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FY 2015-16 & 2016-17 San Dieguito Water District Fiscal Years 2015/16 and 2016/17 Operating and Capital Budget San Dieguito Water District A Subsidiary District of the City of Encinitas San Dieguito Water District Fiscal Years 2015/16 and 2016/17 Operating and Capital Budget Board of Directors Catherine Blakespear, President Kristin Gaspar, Vice President Tony Kranz, Director Lisa Shaffer, Director Mark Muir, Director District Management Vacant, City Manager Glenn Pruim, Director of Public Works Bill O'Donnell, General Manager Joe Aurora, Operations Superintendent Blair Knoll, Senior Engineer Jeff Umbrasas, Administrative Services Manager Document prepared by San Dieguito Water District Staff with support of the City of Encinitas Finance Department San Dieguito Water District 160 Calle Magdalena Encinitas, CA 92024 Tel: 760-633-2650 www.sdwd.org 2 Table of Contents Transmittal Letter 5 Introduction 7 District Overview 7 History Service Area and Customer Base Governance Facilities Budget Development 10 Overview Basis of Accounting Basis of Budgeting Process and Schedule Assumptions Strategic Planning 14 Overview Strengths Challenges Water Portfolio 16 Potable Water Supply Potable Water Demand Future Potable Water Supply and Demand Projections Future Potable Water Purchase and Treatment Cost Projections Recycled Water Budget Summary 20 Sources of Funds Uses of Funds Fund Budget Summaries Detail of Internal Fund Transfers Personnel and Organization 27 Overview Staffing Organization Salary and Benefits Personnel Summaries Classifications and Pay Ranges 3 Revenue 33 Overview Summary Detail Operating Program 36 Overview Summary Administration Customer Services Water Purchases and Treatment Recycled Water Program Field Operations Engineering and Planning Capital Program 51 Overview Program Summaries Project Detail Sheets Long Term Debt(Debt Service) 68 Overview Schedules Fleet Replacement 70 Overview Summary Schedules Reserves and Long-Term Planning 73 Overview Reserves Long-Term Planning Five-Year Cash Flow Glossary 75 4 I am pleased to submit the proposed Fiscal Year 2015/16 and 2016/17 budget for the period of July 1, 2015 through June 30, 2017. The District's two-year budget is a detailed document that outlines the proposed revenue and expenditure plans over the next two years and provides a longer term look at the District's capital program and overall financial plan for the next five years. This budget document is a comprehensive management and financial plan which will guide the District in its objective of providing a safe and reliable water supply to its customers in the most fiscally responsible manner possible. In recent years, the District has made numerous efforts to reduce costs, control expenditures and enhance revenues, all with the intention of continually improving the financial stability of the District and minimizing rate impacts on customers, when possible. Since FY 2012/13, District staffing has been reduced from 25.4 FTEs to 24.0 FTEs, reducing salary and benefit costs. With these staffing reductions and reorganizations, the District has also reduced the number of vehicles in its fleet, reducing fuel, maintenance and replacement costs. In 2014, the District refunded its existing 2004 Water Revenue Refunding Bonds to take advantage of lower interest rates and improved bond covenant terms. This refunding will save the District approximately $250,000 annually through the remainder of the loan. While the District has always valued cooperation and collaboration with neighboring agencies, collaborative efforts have increased during recent years and the District has partnered with neighboring agencies on several maintenance and construction contracts to take advantage of economies of scale in lowering contract costs. The District also completed negotiations and finalized an amendment to the Lake Hodges water rights agreement between the City of San Diego, Santa Fe Irrigation District and San Dieguito Water District. This renegotiated agreement provides improved cost stability and long-term cost savings compared to the previous agreement terms. Recent water rate and miscellaneous fee studies have ensured that the District's revenues are sufficient to meet the operating and reserve requirements of the District. Finally, the District has been aggressively negotiating several existing and new cellular site leases on District property, further enhancing and diversifying its sources of revenue. Even with all of these positives, the District, like many other water agencies, faces numerous challenges during this upcoming two-year budget cycle. While the District has been making serious efforts to control costs and limit increases to expenditures, several large items are creating negative pressure to the expenditure side of the budget. Increasing commitments to Capital Improvements, including both District and Joint Facilities projects is leading to an approximately 47% increase in capital appropriations from FY 2014/15 to FY 2015/16. While this is a large increase in capital funding, projects have been planned in accordance with various Master Plans and studies and are necessary to maintain the efficiency of the system, while