments into a variety of options. It is staff's recommendation, however, that the dollar limits be removed for the three very common investment options under consideration. This change would ensure that the District is in compliance with it's investment policy, while still allowing money to be placed in low-risk investment options. PRIOR RELEVANT BOARD ACTION(S): The District's current investment policy was adopted by Resolution No. 11-08 on May 12, 2011. ATTACHMENTS: Name: Description: Type: Resolution No. 11-XX Investment Policy.doc Investment Policy Resolution Resolution RESOLUTION NO. 11-XX RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT SETTING FORTH PUBLIC FUNDS INVESTMENT POLICY AND RESCINDING RESOLUTION NO. 11-08 WHEREAS, California Government Code (CGC) Section 53600 sets forth guidelines for the investment of public funds and WHEREAS, the current District's Investment Policy was adopted by Resolution No. 11- 08 on May 12, 2011; and WHEREAS, the District is in possession of public funds that are not required for immediate expenditure, and are available for investment; and WHEREAS, a policy setting forth guidelines for the investment of said funds is necessary for compliance with the principles of sound financial management; and WHEREAS, the Board of Directors of the Yorba Linda Water District desire to adopt the Investment Policy set forth herein. NOW, THEREFORE, BE IT RESOLVED by Board of Directors of the Yorba Linda Water District as follows: Section 1: Public funds held for investment by the District may be categorized as follows: a) Those funds that are allocated for immediate expenditure on District operations as authorized by the Board of Directors at their bimonthly meetings; b) Those funds that are allocated for use in an intermediate time frame, such as budgeted purchases, that have not been delivered; c) Those funds that are allocated for future use which do not fall into the above categories. This policy sets forth guidelines for funds that are identified as "available for investment." Section 2: Delegated representative and standards and procedures for the operation of the investment program as follows: a) The authority of the Board of Directors to invest funds is derived from Section 53607 of the CGC. The responsibility to invest, reinvest, sell or exchange securities is hereby delegated to the General Manager or Finance Director for a period of one year. The Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 1 Board of Directors may renew the delegation of authority pursuant to state law each year. b) The standard of prudence to be used by the designated representative shall be the "prudent investor" standard and shall be applied in the contest of managing the overall portfolio. The meaning of the standard of prudent investor, means investment, reinvestment, purchasing, acquiring, exchanging, selling or managing public funds shall be made with care, skill, prudence and diligence, under circumstances then prevailing, including but not limited to, the general economic conditions and the anticipated needs of the agency, which a prudent person, acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the District. Section 3: The General Manager or his/her designated representative shall maintain a cash flow analysis for projecting cash available for investments. All funds not required for immediate or intermediate use may be invested in accordance with this policy. The total funds invested at any time pursuant to this policy will constitute the District's "investment portfolio". Section 4: Priorities regarding the investment of District held public funds are: a) The safety of funds. Safety of principal is the foremost objective of the investment portfolio. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. b) The maintenance of sufficient liquidity to meet all operating requirements that may be reasonably anticipated. Securities should mature concurrent with cash needs to meet anticipated demands. c) The investment portfolio shall be designed with the objective of attaining the best yield or returns on investments, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives. Section 5: The District may invest funds that are available for direct investment in the following categories: a) Banks or Savings and Loans Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 2 Cash will be deposited only in Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance Corporation (FSLIC) insured institutions or fully collateralized certificates of deposit. Collateral for a given investment must be 110 percent of principal for government securities collateral and 150 percent of principal for first mortgage collateral. The institution must maintain a net worth to asset ratio of at least 3.0 percent, and a positive