october 21, 2019 2020 budget proposal final board review · final draft -2020 budget -results ......
TRANSCRIPT
2020 Budget ProposalFinal Board Review
October 21, 2019
2020 Budget – General Expenses Included
Payroll – wage increases by contract & 3% pool for non-union
Health Insurance – significant increases (still working on this!)
General inflationary factors for power, chemicals, purchases, etc.
Legal expenses
Water purchases (Central Lehigh & North Whitehall systems)
Significant increases in operational expenses to advance preventive maintenance goals
Maintenance, Maintenance, Maintenance!• Continuous improvement of SCADA, GIS & CMMS systems
• City Division Expenses:• Switchgear expenses increasing• Kline’s Island treatment plant maintenance supplies• Concrete water reservoirs – added to maintenance contract
• Suburban Division Expenses:• Spare Pump Program• Valves, Hydrants & Flushing Program• Concrete water reservoirs – added to maintenance contract• Supplies for sewer “Capacity Management and O&M” program
(CMOM)
2020 Budget – What’s NEW?• Staff Additions:
• NEW: Staffing evaluation & justification required prior to filling each position• 2 Operations & Maintenance Technicians – Suburban• 1 Operations Supervisor – Suburban• 1 Collections & Data Analyst – Main Office – Shared• 1 Regional Services / Planning Director – Main Office – Shared• 1 Human Resources Coordinator – Main Office – Shared
• Training• NEW: Exploration of innovation & continuous improvement • Leadership Development program continues (kicked off in 2017)• Maintenance of certifications / tuition reimbursement levels
• NEW: Strategic Initiatives• Strategic planning kickoff• Customer survey• Process improvement• Document Management
Financial Targets & Rates – 2020 Budget• Debt Service Coverage Ratio = or > 120%
• Remember the extra 20% is cash that we can use!• Future capital / system improvements• Reduced borrowing• Is 20% extra enough? (more on that later)
• Days of Operating Cash on Hand = or > 180 days• Our “cushion” for emergencies & revenue shortfall!
• Suburban water rates – estimated 5.9% rate increase
• Suburban wastewater rates (direct customers) – no change
• City Division rate increase of 4.1% (based on lease agreement)
Final Draft - 2020 Budget - RESULTSSuburban Water Suburban Wastewater City Division
Operating & Non-Operating Revenues $ 11,519,000 $ 17,492,000 $ 40,257,000Operating Expenses $ 7,335,000 $ 12,356,000 $ 18,660,000Debt Service $ 3,342,000 $ 1,616,000 $ 15,421,000Debt Service Coverage Ratio 1.25 3.18 1.38Net Cash Available for Projects $ 842,000 $ 3,520,000 $ 6,176,000Capital Improvements $ 8,010,000 $ 8,671,000 $ 4,815,000Sources of Project Funding NEW Bonds ($5.1M)
Cash ReservesNEW Bonds ($22.6M)
Cash ReservesCash Reserves
2020 Year-End Operating Cash Balance $ 3,710,000 $ 6,144,000 $ 9,089,000Days of Operating Cash (target = 180) 185 181 178
SUBURBAN WATER
SUBURBAN WASTEWATER
CITY DIVISIONCapital Expenses
What Projects ARE Funded?Wastewater Plant – Disinfection UpgradeWater Plant – High Light Pump VFD Replacement – Design/permitting phaseEquipment, materials, etc.
What Projects Are NOT Funded?Water Main Replacements*Water Plant – High Lift Pump VFD Replacement – Construction*Other projects from water & wastewater master plans
* Pending resolution to lease disputes currently in negotiations
Dashboard – Suburban Water
10,582 9,998
9,349 9,054 8,815
-
2,000
4,000
6,000
8,000
10,000
12,000
$000
Operating Revenues
2020 2019 2018 2017 2016
497
824 846 945
1,414
-
200
400
600
800
1,000
1,200
1,400
1,600
$000
Operating Income
2020 2019 2018 2017 2016
(78)
260
19 104
1,064
(200)
-
200
400
600
800
1,000
1,200
$000
Net Income (Loss)
Column1 2019 2018 2017 2016
842
8,876
(4,278)
1,445
3,017
(6,000)
(4,000)
(2,000)
-
2,000
4,000
6,000
8,000
10,000
$000
Net Cash Available For Capital
2020 2019 2018 2017 2016
1.25 1.40 1.39 1.45
1.80
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
Debt Service Coverage Ratio
2020 2019 2018 2017 2016
8,010 8,250
4,349
5,699
4,186
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
$000
Capital Spending
2020 2019 2018 2017 2016
Dashboard – Suburban Wastewater
16,446
14,426 14,014 12,859 12,873
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
$000
Operating Revenues
2020 2019 2018 2017 2016
(512)
(2,157)
(1,334)
(2,992)(3,189) (3,500)
(3,000)
(2,500)
(2,000)
(1,500)
(1,000)
(500)
-
$000
Operating Income
2020 2019 2018 2017 2016
(1,269)
(2,516)
(778)(539)
(1,135)
(3,000)
(2,500)
(2,000)
(1,500)
(1,000)
(500)
-
$000
Net Income (Loss)
2020 2019 2018 2017 2016
3,520 3,438 3,170
1,089
1,493
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
$000
Net Cash Available For Capital
3520 2019 2018 2017 2016
3.18
6.52
5.78
3.29 3.25
0
1
2
3
4
5
6
7
Debt Service Coverage Ratio
2020 2019 2018 2017 2016
8,671
11,452
2,687 2,865 2,425
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
$000
Capital Spending
2020 2019 2018 2017 2016
Dashboard – City Division
38,712 37,621 34,645
32,895 31,673
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
$000
Operating Revenues
2020 2019 2018 2017 2016
14,173 13,636
11,570
10,136 10,008
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
$000
Operating Income
2020 2019 2018 2017 2016
(4,107)(3,938)
(6,134)
(8,353)(8,510) (9,000)
(8,000)
(7,000)
(6,000)
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
-
$000
Net Income (Loss)
2020 2019 2018 2017 2016
6,176 6,195
1,778
3,747
5,192
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
$000
Net Cash Available For Capital
2020 2019 2018 2017 2016
1.38
1.59 1.66
1.40 1.43
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
Debt Service Coverage Ratio
2020 2019 2018 2017 2016
4,815 3,725
7,854 7,760
13,877
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
$000
Capital Spending
2020 2019 2018 2017 2016
Operating Ratio (with D&A)
1.050.97
1.58
1.27
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Sub W Sub WW City LCA
Operating Revenues / Operating Expenses including depreciation:Illustrates financial capacity to address capital needs of the system.
Operating Ratio (ex D&A)
1.441.33
2.07
1.71
0
0.5
1
1.5
2
2.5
Sub W Sub WW City LCA
Operating Revenues / Operating Expenses excluding depreciation:Illustrates cash available after operating expenses, available for debt.
Final Draft - 2020 BudgetSuburban Water Suburban Wastewater City Division
Operating & Non-Operating Revenues $ 11,519,000 $ 17,492,000 $ 40,257,000Operating Expenses $ 7,335,000 $ 12,356,000 $ 18,660,000Debt Service $ 3,342,000 $ 1,616,000 $ 15,421,000Debt Service Coverage Ratio 1.25 3.18 1.38Net Cash Available for Projects $ 842,000 $ 3,520,000 $ 6,176,000Capital Improvements $ 8,010,000 $ 8,671,000 $ 4,815,000Sources of Project Funding NEW Bonds ($5.1M)
Cash ReservesNEW Bonds ($22.6M)
Cash ReservesCash Reserves
2020 Year-End Operating Cash Balance $ 3,710,000 $ 6,144,000 $ 9,089,000Days of Operating Cash (target = 180) 185 181 178
Good News! We are generating revenue to cover all operating and debt expensesWe are covering some capital improvements with current revenues
LCA’s Challenges: Rates will continue to increase to support future capital program & rising expensesCapital improvements in City Division will be “on hold” until lease disputes are resolved
Next Steps
• 2020 Final Budget – 10/21/2019 Board Meeting• Finalize Suburban Water Rates – November• All rates finalized / adopted – November• 2021-2025 Capital Plan – December-January• City Division Budget – Amended in future if lease issues resolved
2020 BudgetDiscussion / Questions?