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HomeMy WebLinkAbout2012-05-23 - Finance-Accounting Committee Meeting Agenda Packet Yorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING Wednesday, May 23, 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 the Period Ending March 31 , 2012 Recommendation: That the Committee recommend the Board of Directors receive and file the Unaudited Financial Statements for the Period Ending March 31, 2012. 2.2. Appropriations Limit for Fiscal Year 2012/13 Recommendation: That the Committee recommend the Board of Directors approve Resolution No. 12-XX Adopting the Appropriations Limit for Fiscal Year 2012113. 2.3. Financial Reserves Policy for FY 2012/13 Recommendation: That the Committee recommend the Board of Directors approve Resolution No. 12-XX Adopting the Financial Reserves Policy for Fiscal Year 2012/13. 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. Investment Report for Period Ending April 30, 2012 3.2. April 2012 Budget to Actual Results 3.3. March 2012 Debt Service Ratio 3.4. FY 2012/13 Budget Calendar Update 3.5. Advanced Refunding and Line of Credit Status (Verbal Report) 3.6. Status of Strategic Plan Initiatives 3.7. Future Agenda Items and Staff Tasks 4. ADJOURNMENT 4.1. The next meeting of the Finance-Accounting Committee will be held June 25, 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: May 23, 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: Unaudited Financial Statements for the Period Ending March 31, 2012 SUMMARY: Presented are the Unaudited Financial Statements for the Period Ending March 31, 2012 for the District. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors receive and file the Unaudited Financial Statements for the Period Ending March 31, 2012. DISCUSSION: For the period ending March 31, 2012, staff is presenting unaudited statements in the CAFR format. This is a new approach by presenting the quarterly statements on a full-accrual basis, and staff believes this is a more transparent and complete presentation of the District's overall financial position for the Board's review. In addition, staff has included the traditional budget to actual statements for the District as a whole, as well as the individual water and sewer funds. Water Operating Revenue, as presented, is 69.2% of annual budget, which is 2% lower than the historical trend for three quarters of the way through the fiscal year. Other Operating Revenue is 81% of annual budget. This is prominently due to receiving unbudgeted revenue in relation to the Vista Del Verde development. Sewer Other Operating Revenue is well over budget due to the Vista Del Verde development for the first half of the fiscal year. Sewer Other Non-Operating revenue is also well over budget, primarily due to receiving $264,000 from the City of Yorba Linda as a part of the sewer transfer agreement. One item of note for this reporting quarter is that the District recorded a transfer of the Lomas De Yorba facility from the Water Fund to the Sewer Fund. That capital asset was transferred to the City of Yorba Linda, and is therefore netted against the City sewers and recorded 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: FY 2012 3rd Qtr Consolidated Balance Sheet.xlsx FY 2012 3rd Qtr Consolidated Balance Sheet Backup Material FY 2012 3rd Qtr Combined Stmt.xls FY 2012 3rd Qtr Combined Statement Backup Material FY 2012 3rd Qtr Water Stmt.xlsx FY 2012 3rd Qtr Water Statement Backup Material FY 2012 3rd Qtr Sewer Stmt.xls FY 2012 3rd Qtr Sewer Statement Backup Material YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF NET ASSETS March 31, 2012 (With June 30, 2011 for comparison only) ASSETS March 2012 June 2011 CURRENT ASSETS: Cash and cash equivalents $ 24,223,256 $ 29,985,508 Investment 2,160,071 2,143,130 Accounts receivable-water and sewer services 2,556,903 3,642,530 Accounts receivable-property taxes 102,192 114,949 Accrued interest receivable 21,393 22,049 Prepaid expenses &other deposits 287,468 246,919 Inventory 254,947 233,613 TOTAL CURRENT ASSETS 29,606,230 36,388,698 NONCURRENT ASSETS: Bond issuance costs 733,284 755,728 Other post-employment benefit(OPEB) asset 76,613 - Capital assets: Non-depreciable 11,425,334 5,223,388 Depreciable, net of accumulated depreciation 189,608,168 176,410,400 TOTAL NONCURRENT ASSETS 201,843,399 182,389,516 TOTAL ASSETS 231,449,629 218,778,214 LIABILITIES CURRENT LIABILITIES: Accounts payable 3,557,645 4,506,830 Accrued expenses 80,067 130,306 Accrued interest payable - 483,171 Certificates of Participation -current portion 925,000 890,000 Compensated absences 267,806 251,798 Customer and construction deposits 246,817 281,156 Deferred revenue 433,737 416,525 TOTAL CURRENT LIABILITIES 5,511,072 6,959,786 LONG-TERM LIABILITIES (LESS CURRENT PORTION): Deferred annexation revenue 14,147,513 14,406,176 Compensated absences 803,418 755,395 Other post-employment benefit(OPEB) liability - 122,065 Certificates of Participation 41,358,376 42,299,117 TOTAL LONG TERM LIABILITIES (LESS CURRENT PORTION) 56,309,307 57,582,753 TOTAL LIABILITIES 61,820,379 64,542,539 NET ASSETS: $ 169,629,250 $ 154,235,675 YORBA LINDA WATER DISTRICT UNAUDITED COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the period ending March 31, 2012 (With fiscal year ending June 30, 2011 for comparison only) March 2012 June 2011 OPERATING REVENUES: Water sales $ 18,448,098 $ 22,686,251 Sewer revenues 1,282,757 1,274,579 Other operating revenues 664,740 1,035,545 TOTAL OPERATING REVENUES 20,395,595 24,996,375 OPERATING EXPENSES Variable water costs 9,256,797 11,268,306 Personnel services 5,318,516 6,902,995 Supplies and services 2,712,675 3,686,333 Depreciation and amortization 4,923,825 5,279,860 TOTAL OPERATING EXPENSES 22,211,813 27,137,494 OPERATING INCOME/(LOSS) (1,816,218) (2,141,119) NONOPERATING REVENUES(EXPENSES): Property taxes 780,018 1,258,769 Investment income 210,690 274,152 Interest expense (1,416,831) (1,172,503) Other nonoperating revenues 673,862 739,062 Other