earnings record. The bank or savings and loan must be located in California. The maximum maturity shall be five years. No limit will be place on the percentage total invested in this category. b) Negotiable Certificates of Deposit. Investments are limited to deposits issued by a nationally, or California-chartered bank, a California savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a California licensed branch of a foreign bank. (Government Code Section 53601(h)). Deposits shall be limited to those financial institutions which maintain a rating equivalent to "A" or higher by one of the nationally recognized statistical rating organizations (NRSRO), and individual investments shall be limited to Federal Deposit Insurance Corporation-insured limits of $250,000. The maximum maturity is limited to five years and the maximum percentage allowable for investment is 30 percent of the investment portfolio in the aggregate. c) The State Local Agency Investment Fund (LAIF). No limit will be placed on the percentage total in this category. d) Orange County Treasurer's Commingled Investment Pool - Government Code Section 53684 No limit will be placed on the percentage total in this category. e) California Asset Management Program The amounts deposited in this category shall be limited to bond proceeds and are to be invested for the purpose of arbitrage management only. Proceeds may be invested in the Treasury Portfolio and/or the Money Market Portfolio. No limit will be placed on the percentage total in this category. Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 3 f) Treasury Bills, Notes and Bonds - Government Code Section 53601(b-d) The District will require physical delivery of these securities to an acceptable safekeeping account in the District's name and must be properly insured. The maximum maturity shall be limited to five years. No limit will be placed on the percentage total invested in this category. g) Obligations Issued by Federal Agencies and U.S. Government Sponsored Enterprises - Government Code Section 53601 (f) The District will require physical delivery of these securities to an acceptable safekeeping account in the District's name and must be properly insured. Examples of these securities include Federal National Mortgage Association, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation and Federal Home Loan Bank. The maximum maturity shall be limited to five years and the maximum investment of 50 percent of the investment portfolio in the aggregate. h) Corporate Bond - Government Code Section 53601(k) The District will require electronic delivery of these securities to an acceptable safekeeping account in the District's name, which must be properly insured. The corporation must be domestic, the notes must be domestic and the notes must be issued in the United States. The corporation must be domestic and the notes must be domestic and the notes must be issued in the United States. The corporation must be rated A or its equivalent or better by a nationally recognized rating service. The maximum maturity is limited to five years and the maximum percentage allowable for investment is 30 percent of the investment portfolio in the aggregate. i) Banker's Acceptance - Government Code Section 53601(g) The District will require physical delivery of these securities to an acceptable safekeeping account in the District's name and must be properly insured. The maximum term may not exceed 180 days and the maximum percentage allowable for investment is 10 percent of the portfolio in the aggregate. j) Commercial Paper - Government Code Section 53601(h) Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 4 The District will require physical delivery of these securities to an acceptable safekeeping account in the District's name and must be properly insured. Commercial paper rated the highest ranking or of the highest letter and number ratings as provided for by a nationally recognized statistical-rating organization. The entity that issues the commercial paper shall meet two sets of criteria: (1) The corporation shall be organized and operating within the United States, shall have total assets in excess of five hundred million dollars ($500,000,000), and shall issue debt, other than commercial paper, if any, that is rated A or higher by a nationally recognized statistical-rating organization. (2) The corporation shall be organized within the United States as a special purpose corporation, trust, or limited liability company, has program wide credit enhancements including, but not limited to, over collateral ization, letters of credit, or surety bond; has commercial paper that is rated "a-1" or higher, or equivalent by a nationally recognized statistical-rating organization. Eligible commercial paper may not exceed 270 days' maturity and may not represent more than the 25 percent of the investment portfolio in the aggregate. k) Investment Trust of California (the Ca1TRUST JPA pool) - Government Code Section 53601(p) No limit will be placed on the percentage total in this category. 