ensuring a safe and reliable product is delivered to District customers. Due to the changes brought about by the Public Employees' Pension Reform Act (PEPRA) of 2013, CalPERS has now assigned a share of the unfunded accrued liability to all agencies participating in the shared risk pool, including the District. Staff is currently evaluating the financial impact that this change will have on the District in both the short and long-term. Other relatively minor items are also increasing for this budget cycle, including insurance costs, system parts costs and funding for water conservation and outreach during this time of drought. A much more complex challenge currently facing the District, which impacts both revenue and expenditures is the State-wide drought situation. While the San Diego region has invested heavily in diversifying its water supplies and is better situated to face the current drought situation than other parts of the State, the State Water Resources Control Board (SWRCB) is addressing the drought with a "share the pain" approach requiring a 25% reduction in State-wide water use. Individually, the District has been tasked with reducing its water demand by 28%, compared with calendar year 2013 levels. Such a significant and sudden reduction in water demand places a great deal of stress on both water sales revenues, as well as water purchase and treatment expenditures. For budget purposes, staff is proposing a plan that reflects a more practical 20% reduction in water sales and a 14% drought rate to maintain revenue stability. It is felt that this approach is a good compromise between limiting the rate impact on our customers and achieving the targeted water conservation goals. District staff will be closely monitoring developments related to the drought situation, State-mandated water demand reductions and impacts to revenues and expenditures throughout the budget cycle. The District is currently working on an update to its water rate study, utilizing information from this budget. A study is performed every two years to ensure that water rates and service charges are sufficient to meet the financial needs of 5 the District, including operating and capital costs, as well as fund balance targets and reserve requirements. It is anticipated that the update to the study will be completed in Fall 2015, with a rate plan that is vetted through the public and approved by the Board of Directors. The results of the study may require adjustments to this adopted budget,which would be made during a subsequent Board meeting in FY 2015/16. Overall, the proposed FY 2015/16 and FY 2016/17 budget will allow the District to maintain its strong financial position, while continuing a strong commitment to investment in its infrastructure. This document communicates to the Board of Directors, District staff, ratepayers and other stakeholders the financial resources associated with the delivery of services and programs in the coming years. San Dieguito Water District staff is proud to present the recommended FY 2015/16 and FY 2016/17 operating and capital budget. Respectfully Submitted, Bill O'Donnell General Manager 6 History In 1922,the San Dieguito Irrigation District(SDI D)was formed by the South Coast Land Company to obtain water for about 1,000 acres of land in Leucadia. Shortly afterwards, SDID merged with the Cardiff Irrigation District. At that time, a contract was drawn up to provide water from Lake Hodges via the newly constructed Hodges Flume and San Dieguito Reservoir to the land owned by the South Coast Land Company. The first water meters in the District were w installed in 1923. A few years later in 1925, with Lake Hodges Dam in need of repairs, Lake Hodges and its �. supporting conveyances were sold to the City of San IY ,•. t* } Diego, however SDID maintained water rights for 3,200 �Q`x' acre-feet of water annually from Lake Hodges. 4r• ;' •` SDID overcame several financial difficulties in the 1930's. man improvements' The 1940s brought to the District ' 9 Y rovements p , including the installation of a new pumping plant and v;ti storage tank. A chlorine ammonia treatment facility was -`* also installed at San Dieguito Reservoir to increase water quality in the District. Following World War II, the area became a highly successful agricultural center,with flowers, avocados and citrus being grown here and distributed all over the United States. With the District no longer able to solely rely on its local water source to accommodate agriculture and growth, SDID became a member of the San Diego County Water Authority and obtained the right to purchase and distribute imported water via the Metropolitan Water District. The 1960's and 1970's brought several more improvements to the District. The District's original redwood lines were replaced with new pipelines and several new storage facilities were built to increase the District's storage capacity. In 1969, SDID and the Santa Fe Irrigation District (SFID) jointly purchased the San Dieguito Reservoir and Hodges flume. In 1970, the R.E. Badger Water Filtration Plant was completed to ensure both Districts had the means to safely treat both local and imported water for their customers. 