nonoperating expenses (99,258) (406,575) TOTAL NONOPERATING REVENUES/EXPENSES 148,481 692,905 NET INCOME/(LOSS) BEFORE CAPITAL CONTRIBUTIONS (1,667,737) (1,448,214) CAPITAL CONTRIBUTIONS 17,061,312 706,319 CHANGES IN NET ASSETS 15,393,575 (741,895) NET ASSETS- BEGINNING OF YEAR 154,235,675 154,977,570 NET ASSETS- FOR PERIOD END MARCH 31, 2012 $ 169,629,250 $ 154,235,675 Yorba Linda Water District Summary Financial Report Water&Sewer Funds For Period Ending March 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 $11,654,792 $6,250,101 65.09% Water Revenue (Commercial & Fire Det.) 1,726,651 1,389,299 337,352 80.46% Water Revenue (Landscape/Irrigation) 3,757,058 2,878,491 878,567 76.62% Water Revenue (Service Charge) 3,406,392 2,525,516 880,876 74.14% Sewer Charge Revenue 1,548,550 1,160,760 387,790 74.96% Locke Ranch Assessments 159,862 121,997 37,865 76.31% Other Operating Revenue 754,361 664,740 89,621 88.12% Total Operating Revenue: 29,257,767 20,395,595 8,862,172 69.71% Revenue (Non-Operating): Interest 190,000 210,690 (20,690) 110.89% Property Tax 1,232,000 780,018 451,982 63.31% Other Non-Operating Revenue 499,369 673,862 (174,493) 134.94% Total Non-Operating Revenue: 1,921,369 1,664,570 256,799 86.63% Total Revenue 31,179,136 22,060,165 9,118,971 70.75% Expenses (Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 9,256,797 4,414,741 67.71% Salary Related Expenses 7,941,306 5,318,516 2,622,790 66.97% Supplies &Services 4,070,833 2,712,677 1,358,156 66.64% Total Operating Expenses 25,683,677 17,287,990 8,395,687 67.31% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 1,416,831 489,595 74.32% Other Expense 123,193 99,256 23,937 80.57% Total Non-Operating Expenses: 2,029,619 1,516,087 513,532 74.70% Total Expenses 27,713,296 18,804,077 8,909,219 67.85% Net Income(Loss) Before Capital Contributions 3,465,840 3,256,088 209,752 93.95% Contributed Capital - 17,061,312 17,061,312 0.00% Net Income(Loss) Before Depreciation 3,465,840 20,317,400 23,783,240 586.22% Depreciation &Amortization 5,561,699 4,923,825 637,874 88.53% Total Net Income (Loss) ($2,095,859) $15,393,575 $23,145,366 -734.48% Capital- Direct Labor - (292,830) 292,830 Yorba Linda Water District Water Fund For Period Ending March 31, 2012 YTD YTD YTD Budget Actual Under(Over) % of FY 2012 FY 2012 Budget Budget Revenue(Operating): Water Revenue (Residential) $17,904,893 $11,654,792 $6,250,101 65.09% Water Revenue (Commercial & Fire Det.) 1,726,651 1,389,299 337,352 80.46% Water Revenue (Landscape/Irrigation) 3,757,058 2,878,491 878,567 76.62% Water Revenue (Service Charge) 3,406,392 2,525,516 880,876 74.14% Other Operating Revenue 697,360 564,677 132,683 80.97% Total Operating Revenue: 27,492,354 19,012,775 8,479,579 69.16% Revenue(Non-Operating): Interest 170,000 192,950 (22,950) 113.50% Property Tax 1,232,000 780,018 451,982 63.31% Other Non-Operating Revenue 495,394 416,358 79,036 84.05% Total Non-Operating Revenue: 1,897,394 1,389,326 508,068 73.22% Total Revenue 29,389,748 20,402,101 8,987,647 69.42% Expenses (Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 9,256,797 4,414,741 67.71% Salary Related Expenses 6,953,531 4,659,574 2,293,957 70.87% Supplies &Services: Communications 369,303 150,676 218,627 40.80% Contractual Services 527,888 313,718 214,170 59.43% Data Processing 119,645 125,302 (5,658) 104.73% Dues & Memberships 55,973 52,479 3,494 93.76% Fees &Permits 140,030 112,149 27,881 80.09% Insurance 221,526 145,024 76,502 65.47% Materials 361,161 362,893 (1,732) 100.48% District Activities, Emp Recognition 20,758 9,735 11,023 46.90% Maintenance 418,603 275,619 142,984 65.84% Non-Capital Equipment 79,221 49,298 29,923 62.23% Office Expense 45,686 32,261 13,425 70.61% Professional Services 794,406 512,865 281,541 64.56% Training 49,964 22,050 27,914 44.13% Travel &Conferences 48,221 13,896 34,325 28.82% Uncollectible Accounts 35,340 21,833 13,507 61.78% Utilities 114,855 49,945 64,910 43.49% Vehicle Equipment 278,209 197,795 80,414 71.10% Supplies &Services Sub-Total 3,680,788 2,447,538 1,233,250 66.49% Total Operating Expenses 24,305,857 16,363,909 7,941,948 67.32% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 1,416,506 489,920 74.30% Other Expense 117,193 83,316 33,877 71.09% Total Non-Operating Expenses: 2,023,619 1,499,822 523,797 74.12% Total Expenses 26,329,476 17,863,731 8,465,745 67.85% Net Income(Loss) Before Capital Contributions 3,060,272 2,538,370 521,902 82.95% and Transfers Transfers(To)/From - (85,111) (85,111) 0.00% Capital Contributions - 16,537 16,537 0.00% Net Income(Loss) Before Depreciation 3,060,272 2,469,796 453,328 80.71% Depreciation &Amortization 4,628,999 4,010,277 618,722 86.63% Total Net Income(Loss) ($1,568,727) ($1,540,481) ($165,394) 98.20% Capital- Direct Labor - (268,392) 268,392 - Yorba Linda Water District Sewer Fund For Period Ending March 31,2012 YTD YTD YTD Budget Actual Under(Over) %of FY 2012 FY 2012 Budget Budget Revenue(Operating): Sewer Charge Revenue $1,548,550 $1,160,760 $387,790 74.96% Locke Ranch Assessments 159,862 121,997 37,865 76.31% Other Operating Revenue 57,001 100,063 (43,062) 175.55% Total Operating Revenue: 1,765,413 1,382,820 382,593 78.33% Revenue(Non-Operating): Interest 20,000 17,740 2,260 88.70% Other Non-Operating Revenue 3,975 257,504 (253,529) 6478.09% Total Non-Operating Revenue: 23,975 275,244 (251,269) 1148.05% Total Revenue 1,789,388 1,658,064 131,324 92.66% Expenses(Operating): Salary Related Expenses 987,775 658,942 328,833 69.18% Supplies&Services: Communications 27,797 12,236 15,561 44.02% Contractual Services 39,733 22,807 16,926 57.40% Data Processing 9,006 4,310 4,696 47.86% Dues&Memberships 4,213 4,424 (211) 105.01% Fees&Permits 10,540 7,113 3,427 67.49% Insurance 16,674 16,581 93 99.44% Materials 27,184 20,101 7,083 73.94% District Activities, Emp Recognition 1,562 732 830 46.85% Maintenance 74,267 93,934 (19,667) 126.48% Non-Capital Equipment 18,799 11,452 7,347 60.92% Office Expense 3,439 2,429 1,010 70.64% Professional Services 59,794 25,989 33,805 43.46% Training 3,761 