May 26, 2011
Chairperson
Brower and Board Members
Monterey
Peninsula Water Management District
Dear
Chairperson Brower and Board Members:
Budget
Overview
This
letter transmits the proposed budget for Fiscal Year (FY) 2011-12. While preparing the budget, District staff
was mindful of the continuing uncertain economic conditions as well as
the current status of the District’s User Fee.
Despite the strategy
to adopt balanced budgets as directed by the Board of Directors in 2005, the FY
2011-12 budget does include use of General Operating, Litigation/Insurance and
Flood/Drought Reserves, as well as the use of the existing line of credit in
order to maintain most District programs and services pending resolution of the
User Fee issue.
After
compilation of the original requests from all Divisions and a detailed review
and numerous adjustments by Division Managers and the General Manager, budgeted
expenditures and projected revenues for FY 2011-12 total $9,674,200.
Expenditures
As
shown in the proposed expenditures portion of the FY 2011-12 budget, the budgeted
expenditures of $9,674,200 decreased by 6.4% from the amount budgeted in FY 2010-11. The project expenditures portion of the
budget includes $577,100 for additional construction on Water Project 1,
$957,100 towards construction of Water Project 2, and $150,000 for preliminary
expenditures for Water Project 3. The expenditure budget also includes $135,400
for the operation Water Project 1 and $63,100 for the operation of Water
Project 2. The budget was prepared with
the assumption that California American Water (Cal-Am) would continue to
reimburse the District for the operation of Water Project 1, and reimburse the
cost of both operation and construction of Water Project 2.
Other
large project expenditures include $184,800 for the operation of the Sleepy
Hollow fish rearing facility and related fish rescue activities, $61,000 for
riparian and erosion control activities, $300,000 for landscape irrigation
audits related to water conservation, $150,000 for a school retrofit grant
program, and $600,000 for water conservation rebates. The latter three amounts are also reimbursable
by Cal-Am. The expenditure budget also
includes $470,000 for design and permitting and phase 1 construction of a new
water intake system at Sleepy Hollow, $114,300 for design of Sleepy Hollow Ford
removal and bridge replacement, $1,029,100 for the Integrated Regional Water
Management Project, and $6,700 for Steelhead counting station components. These four projects are funded by various
grants.
The
budget for legal expenses is $450,000, including $75,000 from the
Litigation/Insurance reserve to fund one-time costs related to the User Fee
issue. The budget also includes $169,000
for election expenses as three Board of Director positions are up for election
in November of 2011. The FY 2011-12
budget also includes a Capital Improvement Project Forecast as requested by the
Board of Directors in 2005.
Revenues
The
FY 2011-12 proposed revenue budget totals $9,674,200, including the use of General
Operating, Litigation/Insurance and Flood/Drought Reserves in the amounts of $501,300,
$75,000 and $443,900, respectively, and $727,100 from line of credit proceeds
to fund budgeted capital costs for Water Project 1 and preliminary costs for
Water Project 3. User Fee revenues are
projected to be $1,661,500, a decrease of approximately 55% from the amount
budgeted in FY 2010-11. This projection
is based on the approximate amount of $1,560,000 to be received from Cal-Am
based on the Interim Implementation Agreement for the 2011-12 Carmel River
Mitigation Program, plus historical amounts received from the Seaside Municipal
System and the CAWD/PBCSD Reclamation Project.
Property tax revenues are projected to be about $1,465,000 which is the
same amount budgeted in FY 2010-11. Connection charges are estimated to be down slightly from
$400,000 in the current FY to $375,000 in FY 2011-12, and permit revenues are
budgeted at $255,000 which is $44,000 less than FY 2010-11. Projected revenues also include reimbursements
of $198,500 from Cal-Am for Water Project 1 and Water Project 2 operational
costs, $957,100 from Cal-Am for construction costs related to Water Project 2,
$1,225,700 from Cal-Am for rebates and other water conservation and mitigation
activities, $91,000 for services provided to the Seaside Basin Watermaster, and
$1,620,100 in grant funds for various activities as detailed in the expenditure
section above.
Reserves
The
following table summarizes the changes to reserves based on the proposed
budget:
|
Reserve Description |
Balance 07/01/11 |
FY 2011-12 Change |
Balance 06/30/12 |
|
Insurance/Litigation
Reserve |
$250,000 |
($75,000) |
$175,000 |
|
Flood/Drought
Reserve |
443,944 |
(443,944) |
0 |
|
Capital
Equipment Reserve |
373,700 |
0 |
373,700 |
|
General
Operating Reserve |
900,488 |
(501,300) |
399,188 |
|
Totals |
$1,968,132 |
($1,020,244) |
$947,888 |
As
the table indicates the General Operating Reserve is expected to have a balance
of approximately $399,188, which is approximately 5.0% of the FY 2011-12
operating budget after subtracting one-time grant funds of $1,620,100. Total reserves at June 30, 2012 are projected
to be $947,888, or 11.8% of the operating budget.
Summary
The
2011-12 budget was prepared using the strategies adopted in 2005 by the Board
of Directors with the exception of the strategy to adopt balanced budgets on an
annual basis. The proposed FY 2011-12 budget does include
use of General Operating, Litigation/Insurance and Flood/Drought Reserves
pending resolution of the User Fee issue.
Despite the reduced amount of User Fees budgeted in FY 2011-12, the
budget allows the District to maintain most service levels currently provided
by the District, and sustains its ability to achieve the objectives in the
District’s Strategic Plan, including Mission and Vision Statements. This budget process has been one of extraordinary
partnership – with the Board of Directors, the District Management Team and
other District employees. They have made
a direct contribution to the development of the budget under difficult
circumstances and we acknowledge their efforts.
Respectfully
submitted:
___________________________________ ___________________________________
General
Manager Administrative
Services Manager/CFO
___________________________________ ___________________________________
Larry
Hampson
Acting
Planning & Eng. Manager/Dist. Eng. Water
Demand Manager
___________________________________
Water
Resources Manager