4_ Although the District was originally established to provide irrigation water to surrounding farms, ranches and fruit groves, the area eventually developed into a suburban residential community. In 1975, the San Dieguito Irrigation - � ! District became the San Dieguito Water District (SDWD) to , recognize this change in operations. The District now :x - provides the majority of its water to residential and commercial customers. When the City of Encinitas incorporated in 1986, SDWD became a subsidiary District of the City of Encinitas, while maintaining its same service boundaries. SDWD further expanded its storage capacity in 1998 with the completion of a new reservoir at Encinitas Ranch Golf Course. In 2000, recycled water became available in the District via the San Elijo Joint Powers Authority (SEJPA), further diversifying the District's water supply. The District proudly celebrated its 90th Anniversary in 2012. After several years of negotiations, 2014 brought an amendment to the water rights agreement for Lake Hodges, between the District, SFID and City of San Diego. This amendment reaffirmed the District's right to local water from Lake Hodges and clarified many issues between the agencies as the use of the lake has evolved over time. The District has changed over time but maintains its main focus of providing District customers with a safe and reliable water supply in a fiscally responsible manner. 7 Service Area and Customer Base The San Dieguito Water District is located in northern San Diego County and services the coastal portion of the City of Encinitas, including the communities of Cardiff, Leucadia, Old Encinitas, and portions of New x� Encinitas. Bordered by the Batiquitos Lagoon to the north, the San Elijo Lagoon to the south, the Pacific Ocean to the west and the Olivenhain Municipal Water District (OMWD) to the east, the District covers roughly ` 5,655 acres or about 8.8 square miles and provides S D W D water to a population of over 37,000 residents via approximately 11,640 potable water meters and 80 3 = OMWD recycled water meters. Rolling hills and valleys characterize the District, with a elevations ranging from sea-level at the coast to approximately 400 feet above sea level. The District, which is approximately 92% built out, is a mix low- density urban development characterized by the following customer classes: - 77% Residential - 9% Commercial - 8% Landscaping/Construction - 3% Public/Government - 3% Agricultural Of the District's residential properties, approximately 73% of these properties are single family, with the remaining 27% being multi-family units. Residential properties average approximately 2.6 persons per household. As the District is primarily "built-out", mainly infill growth is anticipated, which will keep population and customer growth at minimum levels into the future. The District's service area for potable water customers is broken up into 8 individual meter reading cycles for meter reading and billing purposes. The District bills its potable customers on a bi-monthly basis (every two months) with one cycle being read and billed per week over a two-month period. All recycled water customers are on a separate cycle,with their meters being read and billed on a monthly basis. Governance The San Dieguito Water District is a subsidiary District of the City of Encinitas, and has operated as such since the City's incorporation in 1986. As a subsidiary District to the City, the Encinitas City Council also serves as the Board of Directors to the District, however the Council members hold different positions on the District Board. Board positions are rotated on an annual basis. In addition, District Board members represent the District's interests by serving on other District-related and regional water-related committees, including the Joint Facilities Advisory Committee, the R.E. Badger Water Facilities Financing Authority, the San Elijo Joint Powers Authority and the San Diego County Water Authority Board of Directors. Board members may also hold positions on other ad-hoc committees, such as the Tri-Agency Partnership Committee (with representatives from OMWD, SDWD and SFID), the Water Rate Subcommittee and the Drought Subcommittee. 8 Facilities The District solely owns and operates approximately 175 miles of pipeline, a 2.5-million and 7.5-million gallon reservoir, over 11,600 water services and meters, 19 pressure reducing stations and a pump station. In addition to these facilities, the District jointly owns with the Santa Fe Irrigation District (SFID), approximately 8 miles of pipelines and transmission mains, 2 pump stations, a 1.4 megawatt hydroelectric power plant, a 13-million gallon treated water reservoir and a 40 million-gallon-per day (mgd)water treatment plant. Additionally, the two agencies jointly own the San Dieguito Reservoir, which has a capacity of approximately 800 acre-feet. District offices are housed at a joint facility, shared with the City of Encinitas Public Works Department, at 160 Calle Magdalena, Encinitas, CA 92024. 