3,911 (150) 104.00% Travel&Conferences 3,630 1,076 2,554 29.65% Uncollectible Accounts 2,660 1,162 1,498 43.68% Utilities 8,645 3,971 4,674 45.93% Vehicle Equipment 78,341 32,911 45,430 42.01% Supplies&Services Sub-Total 390,045 265,139 124,906 67.98% Total Operating Expenses 1,377,820 924,081 453,739 67.07% Expenses(Non-Operating): Interest Expense - 325 (325) 0.00% Other Expense 6,000 15,940 (9,940) 265.67% Total Non-Operating Expenses: 6,000 16,265 (10,265) 271.08% Total Expenses 1,383,820 940,346 443,474 67.95% Net Income(Loss) Before Capital Contributions 405,568 717,718 (312,150) 176.97% and Transfers Transfers(To)/From - 85,111 85,111 0.00% Contributed Capital - 17,044,775 17,044,775 0.00% Net Income(Loss) Before Depreciation 405,568 17,847,604 16,817,736 4400.64% Depreciation&Amortization 932,700 913,548 19,152 97.95% Total Net Income(Loss) ($527,132) $16,934,056 $16,798,584 -3212.49% Capital-Direct Labor (24,437) 24,437 ITEM NO. 2.2 AGENDA REPORT Meeting Date: May 23, 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: Appropriations Limit for Fiscal Year 2012/13 SUMMARY: Each year the District must adopt the Appropriations Limit and factors used to calculate this number, in accordance with Proposition 13, approved by the voters in 1977, Government Code Section 7900 and Article XIIIB of the California Constitution. The appropriations limit assures government agencies do not assess and collect taxes in excess of the controlled limits. The District receives a relatively small amount of revenue from property taxes annually and is historically well below the Appropriations Limitation each year. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors approve Resolution No. 12-XX Adopting the Appropriations Limit for Fiscal Year 2012/13. DISCUSSION: In 1977, California voters passed Proposition 13, which limited property tax assessments to 1% of a property's market value and limited assessed value increases to 2% per year. Concurrent with the reduction of property taxes, the voters also passed Proposition 4, the Gann Spending Limitation Initiative, which added Article XIIIB to the California Constitution. Under Article XIIIB, a governmental agency is restricted in the amount of annual appropriations from the proceeds of taxes except taxes to pay voter-approved bond debt service. If proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller, returned to the taxpayers through revised tax rates or through revised fee schedules. An excess in one year may be offset against a deficit in the following year, so effectively the limitation may be exceeded in a single year but not over any consecutive two-year period. District staff performed the required calculation to determine the appropriations limits for FY 2012/13, in compliance with the terms of Article XIIIB of the California Constitution and Government Code Section 7900. The starting point for computing the Appropriations Limit is the total of Appropriations Subject to Limitation in the Base Year of 1978/79. This number is multiplied by controlled factors each successive year to determine the current year's appropriation limit. The State Department of Finance, Population Research Unit, provides inflation and population figures each year. These two are multiplied together to determine the final percentage by which the prior year's limit is increased (or decreased). The District's property tax revenue of $1 ,244,320, budgeted for FY 2012/13, is substantially lower than the calculated limitation of $5,636,910. Therefore, there are no excess appropriations that must be returned to the taxpayers. PRIOR RELEVANT BOARD ACTION(S): The Board of Directors adopted Resolution No. 11-11 on June 23, 2011 , Adopting the Appropriations Limit for Fiscal Year 2011/12. ATTACHMENTS: Na..— Des;ription: Type: Resolution 12- XX Adopting Appropriations Limit for FY 12.13.doc Resolution 12-XX Backup Material RESOLUTION NO. 12-XX RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ADOPTING THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2012/13 WHEREAS, under the terms of Article XIIIB of the California Constitution and Government Code Section 7900 et seq., all local agencies are required to establish, by resolution, an appropriations limit for each fiscal year; and WHEREAS, in June 1990, voters in the State of California approved Proposition 111 which amended Government Code Section 7900 et seq., modifying the method of calculation for the appropriations limit and requiring all local agencies to select, by resolution, the annual adjustment factors used to perform the calculations; and WHEREAS, the District staff has performed the required calculations to determine the limit for Fiscal Year 2012/13, in compliance with the above provisions. NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda Water District as follows: Section 1. That there is hereby adopted, pursuant to Article XIIIB of the California Constitution and Government Code Section 7900 et seq., as amended by Proposition 111, an appropriations limit for Fiscal Year 2012/13 of $5,636,910. Section 2. The annual adjustment factors are the weighted average percentage change in the population of the cities within the District's jurisdiction, and the percentage change in the California Per Capita Income. PASSED AND ADOPTED this 14th day of June 2012, by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Phil Hawkins, President Yorba Linda Water District Resolution No. 12-XX Adopting the Appropriations Limit for FY 2012/13 1 ATTEST: Kenneth R. Vecchiarelli, Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law, LLP Resolution No. 12-XX Adopting the Appropriations Limit for FY 2012/13 2 ITEM NO. 2.3 AGENDA REPORT Meeting Date: May 23, 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: Financial Reserves Policy for FY 2012/13 STAFF RECOMMENDATION: That the Committee recommend the Board of Directors approve Resolution No. 12-XX Adopting the Financial Reserves Policy for Fiscal Year 2012/13. DISCUSSION: Attached is the proposed Financial