FY 2016/17 Proposed Budget Pool Meetings May 12, 2016 Joseph S. Joswiak, CFO 1

Summary of Drivers 1. Judgment, Rules and Regulations 2. Peace Agreement, OBMP Implementation Plan 3. Basin Plan Amendment 4. Peace II Agreement, CEQA 5. Numerous reports approved and ordered by the Court 6. Permits 2

How Drivers Become Expenses 3 1. Judgment, Rules and Regulations: production & storage accounting, Safe Yield Recalculation, MPI analyses, replenishment, administration (assessments, budgets, recharge, storage, & transfer applications) 2. Peace Agreement, OBMP Implementation Plan: monitoring, analyses (recharge/discharge, losses), reporting 3. Basin Plan Amendment: hydraulic control monitoring, water quality monitoring, reporting 4. Peace II Agreement (and CEQA): Prado Basin monitoring, additional subsidence monitoring, RMPU (recharge projects) 5. Numerous reports approved and ordered by the Court: various 6. Permits: data collection and reporting, SB 88 (changing our measuring requirements for diversions)

Additional Commitments 4 Recharge projects – RIPCom Recharge Operations and Maintenance cost share Chino Basin Facilities Improvement Project (CBFIP) Phases I and II recharge projects debt

Executive Summary 5

Review Process 5-Year Budget Projection (FY 2016/17-FY 2020/21): Jun. 11, 2015 Personnel Committee: Nov. 30, 2015; Jan. 21, 2016; and Mar. 17, 2016 Engineering Services: Mar. 14, 2016; March - May 2016 Legal Services: March - May 2016 Groundwater Recharge Coordinating Committee (GRCC): Feb. 23, 2016 Ground Level Monitoring Committee (GLCC): Mar. 21, 2016; Apr. 4, 2016; and May 4, 2016 Recharge Investigations and Projects Committee (RIPCom): 3 rd Thursday of every month since Nov. 2013; Apr. 21, 2016 Budget Distribution/Presentation: Apr. 18, 2016 Budget Workshop #1: Apr. 27, 2016 Budget Workshop: #2: May 2,

How Does The Process Work? 7

8 Type of Expense Labor/ Burden Legal Services Engineering Services Debt Service/ Recharge Improvement Projects All Other Expenses FY 2016/17 Proposed Budget G&A Expenses $1,221,769$391,946$435,071 ¹$2,048,786 OBMP Expenses $80,114$479,480$1,097,459$100,466 ²$1,757,519 Project Expenses $332,640$1,643,393$3,334,800 ³$1,376,331 ⁴$6,687,164 Total Expenses $1,634,523$871,426$2,740,852$3,334,800$1,911,868$10,493,469 Categories vs. Classifications ¹ G&A Expenses: (Rent, Office Supplies, Postage & Printing, IT and Database Consulting, Audit & Consultants, Business Insurances, Dues & Subscriptions, Field Supplies, Travel, Conferences, Pool/Advisory/Board Meeting Expenses). Allocated G&A of $378,505 ² OBMP Expenses: ($37,000 for SAWPA Group, Meeting Expenses, Misc. OBMP Expenses ). Allocated G&A of $73,466 ³ Debt Service: $465,200; Recharge Improvement Projects: $2,869,600 ⁴ Project Expenses: (Recharge Basin O&M $974,957; Meter Maintenance $57,875; Misc. $38,460). Allocated G&A of $305,

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Budget Comparison 10

Budget Comparison 11

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Summary of Key Components 13

Summary of Key Components 14

Conclusion of Executive Summary 15

Beginning of Detailed Budget Information 16

Labor Costs 17 Tab 2

FY 2016/17 Staffing 18 Tab 2

Labor Costs The following assumptions are incorporated within the FY 2016/17 Budget: Personnel Committee met on November 30, 2015 to discuss and review current pay and benefits structure Personnel Committee met on January 21, 2016 and March 17, 2016 to discuss ongoing staffing needs and hiring one additional staff member Current staffing based on increase from nine to ten FTE’s Includes a 3.3% CPI increase, consistent with the Personnel Committee policy for the last four years Health premium increase of 10% effective January 1, 2017 Time & Attendance System FY 2016/17 - Admin: 75%, OBMP: 5%, Projects: 20% FY 2015/16 - Admin: 75%, OBMP: 8%, Projects: 17% 19 Tab 2

Legal Services 20 Tab 3

Legal Services 21

22 Tab 3

Budget Assumptions – Legal 23

Engineering Services 24 Tabs 4, 5, and 6

 Tab 4 – Summary tables for 2016/17  Line-item cost estimate  Variance from 2015/16 budget  Explanation of variance  Expense by category  Tab 5 – Recommendations from the GLMC  Tab 6 – Engineering budget summary  Rationale, Scope, Deliverables, and Cost 25

26 Tab 4

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28 Tab 4

29 Tab 5

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 Per the new master contract with WEI dated January 1, 2016, the rate increase compared to FY 2015/16 is 8.5%  The rates for 2016/17 equate to a 1.1% compounded annual growth rate increase from FY 2009/10  Future rate increases through 2019/20 will be about 1.5%  Mark Wildermuth’s rate will remain constant 32

 Compliance with SB 88  New SWRCB regulations for measuring and reporting on surface water diversions  Initial annual assessment of cultural conditions  Section 4.5 of the proposed SYRA  Prepare 38 th and 39 th Annual Reports  Support for the Assessment Package  Prepare State of the Basin Report (2016)  Prado Basin Habitat Monitoring Program 33

Recharge Debt Service 34 Tab 7

Recharge Debt Service Recharge Improvement Debt Payment (7690.1) IEUA direct payments = $465,200 No adjustments(s) for previous years credits Paid annually in July Prior year’s budget: $460, Tab 7

Recharge Improvement Projects 36 Tab 8

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All Other Expenses – Recharge O&M 38 Tab 7

Recharge O&M Groundwater Recharge Cost Sharing O&M (7206) IEUA direct payments = $974,957 Increased contracted specialty repairs and slope work on Banana Basin, Declez Basin, Ely Basins #1, #2 and #3, Hickory Basin and Jurupa Basin No adjustments(s) for previous years credits Paid on a quarterly basis Prior year’s budget: $791, Tab 7

Recharge O&M 40 Tab 7

Estimated Assessment 41

Production Data Production Information: FY 2015/16 Projected Production = 124, AF FY 2014/15 Actual Production = 116, AF Variance = 7, AF = 6.4% Current projection based on 2 quarters of actual production If Production ↓, then Assessment $/AF = ↑ If Production ↑, then Assessment $/AF = ↓ 42

Estimated Assessment as of May 12, 2016* Assessment AmountsG&A Expenses OBMP & Implementation Projects Total Assessment Estimated Assessment as of May 12, 2016 $15.01$40.17$55.18 Actual Projected Assessment FY2015/16 $15.58$41.96$57.54 Estimated Assessment vs. Actual Assessment ($0.57) (3.7%) ($1.79) (4.3%) ($2.36) (4.1%) 43 * Assumes the Total Assessable Production of 124, AF based upon the first two quarters of actual production reports Using last year’s actual production of 116, AF, the Assessment would be $15.98 for G&A and $42.76 for OBMP & Implementation Projects for a total of $58.74

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45 Tab 9

Approval Process Pools on May 12, 2016 Advisory Committee on May 19, 2016 Watermaster Board on May 26,

Action: Recommend Advisory Committee Approval of the Proposed FY 2016/17 Budget of $10,493,469 47

Questions and Comments 48

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FY Comparisons 55

All Other Expenses – Pool Administration 56

Pool Administration 57

Agricultural Pool Administration 58

Non-Agricultural Pool Administration 59

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 Compliance with SB 88  SB 88 was signed into law in It directed the SWRCB to develop new regulations on monitoring and reporting of diversions and accuracy requirements in estimating diversions  Budget includes:  Review of existing monitoring facilities, reporting methods and accuracy  Coordination with the SWRCB regarding new regs and compliance  Identification of improvements required to comply  Development of compliance plan  Budget also includes expanded reporting of diversions to the SWRCB for calendar year 2016 by April 1, 2017  Must compile all monitoring data into Excel or Access database 61

Section 4.5 of the Safe Yield Reset Agreement (SYRA) states in part: “4.5 Annual Data Collection and Evaluation. In support of its obligations to undertake the reset in accordance with the Reset Technical Memorandum, Watermaster shall annually undertake the following actions: […] (b) Collect data concerning cultural conditions annually, with cultural conditions including, but not limited to, land use, water use practices, production, and facilities for the production, generation, storage, recharge, treatment, or transmission of water; (c) Evaluate the potential need for prudent management discretion to avoid or mitigate undesirable results including, but not limited to, subsidence, water quality degradation, and unreasonable pump lifts. Where the evaluation of available data suggests that there has been or will be a material change from existing and projected conditions or threatened undesirable results, then a more significant evaluation, including modeling, as described in the Reset Technical Memorandum, will be undertaken; […]” 62

 Initial annual assessment of cultural conditions  Task 1 Collect, compile, and review data.  Task 2.1 Assess the change in land use from that assumed in the 2011 Safe Yield reset.  Task 2.2 Assess the change in irrigation water use from that assumed in the 2011 Safe Yield reset.  Task 2.3 Assess the change in the deep infiltration of precipitation and applied water at the root zone, subsurface inflows, and stormwater recharge from that assumed in the 2011 Safe Yield reset.  Task 2.4 Assess the change in groundwater production from that assumed in the 2011 Safe Yield reset.  Task 3 Prepare report 63

 Preparation of the annual report of substantial compliance per Section 7.3 of the Peace 2 agreement  Work scheduled for 2015/16 was not completed. Remaining work includes: ◦ Develop new groundwater production projections ◦ Evaluation of the balance of recharge and discharge with new production projections  >> recommendations to Watermaster on location and magnitude of future recharge 64

 Some of the work scheduled for 2015/16 was not completed. Remaining work includes: ◦ Prepare report for 2016/17 and 2015/16 work, the latter of which includes:  Extended model calibration through 9/30/2015  Assessment of the cumulative effects of transfers  Historical assessment of the balance of recharge and discharge  Estimation of the change in storage from 10/1/2014 through 9/30/

 Prepare 38 th and 39 th Annual Reports  Support for the Assessment Package  Watermaster has requested WEI assistance to complete these tasks until new staff is trained 66

 Prepared every two years pursuant to the November 15, 2001 Court Order  Describes changes in the Chino Basin since Peace Agreement (2000)  Content  Hydrology, groundwater production, groundwater levels, storage, groundwater quality, recharge, land subsidence, hydraulic control, and desalter planning and engineering 67

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 New monitoring program being implemented pursuant to the Peace II SEIR  New tasks for 2016/17 include:  Initiate new monitoring program for the riparian habitat  Establishing a time history of the riparian habitat 70

 Scope of work recommended each year by the Ground-Level Monitoring Committee  Details in Tab 5  Scope and budget change year-to-year  Northwest MZ-1 program is a 6-year effort to develop a subsidence management plan 71