1) Money Market Funds Shares of a qualified money market fund, as defined in CGC section 53601, must meet the criteria described therein. Section 6: All investments of sums of less than $100,000 do not require approval of the Board of Directors or need to be collateralized. Such investments, however, must be made in saving institutions covered by federal deposit insurance. Section 7: Investment of sums greater than $100,000 and less than $1,000,000 in a single institution is authorized in institutions that comply with the following parameters: a) Collateral requirements as set forth in Section 5, (a) herein; b) Institution established as a business in California for a minimum of three years; C) Must show a profit for the most recent two consecutive years; Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 5 d) A capital ratio of six percent for banks, and five percent for savings & loans; e) No more than three percent foreclosures; f) Financial rating of "excellent" or "superior". Section 8: All investments greater than $1,000,000 in one institution, with exception of LAIF, Investment Trust of California (the CaITRUST JPA pool) and Orange County Treasurer's Commingled Investment Pool (OCIP), require approval of the Board of Directors Section 9: When the District uses the services of a broker/dealer to purchase securities, they shall be selected for credit worthiness. These may include "primary" dealers or regional dealers. Each security purchased through a broker/dealer shall be registered in the name of Yorba Linda Water District. No deposit of cash and/or securities shall be made by the broker/dealer except in a qualified public depository as established by state law and Section 3(1) of this resolution. Before a broker/dealer is used, they are subject to investigation and approval by the General Manager or the designated representative and must submit the following: a) Certification of having read and understood this investment policy resolution and agreeing to comply with the District's investment policy; b) Proof of National Association of Security Dealers certification and state registration; C) Compliance with federal capital adequacy regulations and provide documentation of financial solvency; d) Provide audited financial statements within 120 days of fiscal year end; e) Provide similar services to other public-sector clients. Section 10: Policy on repurchase and reverse repurchase agreements and derivative products: a) The District staff is not authorized to initiate investments in repurchase or reverse repurchase agreements or "plain vanilla OTC" and/or "more complex over the counter (OTC) derivative products," as defined below, however, staff is authorized to deposit in LAIF provided LAIF invests no more than ten percent of their Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 6 total portfolio in repurchase or reverse repurchase agreements and does not use derivative products defined below. b) A "plain vanilla OTC" derivative product is defined by the U.S. General Accounting Office as a financial instrument whose market value is derived from a reference rate, index, or a value of an underlying asset. OTC derivatives are privately negotiated contracts and are not traded on organized exchanges. c) A "more complex OTC" derivative product is defined by the U.S. General Accounting Office to have at least one of the following characteristics: 1. Their prices tend to be difficult to obtain, because they are often available from only a few dealers; 2. The payments required by the derivative are calculated on the basis of more than one interest, rate, currency, asset or other factor; 3. The derivative contract has terms that are not determined until some future Date; 4. The contract involves a term that acts as a multiplier or increases the leverage of the rate(s) used to compute payments; 5. The contract may entail potentially unlimited risk; Section 11: The General Manager or his designated representative shall submit a monthly investment portfolio report through the Finance-Accounting Committee to the Board of Directors. Additionally, the General Manager or his designated representative shall submit a comprehensive report for Board approval each quarter. This report shall include but not be limited to.. a) A list of the previous month's investments; b) Institutions where investments were placed; C) Dates of transactions; d) Dates of maturity; e) Interest rates on said investments; Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 7 f) Investment