Reserves Policy for FY 2012/13. This information was previously submitted for review to the Finance-Accounting Committee as well as the entire Board at the April 11 , 2012 Budget Workshop. No additional changes have been made to the Reserve Policy since the Finance-Accounting Committee and the Board last reviewed it in March and April, respectively. The main changes in this year's Financial Reserves Policy is to revise the District's Operating Reserve to the same target that the Government Finance Officers Association recommends - 8-17%. The District's current targets are 5-8%. The other major change is adjusting the Maintenance Reserve to have a target of $200,000. Currently the policy is written to fund $200,000 annually. The remaining changes are minor and primarily include updating account balances, which are required annually. STRATEGIC PLAN: FR 2-A: Review the Reserve Policy and Funding Levels Annually PRIOR RELEVANT BOARD ACTION(S): The Finance Accounting Committee last reviewed the Reserve Policy at their meeting on March 26, 2012. The full Board reviewed the suggested policy changes at their Budget and Water Rates Workshop on April 11 , 2012. ATTACHMENTS: Name: Description: Type: Resolution 12- XX Adopting the Financial Reserves Policy.doc Resolution 12-XX Backup Material Financial Reserves Policy - FY 12.13.docx Financial Reserves Policy Backup Material RESOLUTION NO. 12-XX RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT ADOPTING THE FINANCIAL RESERVES POLICY FOR FY 2012/13 WHEREAS, the purpose of the Yorba Linda Water District's (YLWD) Financial Reserves Policy is to ensure that the District continues to have sufficient funding available to meet its operating, non-operating, capital and debt service obligations; and WHEREAS, adequate reserves and sound financial policies maintain YLWD's bond ratings in the capital markets, provide financing flexibility and sustain debt covenant compliance; and WHEREAS, the District has completed a comprehensive Asset Management Plan and has initiated preparation of a rate study and five-year financial plan; and WHEREAS, the Financial Reserves Policy recommends establishing various reserve categories, defines the purpose and use of these funds and identifies target levels and priority funding of the reserves. NOW THEREFORE, the Board of Directors of the Yorba Linda Water District does find, determine, and resolve: Section 1. The financial reserves policy is attached hereto as Exhibit "A" Section 2. On an annual basis, the Board of Directors shall review the funding options and target levels of the Financial Reserves Policy. Section 3. On a quarterly basis, the Board of Directors will be provided a listing of the fund balances for each reserve established within the Financial Reserves Policy. Section 4. On a monthly basis, the Finance-Accounting Committee will be provided an update status of the reserves within the Financial Reserves Policy. Section 5. This Financial Reserves Policy shall be effective July 1, 2012. Resolution No. 12-XX Financial Reserves Policy for FY 2012/13 1 PASSED AND ADOPTED this 28th day of June, 2012 by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Phil Hawkins, President ATTEST: Yorba Linda Water District Ken Vecchiarelli, Secretary Yorba Linda Water District Resolution No. 12-XX Financial Reserves Policy for FY 2012/13 2 RESERVE POLICY A. GENERAL POLICY: Maintaining adequate reserves is an essential part of sound financial management. The Yorba Linda Water District Board of Directors realizes the importance of reserves in providing reliable service to its customers, financing of long-term capital projects and funding availability for emergencies should the need arise. Interest derived from reserve balances shall be credited to the reserve account from which it was earned. B. CATEGORIES: YLWD shall accumulate, maintain and segregate its reserve funds into the following categories: Restricted and Designated Reserves 1. Board Designated Reserves; and 2. Contractually Restricted Reserves. C. SCOPE: This policy will assist the Board of Directors in establishing: 1. Target levels for reserve funds; 2. Requirements for the use of reserve funds; and 3. Periodic review requirements for each reserve. D. PERIODIC REVIEW: Staff and the YLWD Board shall review the reserve balances and targets annually as a part of the annual budget process. The Finance-Accounting Committee will continue to review all reserve and investment balances monthly, with a quarterly report going to the full Board. E. RESTRICTED AND DESIGNATED RESERVES: 1. Board Designated Reserves: These are reserve funds earmarked for the purpose of funding such items as new capital facilities, repair or replacement of existing facilities and general operating reserves designated for a specific purpose and use by the Board of Directors. 1.0 Operating Reserve A. Definition and Purpose — Established to cover temporary cash flow deficiencies that occur as a result of timing differences between the receipt of operating revenue and expenditure requirements and unexpected expenditures occurring as a result of doing business. June 28, 2012 Page 1 of 3 B. Target Level — The Government Finance Officers Association (GFOA) recommends that funding should be no less than one to two months (or 8% - 17%) of the District's annual operating budget. The District's current target will be a minimum of 8% and a maximum of 17% of the annual operating budget for both the water and sewer funds. C. Events or Conditions Prompting the Use of the Operating Reserve— This reserve may be utilized as needed to pay outstanding operating expenditures prior to the receipt of anticipated operating revenues. 