1. Biennial Budget for Fiscal Years 2017-18 and 2018-19
Charles Turner
May 17, 2017

2. Agenda Follow-Up Items from Prior Budget Workshops
Proposed Budget Summary
Primary Drivers in Budgeted Expenditures
Budget and Rate Setting is Centered Around the District’s Strategic Plan:
With a clearly defined mission and vision, as well as guiding principles that define how we interact with customers and employees, EMWD is driven by standards to provide safe, reliable, economical and environmentally friendly services:
Highly reliable water, recycled water and wastewater service
Protection of public and environmental health
Superior customer and community service
Sound planning and appropriate investment
Efficiency and fiscal responsibility
Exemplary employer
Effective communication and accountability

3. Follow-Up Items from Prior Budget Workshops

4. Late Fees
Until 2015, customers were charged a “Disconnect” Fee of $70 upon notice of possible termination for delinquent payments
In 2015, the District modernized that practice to charge a late fee (after a grace period) for customers to encourage more timely bill payment
As hoped, fewer customers are now delinquent, and the fee assessments continue to trend downward
The Proposed Biennial Budget includes late fee revenue in the “Other Income/Grants” category consistent with the continued downward trend.

5. Recycled Water Rate Comparison

6. Proposed Budget Summary

7. Proposed Consolidated Budget (in Millions)
Overall Net Operating margin to fund Capital Commitments projected to be $53 million and $57 million in FY18 and FY19.
Total budgeted Capital Commitments in FY18 and FY19 of $123 million and $115 million
Funded through both Rates (through Net Operating Margin) and Debt/Reserves
Operating Revenue includes proposed rate Adjustments subject to Board Approval in November.
FY Budget
FY Budget
Operating Revenue
$227,796,800
$240,201,800
Non-Operating Revenue
100,609,000
107,269,600
Contributions from Debt/Reserves
69,392,200
57,529,400
Total Sources of Funds
$397,798,000
$405,000,800
Operating Expenses
$181,201,500
$191,787,100
Non-Operating Expenses
81,768,200
85,303,500
OPEB Obligations
12,295,200
13,524,700
Capital: Operating Fixed Assets
Capital Improvement Plan
35,271,900
87,261,200
28,012,100
86,373,400
Total Uses of Funds

8. Proposed Budget: Sources

9. Proposed Budget: Uses

10. Primary Budget Drivers
Primary drivers to budget expenditure increase:
Higher demand for water will lead to $6 million in additional purchased water cost
CalPERS change to lower its assumed rate of return will increase operating costs by $2.5 million in FY 2019
Wastewater treatment cost to increase due to change in disinfectant from chlorine to sodium hypochlorite
Increased investment in operating fixed assets (OFA).

11. Budget Schedule for FY 2017-18 and FY 2018-19
Dates
Proposed Actions
March 15, 2017
Workshop: Review Key Budget Assumptions
April 5, 2017
Workshop: Review Operating and Capital Biennial Budget
May 17, 2017
Review Board Follow-Up Requests; Consider Adoption of Biennial Budget
June 21, 2017
If not adopted previously, last Board meeting date to adopt FY and FY Biennial Budget before new fiscal year
September 6, 2017
Approve Prop 218 Notice and Review Proposed Rates based on New Cost of Service Methodology
September 30, 2017
Last Day to Mail Proposition 218 Notices
November 15, 2017
Public Hearing to Consider Adoption of Proposed Rates
January 1, 2018
If approved, rates become effective for bills mailed after this date

12. Contact Information
Charles Turner
Director of Finance
(951) Ext. 4363