categories' percent of total portfolio. Section 12: Ethics and Conflicts of Interest All officials, staff members and consultants who make or participate in making investment decisions on behalf of the District, will refrain from personal business activity that could conflict with the execution of the investment function or which may impair the ability to make impartial investment decisions. Officials, staff members, and consultants will disclose to the General Manager any financial interests with a financial institution, provider, dealer or broker conducting business with the District. Officials, staff members and consultants will further disclose any personal financial positions that could be related to the performance of the District's portfolios; Section 13: Safekeeping and Custody All cash and securities in the District's Investment portfolio, including those that are being managed by the delegated representative shall be held in the District's name by a third party bank trust department, acting as agent for the District under the terms of a custody agreement executed by the bank and the District. All securities will be received and delivered using delivery-versus payment procedures. The District's safekeeping agent will only release payment for a security after the security has been properly delivered. The only exception to the foregoing shall be depository accounts and securities purchases made with (i) local government investment pools, and (ii) money market mutual funds, since the purchased securities are not deliverable. Section 14: Maximum Securities To the extent possible, the District will attempt to match investments with anticipated cash flow requirements. Pursuant to state law, no investment shall have a maturity in excess of five years. That Resolution No. 11-08 is hereby rescinded immediately upon adoption of this Resolution. PASSED AND ADOPTED this 8th day of December 2011 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 8 President Yorba Linda Water District ATTEST: Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman, Behrens & Tague LLP Resolution No. 11-XX Setting Forth Public Funds Investment Policy and Rescinding Resolution No. 11-08 9 ITEM NO. 3.1 AGENDA REPORT Meeting Date: November 28, 2011 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: N/A Prepared By: Delia Lugo, Senior Accountant CEQA Compliance: N/A Subject: September 2011 Debt Service Ratio DISCUSSION: Yorba Linda Water District covenanted with the issuance of the 2003 and 2008 Certificates of Participation (COP's), "...to fix, prescribe and collect rates and charges for Water Service which will be at least sufficient to yield, during each Fiscal Year, Net Revenues equal to 110% of the Debt Service for such Fiscal Year." To confirm the covenant is upheld, a calculation is made and reviewed by the external auditors and included in the Comprehensive Annual Financial Report. Honoring these covenants allows the District to maintain high bond ratings and provides confidence in the financial markets for any bond resales and future issuances. The June 30, 2011 audit revealed that the District's debt service calculation was 183% - well above the rate covenant. The staff calculates the District's debt service ratio on a quarterly basis and reports this figure to the Finance-Accounting Committee. Accordingly, September 2011's unaudited debt service ratio is 246% as shown in the attached calculation. It should be pointed out that the District generally sells one third of its water in the first three months of the fiscal year. Therefore, the September ratio is going to trend higher than should be expected for future quarters. Despite this observation, however, the District's financial health for the first three months of Fiscal Year 2011-12 is strong as it pertains to the debt service ratio indicator. ATTACHMENTS: Narne: 3esc; ption: ype: DS Calc 1st Qtr 2011-12.xls September 2011 Debt Service Ratio Backup Material Yorba Linda Water District Water Fund For The Period Ending September 30, 2011 YTD Included in Actual Debt Service FY 2012 Ratio Calculation OPERATING REVENUES: Water sales $ 8,109,156 $ 8,109,156 Other operating revenues 310,446 310,446 TOTAL OPERATING REVENUES 8,419,602 8,419,602 OPERATING EXPENSES Variable water costs 4,667,323 4,667,323 Personnel services 1,559,417 1,559,417 Supplies and services 695,065 695,065 Depreciation and amortization 1,339,117 - TOTAL OPERATING EXPENSES 8,260,922 6,921,805 OPERATING INCOME/(LOSS) 158,680 1,497,797 NONOPERATING REVENUES (EXPENSES): Property taxes 45,107 45,107 Investment income 66,639 66,639 Interest expense (476,565) - Other nonoperating revenues 124,081 124,081 Other nonoperating expenses (9,466) (9,466) TOTAL NONOPERATING REVENUES/EXPENSES (250,204) 226,361 NET INCOME/(LOSS) BEFORE CAPITAL