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HomeMy WebLinkAbout2012-02-27 - Finance-Accounting Committee Meeting Agenda Packet Yorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING Monday, February 27, 2012, 4:00 PM 1717 E Miraloma Ave, Placentia CA 92870 COMMITTEE STAFF Director Robert R. Kiley, Chair Ken Vecchiarelli, General Manager Director Phil Hawkins Stephen Parker, Finance Manager 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. Unaudited Financial Statements for Period Ending December 31, 2011 Recommendation: That the Finance-Accounting Committee recommend the Board of Directors receive and file the Unaudited Financial Statements for the Period Ending December 31, 2011. 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. December 2011 Debt Service Ratio 3.2. Investment Report for Period Ending January 2012 3.3. January 2012 Budget to Actual Results 3.4. Draft Finance Department Budget 3.5. Preliminary 2013 Budget Numbers 3.6. FY 12/13 Budget Calendar Update 3.7. Upcoming Pension Accounting Changes 3.8. Status of Strategic Plan Initiatives 3.9. Future Agenda Items and Staff Tasks 4. ADJOURNMENT 4.1. The next meeting of the Finance-Accounting Committee will be held on March 26, 2012 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: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Prepared By: Delia Lugo, Senior Accountant Subject: Unaudited Financial Statements for Period Ending December 31 , 2011 SUMMARY: Presented are the Unaudited Financial Statements for the Period Ending December 31 , 2011 for the Water and Sewer Funds. STAFF RECOMMENDATION: That the Finance-Accounting Committee recommend the Board of Directors receive and file the Unaudited Financial Statements for the Period Ending December 31 , 2011 . DISCUSSION: For the Period Ending December 31 , 2011 staff is presenting a consolidated unaudited statement in a CAFR format. This new approach presents the quarterly statements on an accrual basis, and we believe that this is a more complete and transparent presentation of the District's overall financial position for your review. Water Operating Revenue, as presented, is 50.9% of annual budget, which is lower than the historical trend by 4% for the first half of the fiscal year. Other Operating Revenue is 64% of annual budget. This is prominently due to the unbudgeted Vista Del Verde Project.Sewer Other Operating Revenue is well over budget due to the Vista Del Verde Project for the first half of the fiscal year. Sewer Other Non-Operating revenue is also well over budget, primarily to receiving $264,000 from the City of Yorba Linda for the Sewer Transfer. One noted item on the Sewer Fund Statement is Other Expense in the amount of $15,770. This unbudgeted amount represents the refunds processed to our customers that were overcharged sewer fees in previous years. ATTACHMENTS: Description: Type: FY 2012 2nd Qtr Consolidated Balance Sheet.xlsx 2nd Quarter FY 2011/12 Unaudited Financial Statements Backup Material FY 2012 2nd Qtr Combined Stmt.xls 2nd Quarter Consolidated Statement Backup Material FY 2012 2nd Qtr Water Stmt.xlsx 2nd Quarter Water Statement Backup Material FY 2012 2nd Qtr Sewer Stmt.xls 2nd Quarter Sewer Statement Backup Material YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF NET ASSETS December 31, 2011 (With June 30, 2011 for comparison only) ASSETS December 2011 June 2011 CURRENT ASSETS: Cash and cash equivalents 27,028,937 29,985,508 Investment 2,156,687 2,143,130 Accounts receivable-water and sewer services 2,819,987 3,642,530 Accounts receivable- property taxes 102,192 114,949 Accrued interest receivable 23,880 22,049 Prepaid expenses &other deposits 303,731 246,919 Inventory 239,289 233,613 TOTAL CURRENT ASSETS 32,674,703 36,388,698 NONCURRENT ASSETS: Bond issuance costs 740,765 755,728 Other post-employment benefit(OPEB) asset 21,081 - Capital assets: Non-depreciable 10,164,560 5,223,388 Depreciable, net of accumulated depreciation 190,292,985 176,410,400 TOTAL NONCURRENT ASSETS 201,219,391 182,389,516 TOTAL ASSETS 233,894,094 218,778,214 LIABILITIES CURRENT LIABILITIES: Accounts payable 4,278,869 4,506,830 Accrued expenses 207,905 130,306 Accrued interest payable 474,418 483,171 Certificates of Participation - current portion 925,000 890,000 Compensated absences 259,177 251,798 Customer and construction deposits 255,201 281,156 Deferred revenue 419,959 416,525 TOTAL CURRENT LIABILITIES 6,820,529 6,959,786 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue 14,230,314 14,406,176 Compensated absences 777,531 755,395 Other post-employment benefit(OPEB) liability - 122,065 Certificates of Participation 41,363,623 42,299,117 TOTAL LONG TERM LIABILITIES (LESS CURRENT PORTION) 56,371,468 57,582,753 TOTAL LIABILITIES 63,191,997 64,542,539 NET ASSETS: $ 170,702,097 $ 154,235,675 YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the period ended December 31, 2011 (With fiscal year ended June 30, 2011 for comparison only) December 2011 June 2011 OPERATING REVENUES: Water sales 13,565,446 22,686,251 Sewer revenues 871,492 1,274,579 Other operating revenues 542,863 1,035,545 TOTAL OPERATING REVENUES 14,979,801 24,996,375 OPERATING EXPENSES Variable water costs 7,183,755 11,268,306 Personnel services 3,611,485 6,902,995 Supplies and services 1,787,705 3,686,333 Depreciation and amortization 3,267,301 5,279,860 TOTAL OPERATING EXPENSES 15,850,246 27,137,494 OPERATING INCOME/(LOSS) (870,445) (2,141,119) NONOPERATING REVENUES (EXPENSES): Property taxes 677,509 1,258,769 Investment income 149,124 274,152 Interest expense (949,017) (1,172,503) Other nonoperating revenues 484,018 739,062 Other nonoperating expenses (86,193) (406,575) TOTAL NONOPERATING REVENUES/EXPENSES 275,441 692,905 NET INCOME/(LOSS) BEFORE CAPITAL CONTRIBUTIONS (595,004) (1,448,214) CAPITAL CONTRIBUTIONS 17,061,426 706,319 CHANGES IN NET ASSETS 16,466,422 (741,895) NET ASSETS- BEGINNING OF YEAR 154,235,675 154,977,570 NET ASSETS- FOR PERIOD END DECEMBER 31, 2011 $ 170,702,097 $ 154,235,675 Yorba Linda Water District Summary Financial Report Water&Sewer Funds For the Period Ending December 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 $8,581,043 $9,323,850 47.93% Water Revenue (Commercial & Fire Det.) 1,726,651 1,003,387 723,264 58.11% Water Revenue (Landscape/Irrigation) 3,757,058 2,298,176 1,458,882 61.17% Water Revenue (Service Charge) 3,406,392 1,682,840 1,723,552 49.40% Sewer Charge Revenue 1,548,550 762,736 785,814 49.25% Locke Ranch Assessments 159,862 108,756 51,106 68.03% Other Operating Revenue 754,361 542,863 211,498 71.96% Total Operating Revenue: 29,257,767 14,979,801 14,277,966 51.20% Revenue (Non-Operating): Interest 190,000 149,124 40,876 78.49% Property Tax 1,232,000 677,509 554,491 54.99% Other Non-Operating Revenue 499,369 484,018 15,351 96.93% Total Non-Operating Revenue: 1,921,369 1,310,651 610,718 68.21% Total Revenue 31,179,136 16,290,452 14,888,684 52.25% Expenses (Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 7,183,755 6,487,783 52.55% Salary Related Expenses 7,941,306 3,611,485 4,329,821 45.48% Supplies &Services 4,070,833 1,787,705 2,283,128 43.91% Total Operating Expenses 25,683,677 12,582,945 13,100,732 48.99% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 949,017 957,409 49.78% Other Expense 123,193 86,193 37,000 69.97% Total Non-Operating Expenses: 2,029,619 1,035,210 994,409 51.01% Total Expenses 27,713,296 13,618,155 14,095,141 49.14% Net Income(Loss) Before Capital Contributions 3,465,840 2,672,297 793,543 77.10% Contributed Capital - 17,061,426 17,061,426 0.00% Net Income(Loss) Before Depreciation 3,465,840 19,733,723 17,854,969 569.38% Depreciation &Amortization 5,561,699 3,267,301 2,294,398 58.75% Total Net Income(Loss) ($2,095,859) $16,466,422 $15,560,571 -785.66% Capital -Direct Labor - (197,500) (197,500) Yorba Linda Water District Water Fund For the Period Ending December 31,2011 YTD YTD YTD Budget Actual Under(Over) % of FY 2012 FY 2012 Budget Budget Revenue (Operating): Water Revenue(Residential) $17,904,893 $8,581,043 $9,323,850 47.93% Water Revenue(Commercial & Fire Det.) 1,726,651 1,003,387 723,264 58.11% Water Revenue(Landscape/Irrigation) 3,757,058 2,298,176 1,458,882 61.17% Water Revenue(Service Charge) 3,406,392 1,682,840 1,723,552 49.40% Other Operating Revenue 697,360 445,857 251,503 63.93% Total Operating Revenue: 27,492,354 14,011,303 13,481,051 50.96% Revenue (Non-Operating): Interest 170,000 137,221 32,779 80.72% Property Tax 1,232,000 677,509 554,491 54.99% Other Non-Operating Revenue 495,394 228,507 266,887 46.13% Total Non-Operating Revenue: 1,897,394 1,043,237 854,157 54.98% Total Revenue 29,389,748 15,054,540 14,335,208 51.22% Expenses(Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 7,183,755 6,487,783 52.55% Salary Related Expenses 6,953,531 3,141,844 3,811,687 47.80% Supplies &Services: Communications 369,303 104,560 264,743 28.31% Contractual Services 527,888 201,441 326,447 38.16% Data Processing 119,645 76,899 42,746 64.27% Dues & Memberships 55,973 46,351 9,622 82.81% Fees& Permits 140,030 73,063 66,967 52.18% Insurance 221,526 93,164 128,362 42.06% Materials 361,161 234,872 126,289 65.03% District Activities, Emp Recognition 20,758 8,331 12,427 40.13% Maintenance 418,603 232,177 186,426 55.46% Non-Capital Equipment 79,221 28,460 50,761 35.92% Office Expense 45,686 18,487 27,199 40.47% Professional Services 794,406 303,501 490,905 38.20% Training 49,964 21,744 28,220 43.52% Travel &Conferences 48,221 11,916 36,305 24.71% Uncollectible Accounts 35,340 432 34,908 1.22% Utilities 114,855 37,831 77,024 32.94% Vehicle Equipment 278,209 116,812 161,397 41.99% Supplies&Services Sub-Total 3,680,788 1,610,041 2,070,747 43.74% Total Operating Expenses 24,305,857 11,935,640 12,370,217 49.11% Expenses(Non-Operating): Interest on Long Term Debt 1,906,426 948,692 957,734 49.76% Other Expense 117,193 70,423 46,770 60.09% Total Non-Operating Expenses: 2,023,619 1,019,115 1,004,504 50.36% Total Expenses 26,329,476 12,954,755 13,374,721 49.20% Net Income(Loss) Before Capital Contributions 3,060,272 2,099,785 960,487 68.61% Capital Contributions - 16,536 16,536 0.00% Net Income(Loss) Before Depreciation 3,060,272 2,116,321 977,023 69.15% Depreciation &Amortization 4,628,999 2,675,828 1,953,171 57.81% Total Net Income(Loss) ($1,568,727) ($559,507) ($976,148) 35.67% Capital- Direct Labor - (181,761) (181,761) - Yorba Linda Water District Sewer Fund For the Period Ending December 31,2011 YTD YTD YTD Budget Actual Under(Over) %of FY 2012 FY 2012 Budget Budget Revenue(Operating): Sewer Charge Revenue $1,548,550 $762,736 $785,814 49.25% Locke Ranch Assessments 159,862 108,756 51,106 68.03% Other Operating Revenue 57,001 97,006 (40,005) 170.18% Total Operating Revenue: 1,765,413 968,498 796,915 54.86% Revenue(Non-Operating): Interest 20,000 11,903 8,097 59.52% Other Non-Operating Revenue 3,975 255,511 (251,536) 6427.95% Total Non-Operating Revenue: 23,975 267,414 (243,439) 1115.39% Total Revenue 1,789,388 1,235,912 553,476 69.07% Expenses(Operating): Salary Related Expenses 987,775 469,641 518,134 49.14% Supplies&Services: Communications 27,797 8,176 19,621 29.41% Contractual Services 39,733 15,641 24,092 39.36% Data Processing 9,006 3,393 5,613 37.68% Dues& Memberships 4,213 3,831 382 90.93% Fees& Permits 10,540 5,313 5,227 50.41% Insurance 16,674 13,603 3,071 81.58% Materials 27,184 12,818 14,366 47.15% District Activities, Emp Recognition 1,562 611 951 39.11% Maintenance 74,267 35,359 38,908 47.61% Non-Capital Equipment 18,799 9,954 8,845 52.95% Office Expense 3,439 1,392 2,047 40.48% Professional Services 59,794 38,083 21,711 63.69% Training 3,761 3,925 (164) 104.37% Travel &Conferences 3,630 929 2,701 25.60% Uncollectible Accounts 2,660 14 2,646 0.53% Utilities 8,645 3,006 5,639 34.77% Vehicle Equipment 78,341 21,616 56,725 27.59% Supplies&Services Sub-Total 390,045 177,664 212,381 45.55% Total Operating Expenses 1,377,820 647,305 730,515 46.98% Expenses(Non-Operating): Interest Expense on Long Term Debt - 325 (325) 0.00% Other Expense 6,000 15,770 (9,770) 262.83% Total Non-Operating Expenses: ) 6,000.00 16,095.00 ( 10,095.00) 2.68 Total Expenses 1,383,820 663,400 720,420 47.94% Net Income(Loss) Before Capital Contributions 405,568 572,512 (166,944) 141.16% Contributed Capital - 17,044,890 17,044,890 