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ITEM: |
PUBLIC
HEARING |
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17. |
CONSIDER ADOPTION OF
MID-YEAR FISCAL YEAR 2016-2017 BUDGET ADJUSTMENT |
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Meeting
Date: |
February 22, 2017 |
Budgeted: |
N/A |
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From: |
David J.
Stoldt, |
Program/ |
N/A |
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General
Manager |
Line Item No.: |
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Prepared
By: |
Suresh
Prasad |
Cost Estimate: |
N/A |
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General Counsel Review: N/A |
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Committee Recommendation: N/A |
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CEQA Compliance: No CEQA Required |
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SUMMARY: Annually, the District considers its financial position after the end of the first half of the fiscal year (FY). District staff has reviewed income and spending patterns since July 1, 2016 through the end of December 31, 2016 and determined that adjustments to the FY 2016-2017 Budget is required. The FY 2016-2017 Budget was adopted on June 20, 2016. Included in the budget adjustment process was a review of staffing levels, supplies, outside services, current work assignments and other factors affecting the current budget. The table below summarizes the proposed changes to the budget:
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Monterey Peninsula Water Management District |
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2016-2017 Budget |
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Mid-Year Budget Adjustment-Summary |
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Revenue |
Adopted |
Change |
Amended |
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Property Tax |
$1,600,000 |
$0 |
$1,600,000 |
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Permit Fees - WDD |
175,000 |
0 |
175,000 |
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Permit Fees - PED |
56,000 |
0 |
56,000 |
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Connection Charges |
212,500 |
0 |
212,500 |
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User Fees |
95,000 |
0 |
95,000 |
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Water Supply Charge |
3,400,000 |
0 |
3,400,000 |
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Mitigation Revenue |
2,518,500 |
0 |
2,518,500 |
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Recording Fees |
8,000 |
0 |
8,000 |
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Interest |
20,000 |
0 |
20,000 |
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Other |
20,000 |
0 |
20,000 |
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Subtotal District Revenues |
8,105,000 |
0 |
8,105,000 |
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Reimbursements - CAW |
2,260,600 |
(215,300) |
2,045,300 |
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Reimbursements - Watermaster |
74,600 |
0 |
74,600 |
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Reimbursements - Reclamation |
20,000 |
0 |
20,000 |
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Reimbursements - Other |
36,000 |
0 |
36,000 |
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Reimbursements - Legal Fees |
10,000 |
0 |
10,000 |
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Grants |
330,400 |
0 |
330,400 |
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Subtotal Reimbursements |
$2,731,600 |
($215,300) |
$2,516,300 |
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Carry Forward From Prior
Year |
941,000 |
567,510 |
1,508,510 |
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From Capital Equipment
Reserve |
0 |
0 |
0 |
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From Fund Balance |
783,050 |
129,685 |
912,735 |
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Total Revenues |
$12,560,650 |
$481,895 |
$13,042,545 |
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Expenditures |
Adopted |
Change |
Amended |
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Personnel |
$3,431,800 |
$0 |
$3,431,800 |
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Supplies & Services |
1,108,600 |
39,600 |
1,148,200 |
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Project Expenditures |
6,750,100 |
436,295 |
7,186,395 |
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Fixed Assets |
115,500 |
6,000 |
121,500 |
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General Fund Balance |
783,050 |
0 |
783,050 |
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Flood/Drought Reserve |
66,600 |
0 |
66,600 |
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Debt Service |
230,000 |
0 |
230,000 |
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Contingency |
75,000 |
0 |
75,000 |
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Total |
$12,560,650 |
$481,895 |
$13,042,545 |
As the revenue and expenditure table above indicates, revenue and
expenditure increased by $481,895. In
order to balance the budget and fund for continuing work on the Ground Water
Replenishment Project, additional funding in the amount of $697,195 will have
to be borrowed from District’s general reserve fund to complete the project. Significant portion of the borrowing in the
amount of $567,510 is carried over costs from prior year, which was budgeted in
FY 2015-2016 but did not get spent in that fiscal year. Detailed information regarding the proposed
changes, as well as their effect on reserves, is detailed in the background
section of this report.
RECOMMENDATION: Following a presentation by District staff and a public hearing, staff recommends adoption of the proposed mid-year budget adjustment for FY 2016-2017.
BACKGROUND: The Board of Directors adopted the original FY 2016-2017 budget on June 20, 2016. The paragraphs below summarize the original budget, proposed mid-year adjustments to the budget and projected reserves accounts.
Revenues
The 2016-2017 adopted budget anticipated revenue sources in the amount of $12,560,650. It was projected that these revenues would be the same amount as budgeted expenditures resulting in a balanced budget. As of December 31, 2016, actual revenue collections totaled $4,347,048 or about 35% of the budgeted amount. Revenues for the first half of each FY year are low because one half of the District’s three major revenue sources, water supply charge, property taxes and reimbursements, are collected during the second half of each FY. District staff has analyzed the revenue activity for the first six months of the FY, as well as activities scheduled for the second half of the FY, and recommends various adjustments to the revenue portion of the budget as shown in Exhibit 17-A and discussed below:
- Project Reimbursements received from Cal-Am customers were decreased by $215,300 due to ASR and conservation related costs being deferred to next fiscal year.
- Fund Balance was increased by $697,195 to fund for Ground Water Replenishment Project. The funds for this will come from District’s general reserves. Significant portion of the borrowing in the amount of $567,510 is carried over costs from prior year, which was budgeted in FY 2015-2016 but did not get spent in that fiscal year.
The cumulative effect of these revenue adjustments is an increase of $481,895 in projected revenues for FY 2016-2017.
Expenditures
The original budget envisioned expenditures of $12,560,650 in the FY ending June 30, 2017. As of December 31, 2016, actual expenditures totaled $3,637,769, or approximately 29% of the budgeted amount. This low percentage at the mid-way point of the FY is not unusual because project expenditures for the first half of each FY year are historically low. District staff has analyzed the expenditure activity for the first six months of the FY, as well as activities scheduled for the second half of the FY, and recommends various adjustments to the expenditure portion of the budget as discussed below:
- The supplies and services portion of the budget increased by $39,600 as shown on Exhibit 17-C. The most significant increase was done to the professional fee line item to include human resources consultant costs which is the outsourced position to replace hiring a full time position.
- The capital assets portion of the budget has an increase of $6,000 as shown on Exhibit 17-D. This minor adjustment reflects additional costs to purchase vehicle replacements.
- As presented on Exhibit 17-E, project expenditures increased by a net amount of $436,295. Some of the larger adjustments are as follows:
- Expenditures for Groundwater Replenishment Project were increased by $1,663,795 based on refined estimates for the project timeline. $792,010 is carried over from prior fiscal year. The other $871,785 was approved by the Board on November 7, 2016.
- Reduction of $762,500 for ASR program as some of the costs has been deferred to next fiscal year.
- Reduction of $100,000 for Cal-Am Desalination project as most of the costs has been deferred to next fiscal year.
- Reduction of $100,000 for Drought Contingency Plan project as some of the costs has been deferred to next fiscal year.
- Increase of $75,000 in Local Water Project dues to Fairgrounds Project that will not be completed.
The cumulative effect of the adjustments to the expenditure side of the budget is a net increase of $481,895 in projected expenditures for FY 2016-2017.
Reserves
The District’s reserve balance is projected to be as follows:
The above adjustments will result in an estimated reserve balance of 2,059,956 at June 30, 2017 as shown on Exhibit 17-F. This amount meets the minimum 5% of the operating budget established by the Board during the 2005-06 budget process. The projected ending reserve balance is an increase of $535,021. The original adopted budget had a projected reserve balance of $1,524,935.
EXHIBITS
17-A Revenues
17-B Personnel Costs
17-C Supplies & Services Costs
17-D Capital Assets
17-E Project Expenditures
17-F Reserves Analysis
U:\staff\Boardpacket\2017\20170222\PublicHrngs\17\Item-17.docx