CONTRIBUTIONS (91,524) 1,724,158 CAPITAL CONTRIBUTIONS 16,537 - CHANGES IN NET ASSETS (74,987) 1,724,158 DEBT SERVICE RATIO CALCULATION: NET REVENUES 1,724,158 DEBT SERVICE 701,295 % 246% ITEM NO. 3.2 AGENDA REPORT Meeting Date: November 28, 2011 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: N/A Prepared By: Delia Lugo, Senior Accountant CEQA Compliance: N/A Subject: Investment Report for Period Ending October 31, 2011 SUMMARY: Staff is submitting the October 2011 Monthly Investment Reports for the Committee's review. This is in accordance with Government Code Section 53607, et, seq., which requires the person delegated to invest funds to make a quarterly report of the investments to the legislative body. DISCUSSION: The Investment Portfolio Report presents the market value and percent yield for all the District investments by institution. The Investment Report Summary includes budget and actual interest and average term portfolio information as well as market value broken out by reserve categories. The total yield for the month ending October 2011 decreased to 0.99%. This is the result from the yield change of investments held in CaITRUST's Short Term portfolio from 0.54% to 0.45%, as well as in the Medium Term portfolio from 1.31 % to 1.19%. The overall increase in the investment balance from the previous month is $473,000. A couple of the larger balance changes include an increase in the Reserve for Debt Service fund of $262,000 due to District meeting its monthly obligation to ensure the funds are set aside for the March 2012 debt service interest payment, an increase of $765,000 in the Water Operating fund due to decrease in the month's overall accounts payable activity, and a decrease of $531,000 in the 2008 COP Revenue account for CIP project activity. PRIOR RELEVANT BOARD ACTION(S): Monthly Investment Reports are presented to the Finance-Accounting Committee on a regular basis. Quarterly Investment Reports are presented to the Board of Directors. The Investment Reports for the month ended September 30 was received and filed by the Finance-Accounting Committee on October 24, 2011. The Investment Report for the quarter ended September 30, 2011 was received and filed by the Board of Directors on November 10, 2011. ATTACHMENTS: Name: L) esczipio : uype: Invst Rpt 10-11.xlsx October 2011 Investment Report Backup Material Invst_Agenda _Backup - Oct_2011.xlsx Agenda Backup Backup Material Yorba Linda Water District Investment Portfolio Report October 31, 2011 Market % Percent Value Cost of Total Institution Yield Checking Account: $ 656,461 $ 656,461 Wells Fargo Bank $ 656,461 $ 656,461 2.29% Total 0.00% Money Market Accounts: $ 42 $ 42 Wells Fargo Money Market 0.05% 2,223,143 2,223,143 US Bank (2008 Revenue Bond) 0.10% 1,927 1,927 US Bank (2008 Bond Reserve) 0.10% $ 2,225,112 $ 2,225,112 7.76% Total 0.10% Federal Home Loan Bank: $ 2,156,391 $ 2,144,397 US Bank (2008 Bond Reserve) 1.35% $ 2,156,391 $ 2,144,397 7.52% 1.35% Pooled Investment Accounts: $ 4,167,179 $ 4,167,179 Local Agency Investment Fund 0.39% 57,037 55,200 Ca1TRUST Short Term 0.45% 19,405,892 18,733,674 Ca1TRUST Medium Term 1.19% $ 23,630,108 $ 22,956,053 82.44% 1.04% $ 28,668,072 $ 27,982,022 100% Total Investments 0.99% Per Government Code requirements, the Investment Report is in compliance with the Yorba Linda Water District's Investment Policy, and there are adequate funds available to meet budgeted and actual expenditures for the next six months. f Delia Lugo, Senior Accountant 10/31/11 Investment Summary Report Below is a chart summarizing the yields as well as terms and maturities for the month of October 2011: Avg. Portfolio Avg. Portfolio # of Month Yield Without Yield With Days to of 2011 CalTRUST CalTRUST Maturity October 0.55% 0.99% 516 Below is are charts comparing operating fund interest for current and prior fiscal years. Actual Interest 10/31/2010 10/31/2011 Monthly - October $ 22,466 $ 22,265 Year-to-Date $ 68,565 $ 70,348 Budget 2010/2011 2011/2012 Interest Budget, October YTD $ 52,000 $ 63,333 Interest Budget, Annual $ 156,000 $ 190,000 Interest earned on investments is recorded in the fund that owns the investment. Investment Summary Comparison Between Current and Previous Month The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds is as follows: September 2011 % Alloc October 2011 % Alloc Fund Description Balance 9/30/2011 Balance 10/31/2011 Water Operating Reserve $ 1,103,450 4.10% $ 2,576,763 9.20% Water Emergency Reserve 1,000,991 3.72% 1,002,070 3.58% Water Capital Project Reserve 17,656,325 65.69% 17,576,283 62.74% Water Reserve for Debt Service 0 0.00% 261,885 0.93% COP Revenue Bond 2008 - Reserve 2,160,285 8.03% 2,158,318 7.71% COP Revenue Bond 2008 2,754,064 10.24% 2,223,143 7.94% Sewer Operating 67,883 0.25% 67,977 