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ITEM: |
PUBLIC
HEARING |
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12. |
CONSIDER ADOPTION OF
MID-YEAR FISCAL YEAR 2018-2019 BUDGET ADJUSTMENT |
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Meeting
Date: |
March 18, 2019 |
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: This action does not constitute a project
as defined by the California Environmental Quality Act Guidelines Section
15378. |
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SUMMARY: Annually, the District considers its financial position after the end of the first 7-8 months of the fiscal year (FY). District staff has reviewed income and spending patterns from July 1, 2018 through the end of February 28, 2019 and determined that adjustments to the FY 2018-2019 Budget is required. The FY 2018-2019 Budget was adopted on June 18, 2018. Included in the budget adjustment process was a review of staffing levels, supplies, outside services, project expenditures, 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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2018-2019 |
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Mid-Year Budget Adjustment-Summary |
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Revenue |
Adopted |
Change |
Amended |
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Property Tax |
$1,800,000 |
$150,000 |
$1,950,000 |
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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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Capacity Fee |
250,000 |
200,000 |
450,000 |
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User Fees |
4,250,000 |
250,000 |
4,500,000 |
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Water Supply Charge |
3,400,000 |
0 |
3,400,000 |
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Interest |
35,000 |
145,000 |
180,000 |
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Other |
15,000 |
0 |
15,000 |
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Subtotal District Revenues |
9,981,000 |
745,000 |
10,726,000 |
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Reimbursements - CAW |
1,506,600 |
0 |
1,506,600 |
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Reimbursements - Watermaster |
54,600 |
0 |
54,600 |
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Reimbursements - Reclamation |
20,000 |
0 |
20,000 |
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Reimbursements - Other |
80,000 |
88,700 |
168,700 |
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Reimbursements - Recording
Fees |
40,000 |
(20,000) |
20,000 |
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Reimbursements - Legal Fees |
16,000 |
0 |
16,000 |
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Grants |
2,147,600 |
0 |
2,147,600 |
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Subtotal Reimbursements |
$3,864,800 |
$68,700 |
$3,933,500 |
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Carry Forward From Prior
Year |
2,143,500 |
0 |
2,143,500 |
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Total Revenues |
$15,989,300 |
$813,700 |
$16,803,000 |
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Expenditures |
Adopted |
Change |
Amended |
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Personnel |
$3,854,500 |
$22,000 |
$3,876,500 |
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Supplies & Services |
1,330,100 |
9,800 |
1,339,900 |
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Project Expenditures |
9,387,900 |
(802,800) |
8,585,100 |
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Fixed Assets |
599,500 |
(25,000) |
574,500 |
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Debt Service |
230,000 |
0 |
230,000 |
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Capital Equip. Reserve |
100,000 |
100,000 |
200,000 |
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General Fund Balance |
52,300 |
1,509,700 |
1,562,000 |
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Pension Reserve |
100,000 |
0 |
100,000 |
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OPEB Reserve |
100,000 |
0 |
100,000 |
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Election Expense |
160,000 |
0 |
160,000 |
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Contingency |
75,000 |
0 |
75,000 |
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Total |
$15,989,300 |
$813,700 |
$16,803,000 |
As the table above indicates, revenues increased by $813,700. Some of the factors relating to the increase
in revenues are increase in property tax revenue, capacity fees, user fee, and
interest earned revenues. Detailed
information regarding all other 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 2018-2019.
BACKGROUND: The Board of Directors adopted the original FY 2018-2019 budget on June 18, 2018. The paragraphs below summarize the original budget, proposed mid-year adjustments to the budget and projected reserves accounts.
Revenues
The 2018-2019 adopted budget anticipated revenue sources in the amount of $15,989,300. It was projected that these revenues would be the same amount as budgeted expenditures resulting in a balanced budget. Through February 28, 2019, actual revenue collections totaled $7,610,733 or about 48% of the budgeted amount. Revenues for the first half of this FY year are in line with previous year figures. District staff has analyzed the revenue activity for the first 8 months of the FY, as well as activities scheduled for the remainder of the FY, and recommends various adjustments to the revenue portion of the budget as shown in Exhibit 12-A and discussed below:
- Increase of $150,000 in property tax revenues based on actual collections for the first half of the FY and also based on prior FY collections.
- Increase of $200,000 in capacity fee based on actual collections through the first half of the FY.
- Increase of $250,000 in user fee revenue based on 90% collection of prior FY.
- Increase of $145,000 in interest income based on actual collections for first half of the FY plus additional income generated at 2% on invested funds throughout the remainder of the FY.
- Other increase in the amount of $68,700 as noted in the exhibit.
The cumulative effect of these revenue adjustments is an increase of $813,700 in projected revenues for FY 2018-2019.
Expenditures
The original budget envisioned expenditures of $15,989,300 in the fiscal year ending June 30, 2019. Through February 28, 2019, actual expenditures totaled $6,941,781, or approximately 43% of the budgeted amount. The spending pattern at mid-way point of the fiscal year is not unusual because most of the project expenditures for the first half of each fiscal year are low. District staff has analyzed the expenditure activity for the first 8 months of the fiscal year, as well as activities scheduled for the remainder of the fiscal year, and recommends various adjustments to the expenditure portion of the budget as discussed below:
- The personnel services portion of the budget increased by $22,000 as shown on Exhibit 12-B.
- The supplies and services portion of the budget increased by $9,800 as shown on Exhibit 12-C.
- The capital assets portion of the budget decreased by $25,000 as shown on Exhibit 12-D.
- As presented on Exhibit 12-E, project expenditures decreased by a net amount of $802,800. Some of the larger adjustments are as follows:
- Reduction of $500,000 for Pure Water Monterey project as most of the work would be deferred to next FY.
- Reduction of $150,000 for Cal-Am Desal Project financing work as most of it is deferred to next FY.
- Increase of $450,000 for Monterey Water System Acquisition Feasibility Study related to Measure J and Rule 19.8 of the District.
- Reduction of $200,000 for Los Padres Alternative Analysis work as most of it is deferred to next FY.
- Reduction of $190,000 for Local Water Project as most of it is deferred to next FY.
- Reduction of $220,000 for San Carlos restoration project as the actual costs came in lower than the budgeted amount.
- Other adjustments to the project expenditures as noted in the exhibit.
The cumulative effect of the adjustments to the expenditure side of the budget is a net decrease of $796,000. Additional $100,000 is set aside for Capital Equipment Reserve, and $1,509,700 will make up the difference in the General Reserve Fund balance. The total change is $813,700 in projected expenditures for FY 2018-2019.
Reserves
The District’s reserve balance is projected to be as follows:
The above adjustments will result in an estimated reserve balance of 13,930,565 at June 30, 2019 as shown on Exhibit 12-F. This amount meets the minimum 5% of the operating budget established by the Board during the 2005-06 budget process. The ending reserve balance is projected to be $13,930,565 for this FY. The original adopted budget had a projected reserve balance of $8,916,407 for the FY.
EXHIBITS
12-A Revenues
12-B Personnel Costs
12-C Supplies & Services Costs
12-D Capital Assets
12-E Project Expenditures
12-F Reserves Analysis
U:\staff\Boardpacket\2019\20190318\PublicHearing\12\Item-12.docx