budget workshop proposed biennial budget for fys 2019/20 ...€¦ · fys 2030-2039. millions. $538....

Budget WorkshopProposed Biennial Budget for

FYs 2019/20 and 2020/21

Finance and AccountingApril 3, 2019

Proposed Biennial Budget FYs 2019/20 – 2020/21Supports Board-Adopted Business Goals

FISCAL RESPONSIBILITY

Rate Study to ensure full

recovery of costs

Financing capital projects

Cost containment

WORK ENVIRONMENT

Training & development

Succession planning

WATER RELIABILITY

Water use efficiency programs

Chino Basin Program

WASTEWATER MANAGEMENT

RP-5 expansion construction

Asset Management

Program

2

Biennial Budget FY 2019/20 and 2020/21

Adoption of two “single-year” budgets and TYCIP

Appropriation limited to a single year

Mid-cycle review for the second budget year

3

IEUA Fund Structure

4

IEUA Service Area

Admin Services

Groundwater Recharge

Recycled Water

Water Resources

Non-Reclaimable Wastewater

Regional Wastewater

Capital Operations

Key Drivers Funding Sources

• Stable and distinct revenue components• FY 2019/20 last year of the multi-year rates adopted in 2015.

– Rate Study Update for fiscal years beginning 2020/21. • Conservative projection on new connections;

– 4,000 new wastewater equivalent dwelling units (EDUs)– 4,000 new water meter equivalent units (MEUs)

• 3.5% average growth on property tax receipts

5

Current multiyear rates

(AF) acre foot(EDU) Equivalent Dwelling Unit(RTS TYRA) – Readiness to Serve Ten Year Rolling Average

Five year rates adopted June 2015 for Fiscal Years 2015/16 – 2019/20.

FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20

Effective Date 10/01/15 7/01/16 7/01/17 7/01/18 7/01/19

Wastewater Connection Fee/EDU $5,415 $6,009 $6,309 $6,624 $6,955Monthly EDU Rate $15.89 $17.14 $18.39 $19.59 $20.00

Recycled Water Direct Delivery/AF $350 $410 $470 $480 $490Groundwater Recharge/AF $410 $470 $530 $540 $550

Water Connection Fee /MEU $693 $693 $1,455 $1,527 $1,604RTS TYRA 7YR Phase In n/a 15% 30% 45% 60%Meter Equivalent Unit n/a $0.90 $0.95 $0.99 $1.04

6

Total Funding Sources($ Millions)

7

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Amended Proposed Proposed

2018/19 2019/20 2020/21

Mill

ions

Operating Revenues Non Operating Revenues Debt Proceeds

User ChargesRecycled Water Sales

MWD Water Sales

Property Taxes / Connection Fees

RP-5 Expansion ConstructionRecycled Water Interties

$276 $290 $370

Current

Key Drivers Uses of Funds

• No significant changes in total operating expenses – Increase in employment costs offset by lower O&M projects

• Significant higher capital expenditures– RP-5 Expansion construction– Pomona/JCSD Recycled Water Interties– Asset Management Program– Chino Basin Program (CBP)

8

Total Uses of Funds($ Millions)

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Amended Proposed Proposed

2018/19 2019/20 2020/21

Mill

ions

Operating Expenses Debt Service Capital

$275 $284 $371

EmploymentOperating Costs

MWD Water Purchases

Bonds / State Revolving Fund Loans

RP-5 Expansion ConstructionRecycled Water Interties

Asset Management Program

Current

Employment Costs($ Millions)

FY 2018/19 Current

FY 2019/20 Proposed

%Change

FY 2020/21 Proposed

%Change

Total Employment Cost $55.0 $59.3 7.8% $62.6 5.6%

FY 2019/20 Proposed

% Change

FY 2020/21 Proposed

% Change

COLA (3%) + Merit Increase (2%) $1.1 1.9% $1.6 2.8%

Benefits (pension & health costs) 1.1 1.9% 1.6 2.8%

Increase 11 budgeted positions 2.1 4% - -

Total Change $4.3 7.8% $3.2 5.6%

Support to RP-5 Expansion ConstructionAsset Management ProgramChino Basin Program

FTE + LTE 293 304 304% TOTAL BUDGET 20% 21% 18%

10

Labor allocation by program

FY 2018/19 Current

FY 2019/20Proposed

FY 2020/21Proposed

Wastewater 81% 80% 80%Water 16% 17% 17%Administration 3% 3% 3%Grand Total 100% 100% 100%

11

Succession Planning

• ~30%(77 FTEs) of proposed staffing eligible to retire in the next 5 years– 12 identified critical positions may retire within the next 2 years

• $800,000 per year to support succession planning– Timely recruitment and transition of critical positions– Adequate overlap for knowledge transfer and training – Minimize impact to productivity

12

Proposed TYCIP $924M

13

$92

$185 $160

$103 $95 $41 $39 $43 $50

$117

$0

$50

$100

$150

$200

$400

$500

$550

FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FYs 2030-2039

Mill

ions

$538

RP-5 Expansion ConstructionRecycled Water Interties

Asset Management Program

RP-1 Capacity Recovery

RP-2 Decommission RP-4 Expansion

$277 M planned over the next two years

Debt Service and Outstanding Principal($ Millions)

$0

$10

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$30

FY 2018/19Amended

FY 2019/20Proposed

FY 2020/21Proposed

Interest Expense Principal Payment Financing Expense $0

$100

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$300

$400

$500

$600

2018/19 2020/21 2022/23 2024/25 2026/27 2028/29

Outstanding PrincipalRP-5 Expansion Construction$282

RP-1 Capacity Recovery$51

Recycled Water Interties$83

$24.5$26.5 $28.1

14

Total Reserves($ Millions)

15

$187 $231 $232 $238 $236 $237 $258 $281

$338 $381

$421 $455 $427

$-

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2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Mill

ions

RESERVES TOTAL MINIMUM TOTAL TARGET

Fiscal Year Ending

Future reserves potential use• RP-1 Capacity Recovery• RP-2 Decommission• RP-4 Expansion• Pay down debt

Key take-aways

Balanced Budget.

FY 2019/20 last year of multiyear rates. Rate study underway for FY 2020/21.

RP-5 Expansion construction phase begins evaluation of financing options.

Asset Management Program.

Chino Basin Program.

16

Review and Approval Timeline

17

Month IEUA Committee IEUA Board

Regional Technical

Committee

RegionalPolicy

Committee

March 03/13 03/20 03/28

April 04/10 04/0304/17

04/25 04/04

May 05/08 05/15 05/30 05/02

June 06/12 06/19 06/06