0.24% Sewer Emergency Reserve 1,000,344 3.72% 1,001,423 3.58% Sewer Capital Project Reserve 1,143,065 4.25% 1,143,750 4.08% $ 26,886,407 100.00% $ 28,011,612 100.00% Wells Fargo Bank Checking Water Operating 1,307,761 600,216 Sewer Operating 842 56,244 1,308,603 656,460 Totals $ 28,195,010 $ 28,668,072 ITEM NO. 3.3 AGENDA REPORT Meeting Date: November 28, 2011 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: N/A Prepared By: Delia Lugo, Senior Accountant CEQA Compliance: N/A Subject: October 2011 Budget to Actual Results DISCUSSION: Attached are the District's budget to actual summary results for the Water Fund, Sewer Fund and a combined statement for both funds pertaining to the reporting month of October 2011. For the month of October 2011, the District water revenue is trending slightly below expectations due to lower water consumption from cooler than normal summer temperatures. Water operating revenue is 38.9% of annual budget, which is lower by approximately 3.2% from the historical trend for the first reporting month of the fiscal year. Our 20 by 2020 baseline is 286.1 gallons per capita per day (GPCD), with a target of 228.9. For the current fiscal year through October 2011, the District is using 239.5 GPCD. The reduction of 46.6 GPCD brings us 81.4% of the way to our goal. Other Operating Revenue is 52% of annual budget for the month of October. This is primarily due to the activity that was reported in the previous months in relation to the Vista Del Verde project. Variable water costs as a percentage of budget are higher than operating revenues as a result of purchasing more import water prior to Metropolitan Water District of Southern California's 7.5% rate increase, which takes effect on January 1, 2012. The majority of the water fund's individual supplies and services expenses are trending below or on budget, with the exception of Dues and Memberships, Insurance, and Materials, which are higher because of timing differences. In the month of October, Sewer Other Operating Revenue is well over budget due to the Vista del Verde Project as reported in previous months. Sewer Other Non-Operating revenue is also well over budget, primarily due to receiving $264,000 from the City of Yorba Linda for the sewer transfer. The supplies and services expenses are trending below or on budget, with the exceptions of Dues and Memberships, Insurance, and Professional Services. PRIOR RELEVANT BOARD ACTION(S): On October 24, 2011 the Committee reviewed, received and filed the September 30, 2011 Budget to Actual Results. ATTACHMENTS: Name: Description: Type: October 2011 Combined.xls October 2011 Consolidated Statement Backup Material October 2011 Water.xls October 2011 Water Statement Backup Material October 2011 Sewer.xls October 2011 Sewer Statement Backup Material Yorba Linda Water District Summary Financial Report Water & Sewer Funds For Four Months Ending October 31, 2011 Original YTD YTD YTD Budget Actual Under(Over) % of FY 2012 FY 2012 Budget Budget Revenue (Operating): Water Revenue (Residential) $17,904,893 $6,675,509 $11,229,384 37.28% Water Revenue (Commercial & Fire Det.) 1,726,651 715,416 1,011,235 41.43% Water Revenue (Landscape/Irrigation) 3,757,058 1,810,506 1,946,552 48.19% Water Revenue (Service Charge) 3,406,392 1,120,944 2,285,448 32.91% Sewer Charge Revenue 1,548,550 486,905 1,061,645 31.44% Locke Ranch Assessments 159,862 644 159,218 0.40% Other Operating Revenue 754,361 452,301 302,060 59.96% Total Operating Revenue: 29,257,767 11,262,225 17,995,542 38.49% Revenue (Non-Operating): Interest 190,000 70,348 119,652 37.03% Property Tax 1,232,000 51,370 1,180,630 4.17% Other Non-Operating Revenue 499,369 432,131 67,238 86.54% Total Non-Operating Revenue: 1,921,369 553,849 1,367,520 28.83% Total Revenue 31,179,136 11,816,074 19,363,062 37.90% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 13,671,538 5,913,409 7,758,129 43.25% Salary Related Expenses 7,941,303 2,188,379 5,752,924 27.56% Supplies & Services 4,020,832 1,151,432 3,388,537 28.64% Total Operating Expenses 25,633,673 9,253,220 16,899,590 36.10% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 632,503 1,273,923 33.18% Other Expense 123,193 24,997 98,196 20.29% Total Non-Operating Expenses: 2,029,619 657,500 1,372,119 32.40% Total Expenses 27,663,292 9,910,720 18,271,709 35.83% Net Income (Loss) Before Capital Contributions 3,515,844 1,905,354 1,091,353 54.19% Contributed Capital - 17,061,427 (17,061,427) 0.00% Net Income (Loss) Before Depreciation 3,515,844 18,966,781 (15,450,937) 539.47% Depreciation & Amortization 5,561,699 2,161,450 3,400,249 38.86% Total Net Income (Loss) ($2,045,855) $16,805,331 ($18,851,186) -821.43% Capital - Direct Labor - (131,729) 131,729 0.00% Yorba Linda Water District Water Fund For Four Months Ending October 