0.00% Net Income(Loss) Before Depreciation 405,568 17,617,402 16,877,946 4343.88% Depreciation&Amortization 932,700 591,473 341,227 63.42% Total Net Income(Loss) ($527,132) $17,025,929 $16,536,719 -3229.92% Capital-Direct Labor (15,739) (15,739) ITEM NO. 3.1 AGENDA REPORT Meeting Date: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Prepared By: Delia Lugo, Senior Accountant Subject: December 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 rating 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, December 2011's unaudited debt service ratio is 217% as shown in the attached calculation. As we traditionally receive approximately 55% of our revenues but only 50% of our expenses in the first half of the year, this figure is expected to drop some by the end of the year. Despite this observation, the District's financial health for the first half of Fiscal Year 2011-12 is strong as it pertains to the debt service ratio indicator. STRATEGIC PLAN: FR 1-E: Maintain Commitment to a Strong Debt Services Ratio ATTACHMENTS: Name: Description: Type: FY 2011-12 2nd Qtr DS Calc.xlsx December 2011 Debt Service Ratio Backup Material Yorba Linda Water District Water Fund For The Period Ending December 31, 2011 YTD Included in Actual Debt Service FY 2012 Ratio Calculation OPERATING REVENUES: Water sales $ 13,565,446 $ 13,565,446 Other operating revenues 445,857 445,857 TOTAL OPERATING REVENUES 14,011,303 14,011,303 OPERATING EXPENSES Variable water costs 7,183,755 7,183,755 Personnel services 3,141,844 3,141,844 Supplies and services 1,610,041 1,610,041 Depreciation and amortization 2,675,828 - TOTAL OPERATING EXPENSES 14,611,468 11,935,640 OPERATING INCOME/(LOSS) (600,165) 2,075,663 NONOPERATING REVENUES (EXPENSES): Property taxes 677,509 677,509 Investment income 137,221 137,221 Interest expense (948,692) - Other nonoperating revenues 228,507 228,507 Other nonoperating expenses (70,423) (70,423) TOTAL NONOPERATING REVENUES/EXPENSES 24,122 972,814 NET INCOME/(LOSS) BEFORE CAPITAL CONTRIBUTIONS (576,043) 3,048,477 CAPITAL CONTRIBUTIONS 16,536 - CHANGES IN NET ASSETS (559,507) 3,048,477 DEBT SERVICE RATIO CALCUATION: NET REVENUES 3,048,477 DEBT SERVICE 1,402,589 % 217% ITEM NO. 3.2 AGENDA REPORT Meeting Date: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Prepared By: Delia Lugo, Senior Accountant Subject: Investment Report for Period Ending January 2012 SUMMARY: Staff is submitting the January 2012 Monthly Investment Reports for the Committee's review. DISCUSSION: The Investment Portfolio Report presents the market value and percent yield for all 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 reserves categories. The total yield for the month ending January 2012 increased to 1 .03%. This is the result of spending down the 2008 Revenue Bond held in a money market account earning only 0.05%, despite the yield change of investments held in CaITRUST's Medium Term portfolio from 1.19% to 1 .15%. The overall decrease in the investment balance from the previous month is $1 ,895,000. A couple of the larger balance changes include an increase in the Reserve for Debt Service fund of $158,000 due to the District meeting its monthly obligation to ensure that funds are set aside for the March 2012 debt service interest payment, a decrease of $685,000 in the Water Operating fund primarily due to payments to OCWD for annexation charges and the bi-annual replenishment assessment, and a decrease of $1 ,425,000 in the 2008 COP Revenue account for CIP project activity. STRATEGIC PLAN: FR 3-C: Manage Cash Flow to Maximize Investment Income ATTACHMENTS: Name: Description: Type: Invst Rpt 01-12.xlsx January 2012 Investment Report Backup Material Invst Agenda Backup - Jan 2012.xlsx Agenda Backup Backup Material Yorba Linda Water District Investment Portfolio Report January 31, 2012 Market % Percent Value Cost of Total Institution Yield Checking Account: $ 103,306 $ 103,306 Wells Fargo Bank $ 103,306 $ 103,306 0.38% Total 0.00% Money Market Accounts: $ 9,982 $ 9,982 Wells Fargo Money Market 0.05% 214,390 214,390 US Bank(2008 Revenue Bond) 0.05% 2,699 2,699 US Bank(2008 Bond Reserve) 0.05% $ 227,071 $ 227,071 0.84% Total 0.05% Federal Home Loan Bank: $ 2,165,866 $ 2,144,397 US Bank(2008 Bond Reserve) 1.34% $ 2,165,866 $ 2,144,397 8.05% 1.34% Pooled Investment Accounts: $ 4,221,075 $ 4,221,075 Local Agency Investment Fund 0.39% 20,192,917 20,111,472 Ca1TRUST Medium Term 1.15% $ 24,413,992 $ 24,332,547 90.72% 1.02% $ 26,910,235 $ 26,807,321 100% Total Investments 1.03% 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. Delia Lugo, Senior Accountant 1/31/12 Investment Summary Report Below is a chart summarizing the yields as well as terms and maturities for the month of January 2012: Avg. Portfolio Avg. Portfolio #of Month Yield Without Yield With Days to of 2012 CaITRUST CaITRUST Maturity January 0.68% 1.03% 565 Below is are charts comparing operating fund interest for current and prior fiscal years. Actual Interest 1/31/2011 1/31/2012 Monthly-January $ 21,917 $ 24,030 Year-to-Date $ 133,017 $ 149,274 Budget 2010/2011 2011/2012 Interest Budget, January YTD $ 91,000 $ 110,833 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: December 2011 % Alloc Janaury 2012 %Alloc Fund Description Balance 12/31/2011 Balance 1/31/2012 Water Operating Reserve $ 3,290,837 11.45% $ 2,605,487 11.45% Water Emergency Reserve 1,002,119 3.48% 1,005,122 3.48% Water Capital Project Reserve 17,577,157 61.10% 17,554,662 61.10% Water Reserve for Debt Service 775,025 2.69% 933,263 2.69% COP Revenue Bond 2008- Reserve 2,159,386 7.51% 2,165,866 7.51% COP Revenue Bond 2008 1,642,550 5.71% 217,089 5.71% Sewer Operating 170,718 0.59% 277,589 0.59% Sewer Emergency Reserve 1,001,472 3.48% 1,004,473 3.48% Sewer Capital Project Reserve 1,146,982 3.99% 1,043,378 3.99% $ 28,766,246 100.00% $ 26,806,929 100.00% Wells Fargo Bank Checking Water Operating (4,835) 21,930 Sewer Operating 43,504 81,376 38,669 103,306 Totals $ 28,804,915 $ 26,910,235 ITEM NO. 3.3 AGENDA REPORT Meeting Date: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Manager Dept: Finance Prepared By: Delia Lugo, Senior Accountant Subject: January 2012 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 January 2012. For the month of January 2012, the District water revenue is trending slightly below expectations. Water operating revenue is 58% of annual budget, which is lower by approximately 2.4% from the historical trend for the first seven reporting months 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 January 2012, the reduction of 42.9 GPCD brings us 75% of the way to our goal. Other Operating Revenue is 71% of annual budget for the month of January. This is primarily due to the activity that was reported in the previous months in relation to the Vista Del Verde project. The majority of the Water Funds individual supplies and services expenses are trending below or on budget, with the exception of Dues and Memberships and Insurance due to timing differences, Maintenance due to unexpected road repairs and Materials due to unbudgeted replacement meter purchases. In the month of January 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 Maintenance for the same reasons as described for the Water Fund and Training due to unbudgeted training for class "A" driver's licenses needed for 3 sewer employees in order to drive the sewer vactor. In the month of January the District recorded a transfer of the Lomas De Yorba facility from the Water to the Sewer Fund, and subsequently recorded the transfer of that asset to the City of Yorba Linda in the Contributed Capital line item of the Sewer Statement. This entry satisfies the District's obligation as set forth in the Sewer System Agreement between the District and the City of Yorba Linda. ATTACHMENTS: Name: Description: Type: January 2012 Combined.xls Janaury 2012 Consolidated Statement Backup Material January 2012 Water.xlsx January 2012 Water Statement Backup Material January 2012 Sewer.xls January 2012 Sewer Statement Backup Material Yorba Linda Water District Summary Financial Report Water&Sewer Funds For Seven Months Ending January 31, 2012 Original YTD YTD YTD Budget Actual Under(Over) % of FY 2012 FY 2012 Budget Budget Revenue (Operating): Water Revenue (Residential) $17,904,893 $9,810,923 $8,093,970 54.79% Water Revenue (Commercial & Fire Det.) 1,726,651 1,146,285 580,366 66.39% Water Revenue (Landscape/Irrigation) 3,757,058 2,504,682 1,252,376 66.67% Water Revenue (Service Charge) 3,406,392 1,963,812 1,442,580 57.65% Sewer Charge Revenue 1,548,550 890,329 658,221 57.49% Locke Ranch Assessments 159,862 112,160 47,702 70.16% Other Operating Revenue 754,361 592,585 161,776 78.55% Total Operating Revenue: 29,257,767 17,020,776 12,236,991 58.18% Revenue (Non-Operating): Interest 190,000 149,274 40,726 78.57% Property Tax 1,232,000 716,797 515,203 58.18% Other Non-Operating Revenue 499,369 614,324 (114,955) 123.02% Total Non-Operating Revenue: 1,921,369 1,480,395 440,974 77.05% Total Revenue 31,179,136 18,501,171 12,677,965 59.34% Expenses (Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 7,859,937 5,811,601 57.49% Salary Related Expenses 7,941,306 3,926,757 4,014,549 49.45% Supplies& Services 4,070,833 2,100,397 1,970,436 51.60% Total Operating Expenses 25,683,677 13,887,091 11,796,586 54.07% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 1,104,955 801,471 57.96% Other Expense 123,193 88,060 35,133 71.48% Total Non-Operating Expenses: 2,029,619 1,193,015 836,604 58.78% Total Expenses 27,713,296 15,080,106 12,633,190 54.41% Net Income(Loss) Before Capital Contributions 3,465,840 3,421,065 44,775 98.71% Contributed Capital - 16,976,316 16,976,316 0.00% Net Income(Loss) Before Depreciation 3,465,840 20,397,381 17,021,091 588.53% Depreciation &Amortization 5,561,699 3,819,417 1,742,282 68.67% Total Net Income (Loss) ($2,095,859) $16,577,964 $15,278,809 -790.99% Capital- Direct Labor - (221,976) (221,976) Yorba Linda Water District Water Fund For Seven Months Ending January 31,2012 Jan 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 $1,229,880 $9,810,923 $8,093,970 54.79% Water Revenue (Commercial & Fire Det.) 1,726,651 142,898 1,146,285 580,366 66.39% Water Revenue (Landscape/Irrigation) 3,757,058 206,506 2,504,682 1,252,376 66.67% Water Revenue (Service Charge) 3,406,392 280,972 1,963,812 1,442,580 57.65% Other Operating Revenue 697,360 50,148 496,005 201,355 71.13% Total Operating Revenue: 27,492,354 1,910,404 15,921,707 11,570,647 57.91% Revenue(Non-Operating): Interest 170,000 150 137,371 32,629 80.81% Property Tax 1,232,000 39,288 716,797 515,203 58.18% Other Non-Operating Revenue 495,394 126,310 354,818 140,576 71.62% Total Non-Operating Revenue: 1,897,394 165,748 1,208,986 688,408 63.72% Total Revenue 29,389,748 2,076,152 17,130,693 12,259,055 58.29% Expenses (Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 676,182 7,859,937 5,811,601 57.49% Salary Related Expenses 6,953,531 278,680 3,420,523 3,533,008 52.13% Supplies &Services: Communications 369,303 (104) 104,456 264,847 28.28% Contractual Services 527,888 36,244 237,685 290,203 45.03% Data Processing 119,645 (20,616) 56,283 63,362 47.04% Dues & Memberships 55,973 3,314 49,665 6,308 88.73% Fees &Permits 140,030 (1,330) 71,733 68,297 51.23% Insurance 221,526 87,924 181,088 40,438 81.75% Materials 361,161 38,824 273,696 87,465 75.78% District Activities, Emp Recognition 20,758 183 8,514 12,244 41.02% Maintenance 418,603 16,557 248,734 169,869 59.42% Non-Capital Equipment 79,221 6,106 34,566 44,655 43.63% Office Expense 45,686 5,920 24,407 21,279 53.42% Professional Services 794,406 107,809 411,310 383,096 51.78% Training 49,964 (77) 21,667 28,297 43.37% Travel &Conferences 48,221 (578) 11,338 36,883 23.51% Uncollectible Accounts 35,340 - 432 34,908 1.22% Utilities 114,855 2,188 40,019 74,836 34.84% Vehicle Equipment 278,209 19,521 136,331 141,878 49.00% Supplies &Services Sub-Total 3,680,788 301,885 1,911,924 1,768,864 51.94% Total Operating Expenses 24,305,857 1,256,747 13,192,384 11,113,473 54.28% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 155,938 1,104,630 801,796 57.94% Other Expense 117,193 1,697 72,120 45,073 61.54% Total Non-Operating Expenses: 2,023,619 157,635 1,176,750 846,869 58.15% Total Expenses 26,329,476 1,414,382 14,369,134 