1.1 Emergency Reserve A. Definition and Purpose — Established to provide protection recovery to the District and its customers for losses arising from an unplanned event or circumstance. The reserve level combined with YLWD's existing insurance policies should adequately protect YLWD and its customers in the event of a loss. B. Target Level —Established at a minimum level equal to $1,000,000 for the water fund and shall accumulate interest and annual contributions as determined by the District's annual operation to a maximum level of $4,000,000. The target for sewer will be a minimum of$250,000 and a maximum of$1,000,000. C. Events or Conditions Prompting the Use of the Emergency Reserve — This reserve shall be utilized to cover unexpected losses experienced by the District as a result of a disaster or other unexpected loss. Any reimbursement received by the District from insurance companies as a result of a submitted claim shall be deposited back into the reserve as replenishment for the loss. 1.2 Capital Replacement Reserve A. Definition and Purpose — Established to provide capital repair and replacement funding as the District's infrastructure deteriorates over its expected useful life. B. Target Level — The Board-approved 2010 Asset Management Plan recommended that the annual contribution to this reserve be at a minimum level of $1,820,000 for the water fund and $345,000 for the sewer fund, less money set aside for the Maintenance Reserve. Funding with available funds based on the District's operations shall be allocated quarterly. C. Events or Conditions Prompting the Use of the Capital Replacement Reserve — Through the annual budget process, staff shall recommend anticipated asset replacement projects. The Board of Directors shall take action to approve recommended project appropriations from the capital replacement reserve. Should unplanned replacement be necessary during any fiscal year, the Board of Directors may take action to amend the budget and appropriate needed funds as required. 1.3 Maintenance Reserve A. Definition and Purpose — Established to provide funding for non-scheduled capital asset repair and replacement. June 28, 2012 Page 2 of 3 B. Target Level— $200,000 subject to an annual review. C. Events or Conditions Prompting the Use of the Maintenance Replacement Reserve — Unplanned failure of assets including but not limited to pumps, motors and major facilty repairs. 1.4 Employee Liabilities Reserve A. Definition and Purpose — The purpose is to cover employees' accrued vacation and other compensatory time and to ensure the complete funding associated with the liability incurred for employees whom have met the requirements necessary for district paid health benefits at retirement. B. Target Level — The annual contribution will be $100,000 ($93,000 for water and $7,000 for sewer) to be evaluated and/or adjusted annually thereafter based on an analysis of current employees' vacation and sick time accrued and actuarial determinations of future retiree costs. The amount of actuarily-determined contributions for the District's Other Post Employment Benefit (OPEB) costs that the District has underfunded and is therefore shown as a long-term liability as of June 30, 2011 was $122,065. When combined with a liability on the District's books for vacation, compensatory and sick time of $1,007,193 at June 30, 2011, the target is projected to be approximately $1,130,000 for the combined water and sewer enterprises. C. Events or Conditions Prompting the Use of the Employee Liabilities Reserve — This reserve may be used in the event that operating funds are not adequate to meet vacation, compensatory and sick time paid out or retiree medical cost obligations within the current year. 2. Contractually Restricted Reserves: These are funds held to satisfy limitations set by external requirements established by creditors, grant agencies or law. Examples include stipulated bond covenants and reserves held with a fiscal agent. 2.0 US Bank 2008 COP Reserve A. Definition and Purpose — Established to cover reserve requirements held with a designated fiscal agent(US Bank) for the 2008 Certificates of Participation. B. Target Level—Funding shall be held in an amount equal to $2,147,096. C. Events or Conditions Prompting the Use of the Contractually Restricted Reserve — This reserve may be utilized as needed by the fiscal agent to pay any outstanding debt service payments not covered by the District within the specified billing and due dates. End of Policy Document June 28, 2012 Page 3 of 3 ITEM NO. 3.1 AGENDA REPORT Meeting Date: May 23, 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 April 30, 2012 SUMMARY: Staff is submitting the April 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 reserve categories. The total yield for the month ending April 2012 increased to 0.98%. This is the result of the yield change of investments held in CaITRUST's Medium Term portfolio from 1 .07% to 1 .13%. The overall decrease in the investment balance from the previous month is approximately $97,000. A couple of the larger balance changes include an increase in the Reserve for Debt Service fund of $183,000 due to the District meeting its monthly obligation to ensure that funds are set aside for the September 2012 debt service principal and interest payment for the 2003 and 2008 COPs, a decrease of $1 .2 million in the Water Capital Projects fund for CIP project activity, an increase of $837,000 in the Water Operating fund primarily due to the receipt of scheduled property tax apportionments. STRATEGIC PLAN: FR 3-C: Manage Cash Flow to Maximize Investment Income ATTACHMENTS: Nami Description: Type: Invst Rpt 4-12.xlsx April 2012 Investment Report Backup Material Invst Agenda Backup - Agenda Backup Backup Material Yorba Linda Water District Investment Portfolio Report April 30, 2012 Market % Percent Value Cost of Total Institution Yield Checking Account: $ 164,475 $ 164,475 Wells Fargo Bank $ 164,475 $ 164,475 0.64% Total 0.00% Money Market Accounts: $ 54,924 $ 54,924 Wells Fargo Money Market 0.05% 2,707 2,707 US Bank(2008 Bond Reserve) 0.04% $ 57,631 $ 57,631 0.22% Total 0.05% Federal Home Loan Bank: $ 2,162,651 $ 2,144,397 US Bank(2008 Bond Reserve) 1.34% $ 2,162,651 $ 2,144,397 8.39% 1.34% Pooled Investment Accounts: $ 4,605,147 $ 4,605,147 Local Agency Investment Fund 0.37% 671,295 