31, 2011 Original Oct YTD YTD YTD Budget Actual Actual Under(Over) % of FY 2012 FY 2012 FY 2012 Budget Budget Revenue (Operating): Water Revenue (Residential) $17,904,893 $1,385,628 $6,675,509 $11,229,384 37.28% Water Revenue (Commercial & Fire Det.) 1,726,651 159,008 715,416 1,011,235 41.43% Water Revenue (Landscape/Irrigation) 3,757,058 388,219 1,810,506 1,946,552 48.19% Water Revenue (Service Charge) 3,406,392 280,364 1,120,944 2,285,448 32.91% Other Operating Revenue 697,360 51,781 362,227 335,133 51.94% Total Operating Revenue: 27,492,354 2,265,000 10,684,602 16,807,752 38.86% Revenue (Non-Operating): Interest 170,000 20,401 64,774 105,226 38.10% Property Tax 1,232,000 6,263 51,370 1,180,630 4.17% Other Non-Operating Revenue 495,394 48,607 172,688 322,706 34.86% Total Non-Operating Revenue: 1,897,394 75,271 288,832 1,608,562 15.22% Total Revenue 29,389,748 2,340,271 10,973,434 18,416,314 37.34% Expenses (Operating): Variable Water Costs (G.W., Import & Power) 13,671,538 1,246,086 5,913,409 7,758,129 43.25% Salary Related Expenses 6,953,531 338,065 1,897,482 5,056,049 29.04% Supplies & Services: Communications 366,513 1,923 58,616 307,897 15.99% Contractual Services 527,485 47,807 125,515 401,970 23.79% Data Processing 119,645 (10,593) 18,790 100,855 15.70% Dues & Memberships 55,682 2,138 27,135 28,547 48.73% Fees & Permits 136,504 17,939 42,232 94,272 30.94% Insurance 221,526 140,801 179,798 41,728 81.16% Materials 352,642 50,396 140,582 212,060 39.87% District Activities, Emp Recognition 20,757 858 3,239 17,518 15.60% Maintenance 368,603 41,491 100,601 268,002 27.29% Non-Capital Equipment 79,221 7,176 19,984 59,237 25.23% Office Expense 45,714 2,279 12,166 33,548 26.61% Professional Services 766,431 3,410 174,162 592,269 22.72% Training 48,625 2,761 13,530 35,095 27.83% Travel & Conferences 49,649 4,550 7,812 41,837 15.73% Uncollectible Accounts 35,340 - 432 34,908 1.22% Utilities 113,925 6,047 28,893 85,032 25.36% Vehicle Equipment 278,209 14,022 74,581 203,628 26.81% Supplies & Services Sub-Total 3,586,471 333,005 1,028,068 2,558,403 28.67% Total Operating Expenses 24,211,540 1,917,156 8,838,959 15,372,581 36.51% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 155,938 632,503 1,273,923 33.18% Other Expense 117,193 15,531 24,997 92,196 21.33% Total Non-Operating Expenses: 2,023,619 171,469 657,500 1,366,119 32.49% Total Expenses 26,235,159 2,088,625 9,496,459 16,738,700 36.20% Net Income (Loss) Before Capital Contributions 3,154,589 251,646 1,476,975 1,677,614 46.82% Capital Contributions - - 16,537 (16,537) 0.00% Net Income (Loss) Before Depreciation 3,154,589 251,646 1,493,512 1,661,077 47.34% Depreciation & Amortization 4,628,999 445,736 1,784,853 2,844,146 38.56% Total Net Income (Loss) ($1,474,410) ($194,090) ($291,341) ($1,183,069) 19.76% Capital - Direct Labor - (34,566) (122,124) 122,124 - Yorba Linda Water District Sewer Fund For Four Months Ending October 31, 2011 Original Oct YTD YTD YTD Budget Actual Actual Under(Over) % of FY 2012 FY 2012 FY 2012 Budget Budget Revenue (Operating): Sewer Charge Revenue $1,548,550 $129,562 $486,905 $1,061,645 31.44% Locke Ranch Assessments 159,862 153 644 159,218 0.40% Other Operating Revenue 57,001 6,689 90,074 (33,073) 158.02% Total Operating Revenue: 1,765,413 136,404 577,623 1,187,790 32.72% Revenue (Non-Operating): Interest 20,000 1,864 5,574 14,426 27.87% Other Non-Operating Revenue 3,975 - 259,443 (255,468) 6526.87% Total Non-Operating Revenue: 23,975 1,864 265,017 (241,042) 1105.39% Total Revenue 1,789,388 138,268 842,640 946,748 47.09% Expenses (Operating): Salary Related Expenses 987,772 58,643 290,897 696,875 30.42% Supplies & Services: Communications 30,587 389 5,364 25,223 17.54% Contractual Services 40,135 2,720 9,747 30,388 24.29% Data Processing 9,005 415 1,414 7,591 15.70% Dues & Memberships 4,505 305 2,180 2,325 48.39% Fees & Permits 14,066 1,249 3,060 11,006 21.75% Insurance 16,674 - 13,533 3,141 81.16% Materials 35,703 5,974 12,092 23,611 33.87% District Activities, Emp Recognition 1,562 65 240 1,322 15.36% Maintenance 74,267 3,734 20,740 53,527 27.93% Non-Capital Equipment 18,799 427 6,177 12,622 32.86% Office Expense 3,411 172 916 2,495 26.85% Professional Services 75,769 238 29,075 46,694 38.37% Training 5,100 180 1,513 3,587 29.67% Travel & Conferences 4,202 343 674 3,528 16.04% Uncollectible Accounts 2,660 - 14 2,646 0.53% Utilities 9,575 517 2,357 7,218 24.62% Vehicle Equipment 78,341 3,100 14,268 64,073 18.21% Supplies & Services Sub-Total 424,361 19,828 123,364 300,997 29.07% Total Operating Expenses 1,412,133 78,471 414,261 997,872 29.34% Expenses (Non-Operating): Other Expense 6,000 - - 6,000 0.00% Total Non-Operating Expenses: 6,000 - - 6,000 0.00% Total Expenses 1,418,133 78,471 414,261 1,003,872 29.21% Net Income (Loss) Before Capital