11,960,342 54.57% Net Income(Loss) Before Capital Contributions 3,060,272 661,770 2,761,559 298,713 90.24% and Transfers Transfers(To)/From - (85,111) (85,111) (85,111) 0.00% Capital Contributions - - 16,537 16,537 0.00% Net Income(Loss) Before Depreciation 3,060,272 576,659 2,692,985 230,139 88.00% Depreciation &Amortization 4,628,999 444,774 3,120,603 1,508,396 67.41% Total Net Income(Loss) ($1,568,727) $131,885 ($427,618) ($1,278,257) 27.26% Capital- Direct Labor - (22,516) (204,277) (204,277) - Yorba Linda Water District Sewer Fund For Seven Months Ending January 31,2012 Jan 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 $127,593 $890,329 $658,221 57.49% Locke Ranch Assessments 159,862 3,404 112,160 47,702 70.16% Other Operating Revenue 57,001 (426) 96,580 (39,579) 169.44% Total Operating Revenue: 1,765,413 130,571 1,099,069 666,344 62.26% Revenue(Non-Operating): Interest 20,000 - 11,903 8,097 59.52% Other Non-Operating Revenue 3,975 3,995 259,506 (255,531) 6528.45% Total Non-Operating Revenue: 23,975 3,995 271,409 (247,434) 1132.05% Total Revenue 1,789,388 134,566 1,370,478 418,910 76.59% Expenses(Operating): Salary Related Expenses 987,775 36,593 506,234 481,541 53.04% Supplies&Services: Communications 27,797 (8) 8,168 19,629 29.38% Contractual Services 39,733 2,792 18,433 21,300 46.39% Data Processing 9,006 (1,558) 1,835 7,171 20.38% Dues&Memberships 4,213 249 4,080 133 96.84% Fees&Permits 10,540 (145) 5,168 5,372 49.03% Insurance 16,674 - 13,603 3,071 81.58% Materials 27,184 252 13,070 14,114 48.08% District Activities, Emp Recognition 1,562 29 640 922 40.96% Maintenance 74,267 15,861 51,220 23,047 68.97% Non-Capital Equipment 18,799 370 10,324 8,475 54.92% Office Expense 3,439 446 1,838 1,601 53.45% Professional Services 59,794 (13,911) 24,172 35,622 40.43% Training 3,761 (19) 3,906 (145) 103.86% Travel&Conferences 3,630 (44) 885 2,745 24.38% Uncollectible Accounts 2,660 - 14 2,646 0.53% Utilities 8,645 212 3,218 5,427 37.22% Vehicle Equipment 78,341 6,283 27,899 50,442 35.61% Supplies&Services Sub-Total 390,045 10,809 188,473 201,572 48.32% Total Operating Expenses 1,377,820 47,402 694,707 683,113 50.42% Expenses(Non-Operating): Interest Expense - - 325 (325) 0.00% Other Expense 6,000 170 15,940 (9,940) 265.67% Total Non-Operating Expenses: 6,000 170 16,265 (10,265) 271.08% Total Expenses 1,383,820 47,572 710,972 672,848 51.38% Net Income(Loss)Before Capital Contributions 405,568 86,994 659,506 (253,938) 162.61% and Transfers Transfers(To)/From - 85,111 85,111 85,111 0.00% Contributed Capital - (85,111) 16,959,779 16,959,779 0.00% Net Income(Loss)Before Depreciation 405,568 86,994 17,704,396 16,790,952 4365.33% Depreciation&Amortization 932,700 107,341 698,814 233,886 74.92% Total Net Income(Loss) ($527,132) ($20,347) $17,005,582 $16,557,066 -3226.06% Capital-Direct Labor - (1,959) (17,698) (17,698) ITEM NO. 3.4 AGENDA REPORT Meeting Date: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Manager Prepared By: Delia Lugo, Senior Accountant Subject: Draft Finance Department Budget DISCUSSION: The Finance Department has decreased its Supplies and Services budget by 15% down to $387,871. The most significant cuts this year were made in the areas of consulting under professional services and office expense. 73% of the Finance Department's budget relates to Customer Service, with postage and printing of customer bills, credit card and lockbox fees, phone answering service and the writing off of uncollectible accounts amounting to 93% of that section's budget. In the Administration Section, the expense of external auditors and consulting services for items like our accounting software, bond reporting and updating our financial plan model account for over 88% of the budget. In the Accounting Section, our bank service fees and office supplies for the administrative building account for over 90% of the budget. Lastly, in the Meter Services Section, meter registers account for over 78% of the budget. ATTACHMENTS: Nan Description: Type: Finance Budget Summary for FY 2012-13.xlsx Finance Budget Summary Backup Material 3010 Budget for 2013.pdf Administration Budget Detail Backup Material 3020 Budget for 2013.pdf Accounting Budget Detail Backup Material 3030 Budget for 2013.pdf Customer Service Budget Detail Backup Material 3040 Budget for 2013.pdf Meter Reading Budget Detail Backup Material Finance Budget Summary Proposed for Fiscal Year 2012/2013 FY 2011/12 Proposed FY 1EKp9Dsesj0peratinq) Amended Budget 2012/13 Budget Supplies &Services Communications $ 103,000 $ 88,000 Contractual Services $ 83,690 $ 88,161 Dues & Memberships $ 1,425 $ 1,405 Fees & Permits $ 87,220 $ 95,995 Insurance $ 500 $ - Materials $ 15,320 $ 12,000 District Activities & Events $ 920 $ 700 Maintenance $ 200 $ 200 Non-Capital Equipment $ 2,200 $ 1,250 Office Expense $ 21,550 $ 16,600 Professional Services $ 92,000 $ 36,160 Professional Development $ 4,100 $ 4,250 Travel & Conferences $ 7,000 $ 4,150 Uncollectible Accounts $ 38,000 $ 39,000 Supplies &Services Sub-Total $ 457,125 $ 387,871 Section Detail Expense Budget Dept/Section: Fin (Admin) (3010) FY 2013 Primary GIL Category Sub Acct No./Sub Category Detail Item Description 1-3010-0600-00 $375 1-3010-0600-00 375 Check signature plate 375 CONTRACTUAL SERVICES(E) CONTRACTUAL SERVICES(E) 1-3010-0640-00 $445 1-3010-0640-00 445 CSMFO 110 DUES,MEMBERSHIPS,SUBSCRI DUES,MEMBERSHIPS,SUBSCRIPTI PTIONS(E) ONS(E) CMTA 185 GFOA 150 1-3010-0715-00 $350 1-3010-0715-50 350 Meeting Supplies 350 District Activities&Events Meeting Supplies 1-3010-0760-00 $300 1-3010-0760-30 300 Reference Books 300 OFFICE EXPENSE(E) Books&Publications 1-3010-0780-00 $34,960 1-3010-0780-00 34,960 GP consulting 5,000 PROFESSIONAL SERVICES(E) PROFESSIONAL SERVICES(E) Auditors 18,960 Bond counsel 1,000 Post-issuance bond consulting 2,000 Project consulting 5,000 Financial plan model consulting 3,000 1-3010-0810-00 $850 1-3010-0810-00 850 GASB Updates 100 PROFESSIONAL DEVELOPMENT Training Misc Training 200 CSMFO Webinars/Luncheons 250 CDIAC Training 300 1-3010-0830-00 $2,250 1-3010-0830-00 2,250 GFOA Conference 1,500 TRAVEL&CONFERENCES(E) TRAVEL&CONFERENCES(E) CSMFO Conference 750 Section Total $39,530 Section Detail Expense Budget Dept/Section: Fin (Accounting) FY 2013 (3020) Primary GIL Category— -.