671,295 Ca1TRUST Short Term 0.44% 18,101,549 18,028,907 Ca1TRUST Medium Term 1.13% $ 23,377,991 $ 23,305,350 90.74% 0.96% $ 25,762,749 $ 25,671,853 100% Total Investments 0.98% 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 4/30/12 Investment Summary Report Below is a chart summarizing the yields as well as terms and maturities for the month of April 2012: Avg. Portfolio Avg. Portfolio #of Month Yield Without Yield With Days to of 2012 CalTRUST CalTRUST Maturi April 0.66% 0.98% 88 Below is are charts comparing operating fund interest for current and prior fiscal years. Actual Interest 4/30/2011 4/30/2012 Monthly-April $ 25,685 $ 20,424 Year-to-Date $ 181,740 $ 189,297 Budget 2010/2011 2011/2012 Interest Budget,April YTD $ 117,000 $ 142,500 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: March 2012 %Alloc April 2012 %Alloc Fund Description Balance 3/31/2012 Balance 4/30/2012 Water Operating Reserve $ 3,232,353 9.64% $ 4,029,510 15.74% Water Emergency Reserve 1,006,122 3.80% 1,008,031 3.94% Water Capital Project Reserve 16,645,068 64.33% 15,405,882 60.18% Water Reserve for Debt Service 405,143 4.44% 587,900 2.30% COP Revenue Bond 2008-Reserve 2,160,071 8.17% 2,162,651 8.45% COP Revenue Bond 2008 2,709 0.82% 2,699 0.01% Sewer Operating 201,916 1.62% 272,238 1.06% Sewer Emergency Reserve 1,005,473 3.80% 1,007,380 3.94% Sewer Capital Project Reserve 1,120,059 3.38% 1,121,982 4.38% $ 25,778,914 100.00% $ 25,598,274 100.00% Wells Fargo Bank Checking Water Operating (39,274) 900 Sewer Operating 120,031 163,575 80,757 164,475 Totals $ 25,859,671 $ 25,762,749 ITEM NO. 3.2 AGENDA REPORT Meeting Date: May 23, 2012 To: Finance-Accounting Committee From: Ken Vecchiarelli, General Manager Presented By: Stephen Parker, Finance Manager Prepared By: Delia Lugo, Senior Accountant Subject: April 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 April 2012. For the month of April 2012, the District water revenue is trending slightly below expectations. Water operating revenue is 74.8% of annual budget, which is lower by approximately 4.1% from the historical trend for the first nine 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 April 2012, the reduction of 41 .9 GPCD brings us 73% of the way to our goal. Other Operating Revenue is 90% of annual budget for the month of April. 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 Fund's individual Supplies and Services expenses are trending below or on budget, with the exception of Dues and Memberships, Data Processing, and Insurance due to timing differences, while Materials are higher primarily due to unbudgeted replacement meter purchases. 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 Sewer Fund's Supplies and Services expenses are trending below or on budget, with the exceptions of Dues and Memberships and Insurance, which are higher due to timing differences, while Materials and Maintenance are higher due to the cost of sewer main repairs on Woodcrest, Los Altos Trail, Yorba Linda Blvd, and at the flood control easement. ATTACHMENTS: Description: Type: April 2012 Combined.xls April 2012 Consolidated Statement Backup Material April 2012 Water.xlsx April 2012 Water Statement Backup Material April 2012 Sewer.xls April 2012 Sewer Statement Backup Material Yorba Linda Water District Summary Financial Report Water&Sewer Funds For Ten Months Ending April 30, 2012 Original YTD YTD YTD Budget Actual Under(Over) % of FY 2012 FY 2012 Budget Budget Revenue (Operating): Water Revenue (Residential) $17,904,893 $12,557,723 $5,347,170 70.14% Water Revenue (Commercial & Fire Det.) 1,726,651 1,516,229 210,422 87.81% Water Revenue (Landscape/Irrigation) 3,757,058 3,049,758 707,300 81.17% Water Revenue (Service Charge) 3,406,392 2,806,476 599,916 82.39% Sewer Charge Revenue 1,548,550 1,287,620 260,930 83.15% Locke Ranch Assessments 159,862 194,657 (34,795) 121.77% Other Operating Revenue 754,361 724,525 29,836 96.04% Total Operating Revenue: 29,257,767 22,136,988 7,120,779 75.66% Revenue (Non-Operating): Interest 190,000 210,263 (20,263) 110.66% Property Tax 1,232,000 1,212,175 19,825 98.39% Other Non-Operating Revenue 499,369 738,913 (239,544) 147.97% Total Non-Operating Revenue: 1,921,369 2,161,351 (239,982) 112.49% Total Revenue 31,179,136 24,298,339 6,880,797 77.93% Expenses (Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 9,962,222 3,709,316 72.87% Salary Related Expenses 7,941,306 5,720,396 2,220,910 72.03% Supplies &Services 4,070,833 3,018,866 1,051,967 74.16% Total Operating Expenses 25,683,677 18,701,484 6,982,193 72.81% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 1,572,769 333,657 82.50% Other Expense 123,193 100,535 22,658 81.61% Total Non-Operating Expenses: 2,029,619 1,673,304 356,315 82.44% Total Expenses 27,713,296 20,374,788 7,338,508 73.52% Net Income(Loss) Before Capital Contributions 3,465,840 3,923,551 (457,711) 113.21% Contributed Capital - 17,061,312 17,061,312 0.00% Net Income(Loss) Before Depreciation 3,465,840 20,984,863 24,450,703 605.48% Depreciation &Amortization 5,561,699 5,481,252 80,447 98.55% Total Net Income(Loss) ($2,095,859) $15,503,611 $24,370,256 -739.73% Capital -Direct Labor - (327,805) 327,805 Yorba Linda Water District Water Fund For Ten Months Ending April 30,2012 April 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 $902,931 $12,557,723 $5,347,170 70.14% Water Revenue (Commercial & Fire Det.) 1,726,651 126,930 1,516,229 210,422 87.81% Water Revenue (Landscape/Irrigation) 3,757,058 171,267 3,049,758 707,300 81.17% Water Revenue (Service Charge) 3,406,392 280,960 2,806,476 599,916 82.39% Other Operating Revenue 697,360 59,449 624,126 73,234 89.50% Total Operating Revenue: 27,492,354 1,541,537 20,554,312 6,938,042 74.76% Revenue(Non-Operating): Interest 170,000 - 192,523 (22,523) 113.25% Property Tax 1,232,000 432,157 1,212,175 19,825 98.39% Other Non-Operating Revenue 495,394 63,048 479,406 15,988 96.77% Total Non-Operating Revenue: 1,897,394 495,205 1,884,104 13,290 99.30% Total Revenue 29,389,748 2,036,742 22,438,416 6,951,332 