Contributions 371,255 59,797 428,379 (57,124) 115.39% Contributed Capital - - 17,044,890 (17,044,890) 0.00% Net Income (Loss) Before Depreciation 371,255 59,797 17,473,269 (17,102,014) 4706.54% Depreciation & Amortization 932,700 107,438 376,597 556,103 40.38% Total Net Income (Loss) ($561,445) ($47,641) $17,096,672 ($17,658,117) -3045.12% Capital - Direct Labor (1,251) (9,605) 9,605 ITEM NO. 3.4 AGENDA REPORT Meeting Date: November 28, 2011 Budgeted: N/A To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Reviewed by Legal: N/A Prepared By: Stephen Parker, Finance CEQA Compliance: N/A Manager Subject: Status of Strategic Plan Initiatives DISCUSSION: Attached are the strategies identified in the 2011-2013 Strategic Plan that relate to Fiscal Responsibility, which are overseen by the Finance-Accounting Committee. Included is an update on each strategy relating to Fiscal Responsibility. PRIOR RELEVANT BOARD ACTION(S): On June 9, 2011 the Board adopted the 2011-2013 Strategic Plan. ATTACHMENTS: Narne: Description: V Ype: Strategic Plan Tracking- FA.xlsx Strategic Plan Tracking - FA Backup Material Strategic Plan Initiatives Status Report Finance - Accounting Committee Strategies Start Date Completion Lead Party Nov 2011 Progress Date FR 1: Maintain Fiduciary Res onsibilit Revise the Water and Sewer Rules and Fee schedule is complete. Water Rules and Regulations recommended General Regulation and Evaluate changes are going to EAO in December, so the corresponding FR 1 -C Feb -1 1 Dec -1 1 Manager/ Fee Schedules Regularly recommended fee schedule changes are going to be submitted to FAC in for Proper Cost of Service Finance Director December as well. Coverage FR 2: Increase Reserve Funding Annual Review of CIP Implement an Approach Finance Forward projection of reserve balances will be completed along with Financial FR 2 -C to Ensure Reserves are Apr -11 Director /Board future financial projections. The District's reserve needs will be updated Needs Included Responsibly Funded of Directors for FY 2012/13 with this new data. in Budget Preparation FR 3: Ide ntify and Develop Additional Revenue Options Review Opportunities to Earn "Cash Back" on Staff has submitted a recommendation to the FAC in this month's FR 3 -13 Operating Expense Jan -11 On -going Finance Director agenda. through Commercial Credit Card Accounts FR 4: Provide a Rate Structure that Promotes Water Use Efficienc Staff met with Raftelis and finalized the recommendations that will be Complete the Cost of Finance presented to the Board at the January 2012 workshop. A preliminary FR 4 -A Service and Water Rates Mar -10 Mar -12 Director /Board discussion of the workshop items was included in the October Finance- Study of Directors Accounting Committee meeting. Evaluate Equitable Rate Board of The Board will be given information on multiple rate structure options Structures that Promote Directors/ FR 4 -B Oct -11 Mar -12 in January 2012 with which they can give staff direction as to what rate Conservation and General structure they believe would best promote conservation and efficiency. Efficiency Manager Strategic Plan Initiatives Status Report Finance - Accounting Committee Strategies Start Date Completion Lead Party Nov 2011 Progress Date Completed Develop a Comprehensive 5 -year financial plan included in budget. Water and sewer financial FR 1 -A Feb -11 Oct -11 Finance Director Multi -Year Financial Plan models are available. Prepare a High Level Annual Budget Document and Comprehensive Annual Completed Budget June 2011. Submitted budget for CSMFO and GFOA FR 1 -13 Financial Report and Feb -11 Jun -11 Finance Director award September 2011. CAFR submitted to the FAC and Board in Compete for Recognition October 2011. Staff submitted for the GFOA award in November 2011. by the Government Finance Officers Association Evaluate and Revise the Completed March 2011. Consider changing allocation methodology in FR 1 -D Sewer Fund Allocation Nov -10 Mar -11 Finance Director conjunction with FY 2012/13 budget process. Include in Maintain Commitment to Sept -09 Rate Quarterly Board of Quarterly review of debt service ratios will continue as well as FR 1 -E Strong Debt Services Increase Financial Directors integrating the ratio into forward financial projections. Ratio Review Review the Reserve Policy Finance Completed review /revision of reserve policy in June 2011. Will review FR 2 -A and Funding Levels Apr -11 Jul -11 Director /Board again in conjunction with the 2012/13 Budget process. Annually of Directors Manage Cash Flow to Delia Lugo, Senior Accountant reviews the cash balances and needs FR 3 -C Maximize Investment On -going On -going Finance Director daily. Mutliple times a month, excess cash is transferred to investments Income to earn interest until the next check register.