9 Overview The San Dieguito Water District utilizes fund accounting and operates as an Enterprise Fund. As an Enterprise Fund, the District operates similar to a private business enterprise where the cost of providing goods and services is either partially or fully recovered by user charges. The District maintains four distinct funds, to further distinguish between type of expenditures and revenues: - Operating Fund: Captures the District's day-to-day expenditures and revenues. Includes the District's Rate Stabilization Reserve. - Capital Replacement Fund: Accounts for costs related to capital improvement projects benefitting District and jointly-owned facilities. Also captures capacity fee revenue when new customers are added to the water system. - Debt Service Fund: Provides for the annual and semi-annual principal and interests payments on District debt. - Fleet Replacement Fund: Maintains funding for the replacement of District vehicles and equipment. Basis of Accounting The District used the full accrual basis of accounting where revenues are recognized when they are earned and expenses are recognized when the liability is incurred. Basis of Budgeting Primarily, the basis of budgeting is consistent with the basis of accounting, described above. Any budgeted funds that are not expensed by the end of the first year of the two-year budget can be "carried over" to the second year of the two-year budget by Board of Directors approval of a Continuing Appropriation Request. All other unexpended appropriations lapse at the end of the fiscal year and do not "carry over." Any variations between budgeted and actual expenditures and revenues are reported at year end, following the District's annual audit, and are reported to the Board of Directors. Variances may affect the District's on-going fund balance positively or negatively. Process and Schedule Budget Document This is the second iteration of the San Dieguito Water District's independent two-year budget document. In Fiscal Year 2013-14, it was decided that a separate District budget document would be developed to allow for a more detailed look at the District's budget and finances. Prior to this, the San Dieguito Water District budget was developed and produced in conjunction with the City of Encinitas' budget, and the two agencies shared a single budget document. Due to the success of the independent budget document, the District is continuing to present its budget in this independent manner. Two-Year Budget Similar to the City of Encinitas, the District utilizes a two-year budget cycle, where two separate 12-month budgets are prepared and submitted to the Board of Directors every other year. The Board appropriates operating and capital improvement funds for the first year only as required by State of California statute. Then, a more condensed, summary document is developed in the second year to disclose any substantive changes and to provide an updated forecast, referred to as the"Second Year Revise." The benefits of the two-year budget process include: 10 - Increased efficiency and reduced production time by not reproducing a comprehensive document in the second year of the two-year process. - More efficient financial management, including reduced staff time dedicated to budget development. - Better long-range planning by more effectively linking operating and capital activities. - Improved program monitoring and evaluation by allowing more time for operational oversight. However, unlike with the City budget, due to the volatility and nature of the water industry, producing a two-year budget also presents certain challenges for the District. Several of the largest components of the District's budget, including water sales, water purchases and wholesale water costs are largely out of the District's control and are subject to sometimes significant changes on a year-to-year basis. Furthermore, external pressures related to the weather, drought, availability of water sources and water politics can severely impact the District's ability to forecast information. While staff endeavors to budget conservatively, in response to this ever-changing environment, the Second-Year Revise of the two-year budget commonly sees significant modifications from the original budget document and budget adjustments are made throughout the year in response to changing conditions. Budget Schedule District staff began developing preliminary information for the upcoming two-year budget process in November and December 2014. This preliminary information included projecting staffing levels and personnel expense account information. In January and February 2015, District staff further worked with City of Encinitas Finance staff to develop salary and benefit numbers for the budget, based upon those staffing levels, and also to develop projected Debt Service Fund figures for the next two years. District staff then developed non-personnel account budget information in March and April 2015 as updated information became available about current year spending and future year needs. During this time, staff also refined its budgetary needs for the Fleet Replacement Fund and developed its proposed Capital Improvement Program. Preliminary guidance from the San Diego County Water Authority (SDCWA) regarding wholesale water rates and charges became available to the District in late-April 2015, which were utilized to develop preliminary water purchase and treatment projections in conjunction with internal water demand projections. Updated SDCWA wholesale rates and charges were provided in late-May 2015 for incorporation in the final proposed budget. Unique to this budget schedule is the incorporation of State-wide water demand reduction requirements stemming from the recent long-term drought. Final direction from the State regarding water demand reductions was made available in May 2015 for implementation on June 1, 2015. These State requirements will have had a significant impact on both revenues and expenditures in this proposed budget. A draft budget document was provided to the District management and City of Encinitas Finance staff in May 2015 for preliminary review and feedback. A draft of the Fiscal Year 2015/16 and 2016/17 District budget was introduced to the public and the Board of Directors on May 20, 2015, where the budget was deliberated and staff received further input and direction. Incorporating feedback from the May 20, 2015 meeting and including any other final revisions deemed necessary by staff, a final proposed version of the District budget was brought back to the Board of Directors on June 17, 2015 for adoption. As approved on June 17, 2015, the budget document will be implemented on July 1, 2015. The District's fiscal year runs from July 1 through June 30. Zero-Based Budgeting The District uses the Zero-Based Budgeting (ZBB) methodology as a tool for developing budget information. With ZBB, while historical information is taken into consideration for assessing trends, it does not provide justification for future expenditures. Instead, budgets are built "from the ground up" and future expenditures are justified on their individual merit every year. While, more time consuming than incremental budgeting, this approach shifts budget attention from simply adding to prior year budgets and focuses consideration on maintaining the minimum level of operational support. The ZBB approach ensures that resources are directed towards the most necessary and productive accounts and is also helpful in educating the Board and District management on the nature and details of programs and/or services. 11 Budget Monitoring and Adjustments On a quarterly basis, the District reviews its actual expenditures and revenues in comparison to original budget projections. The City Manager and City of Encinitas Finance staff are also provided this information for review. District staff updates the Board of Directors of the District's current financial situation on a quarterly basis as these reviews are performed. During these quarterly updates, or during any District Board meeting, staff may request that the Board approve adjustments to the budget, as necessary, in order to address budget variances or changes. The status of the District's various Capital Improvement Projects are also reviewed on a quarterly basis. Additionally, staff internally monitors the District's financial situation on a monthly basis to stay aware of trends and current conditions. These various monitoring processes ensure that candid and frequent discussions are had on the use of resources and also allow for the timely redirection of resources when necessary. Budget Controls The District maintains a variety of budget controls to ensure accountability and oversight of expenditures. The District follows the City of Encinitas Purchasing Policy, which includes a number of provisions to ensure fiscal control, including multi-level approval of purchases, spending limits and specific vendor selection procedures. Major budget changes must be approved by the District Board of Directors. As discussed above, regular budget monitoring occurs to ensure resources are being properly utilized as directed by this document. Finally, the District undergoes an annual audit,which reports on the District's fiscal and budgetary controls. Assumptions While many items in this budget may be predictable due to existing contract, rate and cost information, other items do not have readily available information at the time of budget development, and must be assumed with reasonable justifications. District staff utilized various assumptions when developing this budget, many of which have been discussed throughout the document. The following is a summary of various meaningful assumptions: - While still operating under a Terms and Conditions of Employment, no across-the-board salary increases are projected during the two-year budget. Only scheduled step increases are budgeted. - While still operating under the Terms and Conditions of Employment, no changes to employee benefit levels are projected during the two-year budget. - Due to updated CalPERS methodologies, the District will see an approximate 6% reduction in the CalPERS normal employer contribution rate from FY 2014/15 to FY 2015/16. - Based upon updated valuations, CalPERS is now mandating installment payments towards agency unfunded liabilities. These payments are currently budgeted as $251,099 in FY 2015/16 and $288,984 in FY 2016/17. - SDCWA commodity rates are projected to increase by 1.9% for treated water and 2.3% untreated water in CY 2016 and estimated to increase by 7.0%for both treated and untreated water in CY 2017. - SDCWA fixed charges are projected to see a net increase of 33% in CY 2016 and then are estimated to increase by 7.0% in CY 2017 - Customer account growth is projected at 0.5%each of the two years. - Due to State-wide mandates for a reduction in water demand, potable water sales are projected to see a 20% reduction from CY 2013 levels in FY 2015/16 and then remain flat in FY 2016/17. 12 - To maintain revenue stability and encourage water conservation, a drought rate associated with a 14% reduction in water sales is projected to be in effect in both FY 2015/16 and FY 2016/17. - Water supply source projections to meet customer demands is based upon historical average levels of local water, imported treated water and imported untreated water. - Water sales and meter service charge revenue projections in this budget assume current water rates are in effect through the entire two-year budget. - As reflected in the Fund Budget Summaries and the Cash Flow, the District has an "additional revenue requirement'of$1,638,356 in FY 2015/16 and $1,400,719 in FY 2016/17 to meet target reserve levels. The District is currently undergoing a water rate study to set water rates for FY 2015/16 and FY 2016/17 in order to meet these requirements. 13 Strategic • Overview District staff utilizes a variety of studies and plans to guide work and decisions. The District utilizes both the 2010 Water System Master Plan and 2012 Joint Facilities Master Plan to plan and create the Capital Improvement Program. The District's 2010 Urban Water Management Plan is utilized to plan the District's long-term water supply strategy. In addition, District staff sets measurable goals and objectives related to the maintenance and repair of infrastructure, meeting current and future water quality regulations and meeting water conservation best management practices. District staff reports on significant accomplishments during the last two-year budget and does set goals and objectives for the next two years as shown in the "Operating Program" section of this document. Staff also maintains a financial risk analysis to assist in projecting the fiscal impacts of potential adverse conditions which the District may face. The District anticipates the development of a Strategic Planning document via collaboration with a number of stakeholders during this two year budget cycle. Stakeholders include the Board of Directors, District management and staff, City of Encinitas finance staff and input by District ratepayers. It is anticipated that this District Strategic Planning document will be completed and ready for inclusion in the next two-year District budget document. As part of this document, District staff has evaluated a number of strengths and challenges that have influenced or will influence this two-year budget. Strengths The District prides itself on its strong financial position. Financially, the District holds a credit rating of"AA+" which was recently reaffirmed by Standard & Poor's (S&P), a leading international independent credit rating agency. Furthermore, the District has consistently exceeded debt covenant requirements of 115% debt coverage ratio and has also met or exceeded its minimum target reserve levels on an annual basis. Maintenance and upkeep of infrastructure is also a strength of the District. One commonly used industry indicator of overall system performance is water loss percentage. The District's current water loss is 2%, well below the industry average, and indicates that the District's infrastructure is being maintained in excellent condition, with minimal breakage, leaks and losses. Having a local water source is another advantage for the District. Having this source of local supply allows the District to not solely rely on imported water to serve its customers. In addition to diversity of supply, this local water is generally a cheaper source than imported water, greatly benefitting the District financially when it is available. The availability of recycled water also benefits the District by reducing reliance on potable water supplies. Provided by the San Elijo Joint Powers Authority, recycled water provides customers with a drought-proof water supply for landscaping and other commercial uses,where available. The District also benefits by its partnerships with other agencies, such as the Santa Fe Irrigation District, the City of Encinitas, the Olivenhain Municipal Water District, the San Elijo Joint Powers Authority and others. These partnerships increase the level of service that the District can offer its customers while reducing costs and staffing levels. Challenges The volatility of the water industry is a constant challenge to the District, both in terms of the cost and availability of potable water supplies. While the District maintains a local water supply, this supply depends heavily on local weather conditions and does not meet the District's entire supply needs. When local water is not available, the District must rely on imported water from a variety of sources, including the State Water Project, the Colorado River and, in late-2015, the Carlsbad Desalination Plant. These imported sources also have their own volatilities, including 14 drought and other environmental factors. In additional to supply concerns, imported water also presents cost concerns, as it has seen steady price increases over recent years, which can have a large impact on the District budget. As a majority of the District's revenue comes from water sales, customer demand can have a large impact on the financial stability of the District. Reduction in customer water sales can negatively impact revenues. In times of higher water conservation requirements, balancing water conservation with revenue requirements is always a challenge when budgeting. Recent drought conditions and the SWRCB response to those conditions have created a new challenge for the District. While the San Diego region has invested heavily in diverse water supply sources and is faring better than other parts of the State, the SWRCB has went with a "share the pain"approach, requiring all water agencies to meet specified water reduction targets. With the District facing mandated double-digit water use reduction targets over this upcoming two-year budget, projecting water purchases and water sales has taken on new layers of complexity. Maintenance and investment in District and Joint Facilities infrastructure is a challenge as facilities and infrastructure age. While having a water treatment plant is an overall benefit to the District, maintenance and capital improvement costs to this 45 year-old facility can greatly impact the District budget. While overall the District's infrastructure is in excellent condition, funding regular improvements to the water system constantly pushes the District's limited financial resources. 15 Water Portfolio Potable Water Supply The District maintains a diverse potable water supply of three water sources to serve its customers; local water from Lake Hodges, imported treated water and imported untreated water. Local climate conditions can have a significant effect on the District's water supply balance between local and imported supplies. The District resides in a semi-arid region with an average precipitation of approximately 10 inches annually, however rainfall amounts can vary greatly from year-to-year, which heavily impacts the availability of local water from Lake Hodges. Owned and operated by the City of San Diego, the District maintains water rights to Lake Hodges water through a series of agreements with the City of San Diego. Currently,the District has rights to approximately 22%of the annual inflow into Lake Hodges. Prior to 2012, the District had the ability to regularly utilize more water than it had rights to due to the fact that the City of San Diego did not have the ability to withdraw their share of water from Lake Hodges. However, in 2012, the City of San Diego obtained the ability to withdraw their share of water from the lake as part of the San Diego County Water Authority's (SDCWA) Emergency Storage Project. As such, the City of San Diego, Santa Fe Irrigation District and San Dieguito Water District negotiated an amendment to the existing Lake Hodges agreement to reflect these new changes to the operations of the lake. The District is also exploring the potential for other local water supplies, most notably potable water reuse. While currently not regulated fully at the state level, the District, along with several other agencies are looking into the emerging supply market of potable water reuse as an important way to supplement local supplies at such time that it does become approved and regulated. Both imported treated and untreated water are purchased from SDCWA, who receives water from the Metropolitan Water District of Southern California (MWD). This imported water is delivered from Northern California through the State Water Project and from the Colorado River through _. the Colorado River Aqueduct. SDCWA also obtains water «r via long-term transfer agreements with agencies in the r Coachella Valley and Imperial County. SDCWA is actively r State k-Vater PY4)CCk diversifying its portfolio by exploring alternative supplies (Bay-Dena} including water transfers, groundwater projects and pfpr ¢p Fier desalination. The region's first desalination plant is scheduled to begin production in Fall 2015 in Carlsbad, California and will provide SDCWA with a drought proof Local Supplies supply of water to further diversify its water portfolio and andCanservaticiq supplement its other water sources. The District became a member of SDCWA in 1948, obtaining the right to purchase and distribute imported water from the wholesaler. As the District jointly owns and operates a water treatment plant with the Santa Fe Irrigation District (SFID), the District primarily purchases untreated water from SDCWA and treats the water at the plant. However, in the event that the water treatment plant is unavailable, the District has the ability to purchase and distribute treated water directly from SDCWA. Typically, utilizing local water is less expensive to the District than purchasing imported untreated water. Utilizing treated water from SDCWA is the most expensive option to the District. Therefore, when available, the District aims to maximize its use of local water in order to realize that cost benefit. However, given the availability of local water is greatly impacted by local climate conditions, it is not always possible to substantially meet demand with local water and the ratio of local to imported water can vary greatly from year-to-year. For example, in FY 2010/11, local water accounted for about 69% of the District's potable water supply, however in FY 2013/14, local water only accounted 16 Potable Water Supply for 17% of supply. Over the past five years, local water has accounted for 5-Year Average an average of 54% of the Districts potable water supply. Over that same period, potable water, both local and imported, has made up approximately 91% of the District's total water supply, with the remaining 9% coming from recycled water. Potable Water Demand Imported water Local Water use (demand) in the District is affected by the weather, population 46% wat growth, the local economy and conservation measures. The 1980's brought a steady increase in water use which peaked in CY 1990 when the District's demand was 8,650 acre-feet (AF) of water. However, a major drought in the early 1990's resulted in water rationing and increased water conservations measures, leading to a 24%drop in demand by CY 1992. As these drought conditions eased and the local economy grew in the late 1990's, demand again increased. In CY 2007, demand was at 7,753 AF. During the 2008 through 2011 drought, District customers again responded by significantly reducing their demand. Demand in CY 2012 was 6,307 AF,which is 19% lower than demand in 2007. However, as the District came out of drought conditions due to several rainy years, demand again crept upwards, reaching 6,712 AF in CY 2014. Future Potable Water Supply and Demand Projections Although demand has been increasing over the past few years due to warm and dry conditions, the region and the entire State are again facing serious drought conditions. Due to the severity of the State-wide drought, the Governor and the SWRCB have taken the unprecedented step of calling for a State-wide reduction in water use of 25% from CY 2013 levels. Based upon the SWRCB's methodology, the District has been tasked with reducing demand by 28% Water Supply(Acre-Feet) from CY 2013 levels. Acknowledging the severity of such a reduction and that time it will take for customers to 6,000 practically change their water-use habits, the District is 5,OW projecting a more realistic 20% reduction in demand from ¢ CY 2013 levels in FY 2015/16, with FY 2016/17 staying flat. This level of demand equates to projected water purchases 3' of 5,422 AF in both fiscal years. 2,OW 1,oao Going in to the upcoming two-year budget, water levels at a il,�IMA Lake Hodges are at minimum levels due to a lack of recent NN �aa1 ,�� NZ�� local rainfall. Given this situation, the District's recent local ��� ti4� ��� �� �o, yo�y �4Qy water usage has been low, mainly relying on imported water 101 1y11 titi�~ �ti t and minimal levels of local water to meet supply demands. Fd �{ �� F� •���� �`�� � ��� However, in keeping with District practice of budgeting to historical average levels of water supply, the District is ■Lora eater ■ mported7reated Imported Untreated projecting to meet its supply demand with 38% local water, 5% imported treated water, and 57% imported untreated water, over the two-year budget. If supply conditions change drastically from estimates, the District may update its projections and adjust the budget accordingly. Future Potable Water Purchase and Treatment Cost Projections The District purchases local water from the City of San Diego and imported water from the San Diego County Water Authority (SDCWA). Potable water purchase and treatment costs typically comprise about 60% to 65% of the District's O&M budget. 17 Historically, the District has purchased its rightful share of local water from the City of San Diego on a commodity basis, paying by the acre-foot. However, due to a renegotiated agreement between the District, SFID and the City of San Diego,which clarified many terms of the agreement, the District now pays for local water on a fixed charge basis, regardless of the volume of local water utilized by the District. Moving to a fixed charge for the purchase of local water provides the District with greater stability in budgeting for local water purchases and also protects the District against large spikes in local water costs during years of heavy local rainfall. For this two-year budget, the District is projecting local water costs of $5,300 monthly ($63,600 annually) compared to a prior rate of $49.70 per AF (approximately$120,000 annually based on average local water supplies) Over the years, the cost of imported water from SDCWA has seen steady increases. The upcoming two-year budget is no exception. Commodity costs of imported water are adjusted on a calendar year basis, as are most fixed charges from SDCWA(with the exception of the Imported Water Costs(per Acre-Foot) Readiness-to-Serve charge which is adjusted $1•D00 on a fiscal year basis). For the development of y� this budget, the District is using final rate and charge guidance from SDCWA for CY 2016. 5$°D Estimates are used for the following calendar $7w year as SDCWA has not yet developed their rates and charges for CY 2017. Imported $600 Treated Water costs are proposed to increase $504. 1.9% in CY 2016 and then estimated to Cr 2012 Cr 2013 Cr 2014. Cr 2015 Cv 2016 Cr 2017 increase 7.0% in CY 2017. