Biennial Budget Update for FY 2014-15 & FY 2015-16 Charles Turner Director of Finance June 17, 2015

Presentation Topics Budget Summary FY 2014-15 and FY 2015-16 Operating Revenues & Expenses Operating Fixed Assets Vehicles, IT Infrastructure, Maintenance/RWRF, Other CIP Investment FY 2014-15 and FY 2015-16 Content Slide: List the topics of your presentation as shown. Keep the mission statement box. Heading font: Trebuchet bold 28 white Body font: Helvetica 22 black Bullets: Black Shape Color: RGB 70/140/113 green

Budget Summary Original and Updated Budget for FY 2015-16 is unchanged $307 million in Revenue $262 million in Expenses $45 million in Net Operating Margin Content Slide: List the topics of your presentation as shown. Keep the mission statement box. Heading font: Trebuchet bold 28 white Body font: Helvetica 22 black Bullets: Black Shape Color: RGB 70/140/113 green

Revenues Operating Revenues Connection Fees No change to Year 2 budget Water Sales Revenues projected to remain same as result of WSCP Stage 4 and Tier 4 sales Water revenue in Year 2 higher than Year 1 due to rate increase in January Sewer Service and Recycled Service Year 2 revenues higher than Year 1 due to approved rate increases and expected new sewer connections Connection Fees No change to Year 2 budget Still expect new connections to increase in the coming year as economy recovers

Expenses Operating Expenses Non-Operating Expenses Unchanged for Year 2 update Purchased water cost unchanged Expected decrease in consumption offset by expected additional supply and conservation costs Water, Sewer, and Recycled operating costs remain unchanged for Year 2 update Wages and Benefits unchanged Year 2 budgeted positions = 631 Currently filled positions = 614 Current vacancies = 16 Non-Operating Expenses Unchanged for Year 2 update G&A unchanged Debt expense continues as expected

Operating Fixed Assets Content Slide: List the topics of your presentation as shown. Keep the mission statement box. Heading font: Trebuchet bold 28 white Body font: Helvetica 22 black Bullets: Black Shape Color: RGB 70/140/113 green Note: Between FY 2015 and 2016, roughly $1.1 million of budgeted Maintenance and Other OFA projects may be treated as an operating expense instead of OFA.

Operating Fixed Assets Administrative Code changes adopted March 2015 General Manager may approve purchases that are listed in the budget and adjust funding within categories for both years Allows flexibility to adapt to changing needs within the two-year time frame Total category amounts remain unchanged for Year 2 Itemized lists were updated for Year 2 Changes to list of individual projects & purchases for Year 2 Based on Year 1 progress Changes in timing and conditions Revised projections

CIP Investment Updated CIP 2-year budget decreased by $1.9 million from the original 2-year budget. Content Slide: List the topics of your presentation as shown. Keep the mission statement box. Heading font: Trebuchet bold 28 white Body font: Helvetica 22 black Bullets: Black Shape Color: RGB 70/140/113 green

Budget Update Summary Operating Revenues and Expenses are unchanged for the Year 2 budget update Revenue and Expenses remain level Drought conditions do not significantly impact the expected revenues or expenses Non-Operating Revenues and Expenses are also unchanged for the Year 2 budget update Connection fees expected to pick up Operating Fixed Assets Two-year budget total is unchanged Itemized list for Year 2 was changed to accommodate needs CIP Investment Year 2 budget is slightly from original amount Total 2-year budget decreased by $1.9 million

Charles Turner Director of Finance 951-928-3777 ext. 4363 turnerc@emwd.org