76.35% Expenses (Operating): Variable Water Costs (G.W., Import& Power) 13,671,538 705,425 9,962,222 3,709,316 72.87% Salary Related Expenses 6,953,531 350,490 5,010,064 1,943,467 76.39% Supplies &Services: Communications 369,303 (7,109) 143,567 225,736 38.88% Contractual Services 527,888 14,852 328,570 199,318 62.24% Data Processing 119,645 (11,605) 113,697 5,948 95.03% Dues & Memberships 55,973 272 52,751 3,222 94.24% Fees &Permits 140,030 6,554 118,703 21,327 84.77% Insurance 221,526 76,096 221,120 406 99.82% Materials 361,161 34,770 397,663 (36,502) 110.11% District Activities, Emp Recognition 20,758 268 10,003 10,755 48.19% Maintenance 418,603 25,988 301,607 116,996 72.05% Non-Capital Equipment 79,221 2,785 52,083 27,138 65.74% Office Expense 45,686 1,764 34,025 11,661 74.48% Professional Services 794,406 108,671 621,536 172,870 78.24% Training 49,964 1,668 23,718 26,246 47.47% Travel &Conferences 48,221 2,127 16,023 32,198 33.23% Uncollectible Accounts 35,340 - 21,833 13,507 61.78% Utilities 114,855 4,066 54,011 60,844 47.03% Vehicle Equipment 278,209 20,521 218,316 59,893 78.47% Supplies &Services Sub-Total 3,680,788 281,688 2,729,226 951,562 74.15% Total Operating Expenses 24,305,857 1,337,603 17,701,512 6,604,345 72.83% Expenses (Non-Operating): Interest on Long Term Debt 1,906,426 155,938 1,572,444 333,982 82.48% Other Expense 117,193 1,279 84,595 32,598 72.18% Total Non-Operating Expenses: 2,023,619 157,217 1,657,039 366,580 81.88% Total Expenses 26,329,476 1,494,820 19,358,551 6,970,925 73.52% Net Income(Loss) Before Capital Contributions 3,060,272 541,922 3,079,865 (19,593) 100.64% and Transfers Transfers(To)/From - - (85,111) (85,111) 0.00% Capital Contributions - - 16,537 16,537 0.00% Net Income(Loss) Before Depreciation 3,060,272 541,922 3,011,291 (88,167) 98.40% Depreciation &Amortization 4,628,999 449,859 4,460,136 168,863 96.35% Total Net Income(Loss) ($1,568,727) $92,063 ($1,448,845) ($257,030) 92.36% Capital- Direct Labor - (33,156) (301,548) 301,548 Yorba Linda Water District Sewer Fund For Ten Months Ending Apirl 30,2012 April 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 $126,860 $1,287,620 $260,930 83.15% Locke Ranch Assessments 159,862 72,660 194,657 (34,795) 121.77% Other Operating Revenue 57,001 336 100,399 (43,398) 176.14% Total Operating Revenue: 1,765,413 199,856 1,582,676 182,737 89.65% Revenue(Non-Operating): Interest 20,000 - 17,740 2,260 88.70% Other Non-Operating Revenue 3,975 2,003 259,507 (255,532) 6528.48% Total Non-Operating Revenue: 23,975 2,003 277,247 (253,272) 1156.40% Total Revenue 1,789,388 201,859 1,859,923 (70,535) 103.94% Expenses(Operating): Salary Related Expenses 987,775 51,390 710,332 277,443 74.57% Supplies&Services: Communications 27,797 550 12,786 15,011 46.00% Contractual Services 39,733 2,933 25,740 13,993 64.78% Data Processing 9,006 4,247 8,557 449 95.02% Dues&Memberships 4,213 21 4,445 (232) 105.51% Fees&Permits 10,540 26 7,139 3,401 67.73% Insurance 16,674 35 16,616 58 99.65% Materials 27,184 187 20,288 6,896 74.63% District Activities, Emp Recognition 1,562 20 752 810 48.13% Maintenance 74,267 8,331 102,265 (27,998) 137.70% Non-Capital Equipment 18,799 1,062 12,514 6,285 66.57% Office Expense 3,439 133 2,562 877 74.50% Professional Services 59,794 1,744 27,733 32,061 46.38% Training 3,761 95 4,006 (245) 106.52% Travel&Conferences 3,630 75 1,151 2,479 31.71% Uncollectible Accounts 2,660 - 1,162 1,498 43.68% Utilities 8,645 465 4,436 4,209 51.31% Vehicle Equipment 78,341 4,577 37,488 40,853 47.85% Supplies&Services Sub-Total 390,045 24,501 289,640 100,405 74.26% Total Operating Expenses 1,377,820 75,891 999,972 377,848 72.58% Expenses(Non-Operating): Interest Expense - - 325 (325) 0.00% Other Expense 6,000 - 15,940 (9,940) 265.67% Total Non-Operating Expenses: 6,000 - 16,265 (10,265) 271.08% Total Expenses 1,383,820 75,891 1,016,237 367,583 73.44% Net Income(Loss) Before Capital Contributions 405,568 125,968 843,686 (438,118) 208.03% and Transfers Transfers(To)/From - - 85,111 85,111 Contributed Capital - - 17,044,775 17,044,775 0.00% Net Income(Loss) Before Depreciation 405,568 125,968 17,973,572 16,691,768 4431.70% Depreciation&Amortization 932,700 107,568 1,021,116 (88,416) 109.48% Total Net Income(Loss) ($527,132) $18,400 $16,952,456 $16,780,184 -3215.98% Capital-Direct Labor (1,819) (26,256) 26,256 ITEM NO. 3.3 AGENDA REPORT Meeting Date: May 23, 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: March 2012 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, March 2012's unaudited debt service ratio is 188% as shown in the attached calculation. As we traditionally receive approximately 71% of our revenues but only 75% of our expenses by the third quarter mark 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 3rd Qtr DS Calc.xlsx March 2012 Debt Service Ratio Backup Material Yorba Linda Water District Water Fund For The Period Ending March 31, 2012 YTD Included in Actual Debt Service FY 2012 Ratio Calculation OPERATING REVENUES: Water sales $ 18,448,098 $ 18,448,098 Other operating revenues 564,677 564,677 TOTAL OPERATING REVENUES 19,012,775 19,012,775 OPERATING EXPENSES Variable water costs 9,256,797 9,256,797 Personnel services 4,659,574 4,659,574 Supplies and services 2,447,538 2,447,538 Depreciation and amortization 4,010,277 - TOTAL OPERATING EXPENSES 20,374,186 16,363,909 OPERATING INCOME/(LOSS) (1,361,411) 2,648,866 NONOPERATING REVENUES (EXPENSES): Property taxes 780,018 780,018 Investment income 192,950 192,950 Interest expense (1,416,506) - Other nonoperating revenues 416,358 416,358 Other nonoperating expenses (83,316) (83,316) TOTAL NONOPERATING REVENUES/EXPENSES (110,496) 1,306,010 NET INCOME/(LOSS) BEFORE CAPITAL CONTRIBUTIONS (1,471,907) 3,954,876 TRANSFERS (85,111) - CAPITAL CONTRIBUTIONS 16,537 - CHANGES IN NET ASSETS (1,540,481) 3,954,876 ,Z DEBT SERVICE RATIO CALCUATION: NET REVENUES 3,954,876 DEBT SERVICE 2,103,884 % 188% ITEM NO. 3.4 AGENDA REPORT Meeting Date: May 23, 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: FY 2012/13 Budget Calendar Update DISCUSSION: Attached is the revised FY 2012/13 Budget Calendar with changes that have occurred since it was last presented in red. STRATEGIC PLAN: FR 1-B: Prepare a High Level Annual Budget Document and Comprehensive Annual Financial Report and Compete for Recognition by the Government Finance Officers Association ATTACHMENTS: Name: Description: Type: Budget Calendar - FY 12.13 5.23.12.xlsx Updated 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), Draft Budget(v 1.0) MARCH March 5, 2012 Public Affairs-Communications-Tech Committee IT& Public Affairs budget(v 1.0) March 12, 2012 Planning-Engineering-Operations Committee Engineering and Operations budget(v 1.0) March 14, 2012 Exec-Admin-Organizational Committee Board of Directors and Administration budget(v 1.0) March 20, 2012 Personnel-Risk Mgmt Committee Labor and benefits(v 1.0), HR budget(v 1.0) APRIL April 9,2012 Public Affairs-Communications-Tech Committee IT budget(v 2.0) April 11, 2012 Board Workshop-Budget Budget presented to Board for review and discussion Reserve policy discussion, CIP Budget(v 2.0) April 26, 2012 Board of Directors Prop 218 decision MAY May 2,�.�4 2012 Board of Directors Draft Budget(Full Board) June 14, 201: May 23,2012 Finance-Accounting Committee Reserve policy recommendation JUNE • June 21, 2012 Board of Directors Prop 218 Public Hearing June 28, 2012 Board of Directors Budget review and possible adoption (Full Board) Reserve policy adoption • Tentative date ITEM NO. 3.6 AGENDA REPORT Meeting Date: May 23, 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.Pdf Strategic Plan Tracking-FA Backup Material Strategic Plan Initiatives Status Report Finance-Accounting Committee Strategies Lead Party Comments May 2012 Progress FR 1: Maintain Fiduciary Res onsibilit Finance Accounting Develop a Comprehensive Multi- Finance Committee to consider Multi-year financial plan provided to the Board during April 11 workshop. A FR 1-A Year Financial Plan Director Adding Sewer Model to comprehensive version will be included in the FY 2012/13 budget. Contract in Jun-11 Revise the Water and Sewer Rules General Complete Study in House Water Rules and Regulations and Fee Schedule was approved by the Board on FR 1 C and Regulation and Evaluate Fee Manager/ and Recommend Fees March 8,2012. Sewer Rules and Regulations and Fee Schedule will be brought Schedules Regularly for Proper Finance Structure Update for before the Board in the fall of 2012. Cost of Service Coverage Director Adoption by December 2011 FR 4: Provide a Rate Structure that Promotes Water Use Efficienc Evaluate Equitable Rate Board of Board to Consider Rate A recommendation to update the current fixed charge with a volumetric approach FR 4-B Structures that Promote Directors/ Structure Alternatives in Oct was presented to the Board during the April 11 Workshop. The Rate Increase Conservation and Efficiency General 2011 Notice approved by the Board on April 26 to be mailed to the District's Manager customers reflects those proposed changes. Com leted Strategies Lead Party Comments May 2012 Progress Prepare a High Level Annual Completed Budget June 2011. CAFR submitted to the FAC and Board in October Budget Document and 2011. YLWD received the Excellence in Budgeting Award from CSMFO on the FY FR 1-B Comprehensive Annual Financial Finance Include Fees in FY 2011/12 2011/12 Budget in January. YLWD received it's first ever Distinguished Budget Report and Compete for Director Budget presentation Award and second Certificate of Achievement for Excellence in Financial Recognition the Government Reporting from the Government Finance Officers Association in March 2012. Finance Officers c ers Association Evaluate and Revise the Sewer Finance Revised Allocation included Completed March 2011. Consider changing allocation methodology in conjunction FR 1-D Fund Allocation Director in FY 2011/12 Budget with FY 2013/14 budget process. Substantial Rate Increase Maintain Commitment to Strong Board of Adopted in Sept 2009 Quarterly review of debt service ratios will continue as well as integrating the ratio FR 1-E Debt Services Ratio Directors followed by Pass Through into forward financial projections. Increase in Aug 2010 Latest Revisions Reviewed by Review the Reserve Policy and Finance Finance-Accounting Completed review/revision of reserve policy in June 2011. Submitted draft 2012 FR 2-A Director/Board Committee for Board of reserve policy to FAC in March 2012 and the Board at April 11 Board Workshop. Funding Levels Annually of Directors Directors to Consider in Jun- Reserve policy submitted to PAC for recommendation in May 2012 meeting. 11 Financial model allowed review of reserves on a long-term basis. Staff recommended Implement an Approach to Ensure Finance Rates,COP'S and Other a 3-year rate increase to ensure reserves are responsibly funded. Board voted to FR 2-C Director/Board Reserves are Responsibly Funded of Directors Capital Financing Options initiate Prop 218 process on April 26. A Public Hearing is scheduled for June 21. Review Opportunities to Earn Card Options Discussed with FR 3-B "Cash Back"on Operating Finance Finance-Accounting YLWD is online with Cal-CARD. Expense through Commercial Director Committee in March-Add'1 Credit Card Accounts research Required Manage Cash Flow to Maximize Finance Track Opportunities and Delia Lugo,Senior Accountant reviews the cash balances and needs daily. Mutliple FR 3-C Effectiveness with Quarterly times a month,excess cash is transferred to investments to earn interest until the Investment Income Director Investment Reports next check register. Finance Board to Consider Rate The January 16,2012 Board Workshop showed the end product of the cost of service FR 4-A Complete the Cost of Service and Director/Board Structure Alternatives in Oct and water rate study. Raftelis Financial Consultants completed a document to Water Rates Study of Directors 2011 support the District's Prop 218 notice,which was received and filed by the Board on April 26.