� Sub Acct No./Sub Category Detail Item Description M 1-3020-0580-00 $400 1-3020-0580-00 400 Publish Unclaimed List 400 COMMUNICATIONS(E) COMMUNICATIONS(E) 1-3020-0600-00 $570 1-3020-0600-30 570 Check signer 570 CONTRACTUAL SERVICES(E) Warranties&Service Contracts 1-3020-0640-00 $710 1-3020-0640-00 710 Delia Lugo-CSMFO,GFOA,etc. 300 DUES,MEMBERSHIPS,SUBSCRI DUES,MEM BERSHI PS,SUBSCRIPTI PTIONS(E) ONS(E) Maria Trujillo-CSMFO 110 Joann-CSMFO,GFOA,etc 300 1-3020-0645-00 $30,995 1-3020-0645-00 865 CSMFO Budget Reviewer Fee 100 Fees&Permits Fees&Permits GFOA CAFR Reviewer Fee 435 GFOA Budget Award Reviewer Fee 330 1-3020-0645-50 30,130 Analysis Fees(avg$2550/mo) 30,000 Bank Service/Fees Safe Deposit Box Fee 100 Annual Bankcard Fee 30 1-3020-0715-00 $200 1-3020-0715-50 200 Meeting Supplies 200 District Activities and Events Meeting Supplies 1-3020-0730-00 $200 1-3020-0730-00 200 Misc(typewriter,etc.) 200 MAINTENANCE(E) MAINTENANCE(E) 1-3020-0750-00 $200 1-3020-0750-00 200 Mlsc.Small Equipment(Ergonomic,etc.) 200 NON-CAPITAL EQUIPMENT(E) NON-CAPITAL EQUIPMENT(E) 1-3020-0760-00 $14,300 1-3020-0760-00 10,100 Office supplies 10,000 OFFICE EXPENSE(E) OFFICE EXPENSE(E) Ribbon(Check signing machine) 100 1-3020-0760-10 4,000 Paper 4,000 Paper 1-3020-0760-30 200 Govt Tax Text-Diehl Evans 200 Books&Publications 1-3020-0810-00 $1,300 1-3020-0810-00 1,300 Staff Training 1,000 PROFESSIONAL DEVELOPMENT PROFESSIONAL DEVELOPMENT GP Dynamics-Smartlist Builder 300 1-3020-0830-00 $400 1-3020-0830-00 400 Mileage 100 TRAVEL&CONFERENCES(E) TRAVEL&CONFERENCES(E) PERS Conference 300 Section Total $49,275 Section Detail Expense Budget Dept/Section: Fin (CS & Billing) FY 2013 (3030) Primary GIL Category-, Sub Acct No./Sub Category Detail Item Description 1-3030-0580-00 $87,600 1-3030-0580-00 600 UPS/Fed Ex/Other 600 COMMUNICATIONS(E) COMMUNICATIONS(E) 1-3030-0580-10 2,000 Postage Metered 2,000 Postage 1-3030-0580-22 85,000 Postage-Infosend 85,000 Postage-Infosend 1-3030-0600-00 $86,616 1-3030-0600-00 1,500 Post Office Box 180 CONTRACTUAL SERVICES(E) CONTRACTUAL SERVICES(E) Post Master-Lockbox 1,320 1-3030-0600-21 6,000 Online-Credit Checks 6,000 Customer Credit Check 1-3030-0600-22 55,000 Mailing Service 42,000 Printing of Bills-Infosend Info Send E-Bill Fees 13,000 1-3030-0600-30 1,116 Meter&Scale Lease Agreement 1,116 Warranties&Service Contracts 1-3030-0600-55 8,000 Phone Answering Service 8,000 Answering Service 1-3030-0600-70 15,000 Temporary Employment 15,000 Temporary Employment Services 1-3030-0645-00 $65,000 1-3030-0645-50 65,000 Lock Box Services 25,000 Fees&Permits Bank Services/Fees Credit Card&Auto Dr Processing 40,000 1-3030-0715-00 $150 1-3030-0715-50 150 Meeting Supplies 150 District Activities and Events Meeting Supplies 1-3030-0750-00 $300 1-3030-0750-00 300 Miscellaneous Equipment 300 NON-CAPITAL EQUIPMENT(E) NON-CAPITAL EQUIPMENT(E) 1-3030-0760-00 $2,000 1-3030-0760-00 1,750 Postage Machine Supplies 300 OFFICE EXPENSE(E) OFFICE EXPENSE(E) Deposit Supplies 100 Forms/Pads/Tags 1,350 1-3030-0760-30 250 Customer Service Publications/Books 250 ---Books&Publications 1-3030-0780-00 $1,200 1-3030-0780-09 1,200 Agency Fee 1,200 PROFESSIONAL SERVICES(E) Collection Services 1-3030-0810-00 $1,600 1-3030-0810-00 1,600 Cust Sery Reps Seminar 1,000 PROFESSIONAL DEVELOPMENT PROFESSIONAL DEVELOPMENT Supervisor Training 600 1-3030-0830-00 $200 1-3030-0830-00 200 Mileage 200 TRAVEL&CONFERENCES(E) TRAVEL&CONFERENCES(E) 1-3030-0850-00 $39,000 1-3030-0850-00 39,000 Uncollectible Accounts 39,000 UNCOLLECTIBLE ACCOUNTS(E) UNCOLLECTIBLE ACCOUNTS(E) Section Total $283,666 Section Detail Expense Budget Dept/Section: Fin (Meter Reading) FY 2013 (3040) Primary GIL Category—I -.� Sub Acct No./Sub Category Detail Item Description M 1-3040-0600-00 $600 1-3040-0600-50 600 Uniforms 600 CONTRACTUAL SERVICES(E) Uniform 1-3040-0640-00 $250 1-3040-0640-00 250 AWWA 250 DUES,MEMBERSHIPS,SUBSCRI DUES,MEMBERSHIPS,SUBSCRIPTI PTIONS(E) ONS(E) 1-3040-0710-00 $12,000 1-3040-0710-58 12,000 Registers 12,000 MATERIALS(E) Registers 1-3040-0750-00 $750 1-3040-0750-00 500 Meter Shop Equipment 500 NON-CAPITAL EQUIPMENT(E) NON-CAPITAL EQUIPMENT(E) 1-3040-0750-10 250 Hand Tools/Meter Lid Bars/Lifters 250 Hand and Power Tools 1-3040-0810-00 $500 1-3040-0810-00 500 Training classes 500 PROFESSIONAL DEVELOPMENT PROFESSIONAL DEVELOPMENT 1-3040-0830-00 $1,300 1-3040-0830-00 1,300 AWWA Conference 1,300 TRAVEL&CONFERENCES(E) TRAVEL&CONFERENCES(E) Section Total $15,400 ITEM NO. 3.5 AGENDA REPORT Meeting Date: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Prepared By: Stephen Parker, Finance Manager Subject: Preliminary 2013 Budget Numbers SUMMARY: Presented for review and discussion are the preliminary FY 2012/13 budget revenues and expenses of the District. This information includes a number of assumptions as we are early in the budget process, but provides an overview of what next years' budget will look like. DISCUSSION: Operating revenues are initially lower by 1% based on no rate increase, an assumption revision from 5% to 6% water loss based on last years' calculations and a slight lowering of operating revenues based on customer service fees decreasing as a result of upcoming fee changes. Variable water costs are up over $700,000 or 5% as a result of a 4% OCWD increase effective July 1 , 2012, and a 5% MET increase taking effect January 1 , 2013. Preliminary numbers for personnel expenses do not currently include any potential cost of living allowance, but does factor in potential step increases for merit as well as adjustments for health insurance and PERS expenses. Personnel expenses are actually lower than last year based on current information. Supplies and services have been scrutinized by staff and have decreased by over 7% from last years' budget. Depreciation expense has increased by over 20% from last years' budget due to higher than expected expense from the Sewers that the City of Yorba Linda transferred to the District as well as an increase in completed projects in the water fund. ATTACHMENTS: Name: Description: Type: Version 1 of 2012-13 Budget.xlsx Preliminary 2013 Budget-Combined Backup Material Consolidated Proposed Budget Budget FY2012 FY 2013 Revenue(Operating): Water Revenue(Residential) $17,904,893 16,934,400 Water Revenue(Commercial&Fire Det.) 1,726,651 1,909,656 Water Revenue(Landscape/Irrigation) 3,757,058 4,208,843 Water Revenue(Service Charge) 3,406,392 3,406,392 Sewer Charge Revenue 1,548,550 1,548,550 Locke Ranch Assessments 159,862 159,862 Other Operating Revenue 754,361 664,900 Total Operating Revenue: 29,257,767 28,832,603 Revenue(Non-Operating): Interest 190,000 175,000 Property Tax 1,232,000 1,244,320 Other Non-Operating Revenue 499,369 479,363 Total Non-Operating Revenue: 1,921,369 1,898,683 Total Revenue 31,179,136 30,731,286 Expenses(Operating): Variable Water Costs(G.W., Import&Power) 13,671,538 14,385,538 Salary Related Expenses 7,941,306 7,879,867 Supplies&Services: Communications 397,100 308,250 Contractual Services 567,621 496,671 Data Processing 128,650 128,240 Dues&Memberships 60,186 61,192 Board Election Fees - 63,500 Fees&Permits 150,570 151,095 Insurance 238,200 279,200 Materials 388,345 490,025 District Activities, Emp Recognition 22,320 18,900 Maintenance 492,870 381,970 Non-Capital Equipment 98,020 86,100 Office Expense 49,125 41,225 Professional Services 854,200 719,460 Training 53,725 51,020 Travel&Conferences 51,851 43,700 Uncollectible Accounts 38,000 39,000 Utilities 123,500 85,000 Vehicle Equipment 356,550 333,900 Supplies&Services Sub-Total 4,070,833 3,778,448 Total Operating Expenses 25,683,677 26,043,853 Expenses(Non-Operating): Interest on Long Term Debt 1,906,426 1,893,172 Other Expense 123,193 124,000 Total Non-Operating Expenses: 2,029,619 2,017,172 Total Expenses 27,713,296 28,061,025 Net Income(Loss) Before Depreciation 3,465,840 2,670,261 Depreciation&Amortization 5,561,699 6,884,018 Total Net Income(Loss) ($2,095,859) ($4,213,757) ITEM NO. 3.6 AGENDA REPORT Meeting Date: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Manager Prepared By: Stephen Parker, Finance Manager Subject: FY 12/13 Budget Calendar Update DISCUSSION: Attached is the FY 2012/13 Budget Calendar with changes that have occurred since it was last presented shown in red. ATTACHMENTS: Description: Type: Budget Calendar - FY 12.13 2.23.12.xlsx FY 12/13 Budget Calendar Backup Material BUDGET CALENDAR FOR FISCAL YEAR 2012/13 DATE BOARD/COMMITTEE SCHEDULE JANUARY January 17,2012 Manager's Meeting Discuss Budget Calendar and Process Personnel &Capital budget discussion January 23,2012 Finance-Accounting Committee Review the Budget Calendar FEBRUARY February 2, 2012 Planning-Engineering-Operations Committee Capital Improvement Projects budget(v 0.5) February 23, 2012 Board of Directors Capital Improvement Projects budget(v 1.0) February 27, 2012 Finance-Accounting Committee Finance budget(v 1.0), GperatiRg FGVGR6196(V 1.0) Draft ouuyei w i.v)Reserve pelf y alysis(y 1 ) MARCH March 1, 2012 Planning-Engineering-Operations Committee Engineering and Operations budget(v 1.0) March 5, 2012 Public Affairs-Communications-Tech Committee IT& Public Affairs budget(v 1.0) March 8, 2012 Board of Directors Capital Improvement Projects budget(v 2.0)(if needed) March 13, 2012 Personnel-Risk Mgmt Committee Labor and benefits(v 1.0), HR budget(v 1.0) March 20, 2012 Exec-Admin-Organizational Committee Board of Directors and Administration budget(v 1.0) March 22, 2012 Board of Directors Capital Improvement Projects budget(v 3.0)(if needed) March 26, 2012 Finance-Accounting Committee Finance budget(v 2.0)(if needed), Reserve policy analysis(v .0) * March 29, 2012 Planning-Engineering-Operations Committee Engineering and Operations budget(v 2.0)(if needed) APRIL April 2,2012 Public Affairs-Communications-Tech Committee IT& Public Affairs budget(v 2.0)(if needed) * April 5,2012 Board Workshop-Budget Budget presented to Board for review and discussion Reserve policy discussion April 10, 2012 Personnel-Risk Mgmt Committee HR budget(v 2.0)(if needed), Labor and Benefits(v 2.0) April 12, 2012 Board of Directors Possible Prop 218 decision April 17, 2012 Exec-Admin-Organizational Committee Board of Directors and Administration budget(v 2.0)(if needed) MAY May 24,2012 Board of Directors Draft Budget(Full Board) May 28,2012 Finance-Accounting Committee Possible reserve policy recommendation Draft reserve policy * May 31,2012 Board of Directors Prop 218 Public Hearing JUNE June 14, 2012 Board of Directors Budget review and possible adoption (Full Board) Reserve policy possible adoption June 28, 2012 Board of Directors Budget review and possible adoption (Full Board) * Tentative date ITEM NO. 3.7 AGENDA REPORT Meeting Date: February 27, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Dept: Finance Manager Prepared By: Stephen Parker, Finance Manager Subject: Upcoming Pension Accounting Changes DISCUSSION: Governmental Accounting Standards Board (GASB) is the rule-setting body responsible for reporting standards in accounting - otherwise known as generally accepted accounting principles. GASB has recently written an exposure draft on amending GASB 27 - the rule for pension accounting standards for employers in cost sharing and multiple-employer plans (the category that YLWD falls into). An exposure draft provides for comments by affected parties and potentially allows time for the rules as proposed to be revised. Staff is sharing the information as recorded in the exposure draft to give advance notice of what is likely to come in the future recording of pensions on the financial statements. GASB is proposing changing the way that the liability of pensions are recorded on the financial statements. Namely, • Putting the entire pension liability on the balance sheet instead of the current footnote disclosure by recognizing the employer's "proportionate share" of collective net pension liability and pension expense. This is the component that is most probably not going to be included when GASB is likely to adopt the amendment in or about June 2012. • Changing the discount rate (the rate at which future benefit payments are discounted to their present value) from the current expected rate of return (7.75% assumed by PERS) to either a risk-free rate of return (average bond rates) or a combination of long-term rate of return until current assets are depleted, then risk free thereafter. • Shortening the amortization period for recognizing large changes. Currently PERS spreads theirs over 15 years and recently performed a 3-year smoothing of one of the 15 years' effects. The recommendation would be to recognize changes over the remaining service lives of individual plan members. • Recognizing investment earnings variance from projected within 5 years, which is a major departure from PERS' current method. • Other items that would not affect YLWD as dramatically, so are not explored in detail here. The effect of these changes will be that the pension cost shown on the financial statements will increase from what is currently shown in the footnotes. In addition, there might be a different amount disclosed on the footnotes as compared to the financial statements. As a result of these changes, either PERS will have to change the way they complete actuarials, or Districts' will have to engage their own actuaries. It is also likely that whatever changes are accomplished on the pension side will follow for Other Post-Employment Benefits in a few years. At this point there are a lot more questions than answers. More information will be available in the coming months, but the effective date that these changes are required to be implemented by the District is FY 2013/14. ITEM NO. 3.8 AGENDA REPORT Meeting Date: February 27, 2012 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. ATTACHMENTS: Name: Description: Type: Strategic Plan Tracking- FA.xlsx Strategic Plan Tracking-FA Backup Material Strategic Plan Initiatives Status Report Finance-Accounting Committee Strategies Lead Party Comments Feb 2012 Progress FR 1: Maintain Fiduciary Res onsibilit Finance Accounting Develop a Comprehensive Committee to 5-year financial plan included in budget. A more comprehensive version FR 1-A Finance Director consider Adding Multi-Year Financial Plan will be included in the FY 2012/13 budget. Sewer Model to Contract in Jun-1 1 Revise the Water and Complete Study in Sewer Rules and House and Water Rules and Regulations recommended changes submitted to EAO General Regulation and Evaluate Recommend Fees and corresponding recommended fee schedule changes submitted to FR 1-C Manager/ Fee Schedules Regularly Structure Update for FAC in December. These items are pending a legal review before both for Proper Cost of Service Finance Director Adoption by items are submitted to the Board. Coverage December 2011 FR 3: Identify and Develop Additional Revenue Options Card Options Review Opportunities to Discussed with On December 22, 2011, the Board approved YLWD entering into an Earn"Cash Back" on agreement with US Bank and the State of California in the CalCard Finance-Accounting FR 3-B Operating Expense Finance Director Committee in March- program. Staff has been given new information to provide US Bank through Commercial to complete the process. It should take another 3-5 weeks to get Credit Card Accounts Add'l research fully set-up. Required FR 4: Provide a Rate Structure that Promotes Water Use Efficienc Board to Consider The January 16, 2012 Board Workshop showed the end product of the Complete the Cost of Finance Rate Structure cost of service and water rate study. Raftelis might continue work with FR 4-A Service and Water Rates Director/Board Alternatives in Oct the District if a Prop 218 process is requested by the Board in Study of Directors 2011 conjunction with the fiscal year 2012-13 budget process. Evaluate Equitable Rate Board of Board to Consider Multiple rate structure options were presented to the Board in a Structures that Promote Directors/ Rate Structure workshop on January 16, 2012. No specific direction was given on the FR 4-B Conservation and General Alternatives in Oct rate structure, and this item will be discussed further throughout the Efficiency Manager 2011 fiscal year 2012-13 budget process . Completed Prepare a High Level Annual Budget Document and Completed Budget June 2011. Submitted budget for CSMFO and GFOA Comprehensive Annual award September 2011. CAFR submitted to the FAC and Board in Include Fees in FY FR 1-13 Financial Report and Finance Director October 2011. Staff submitted for the GFOA award in November 2011. 2011/12 Budget Compete for Recognition YLWD received the Excellence in Budgeting Award from CSMFO on the by the Government FY 2011/12 Budget in January. Finance Officers Association Revised Allocation Evaluate and Revise the Completed March 2011. Consider changing allocation methodology in FR 1-D Finance Director included in FY Sewer Fund Allocation conjunction with FY 2012/13 budget process. 2011/12 Budget Substantial Rate Maintain Commitment to Increase Adopted in Board of Quarterly review of debt service ratios will continue as well as FR 1-E Strong Debt Services Sept 2009 followed by Directors integrating the ratio into forward financial projections. Ratio Pass Through Increase in Aug 2010 Latest Revisions Reviewed by Finance- Review the Reserve Policy Finance Accounting Completed review/revision of reserve policy in June 2011. Will review FR 2-A and Funding Levels Director/Board Committee for Board again in conjunction with the 2012/13 Budget process. Annually of Directors of Directors to Consider in Jun-11 Implement an Approach Finance Rates, COP'S and Forward projection of reserve balances will be completed along with FR 2-C to Ensure Reserves are Director/Board Other Capital future financial projections. The District's reserve needs will be updated Responsibly Funded of Directors Financing Options for FY 2012/13 with this new data. Track Opportunities Manage Cash Flow to Delia Lugo, Senior Accountant reviews the cash balances and needs and Effectiveness FR 3-C Maximize Investment Finance Director daily. Mutliple times a month, excess cash is transferred to investments with Quarterly Income to earn interest until the next check register. Investment Reports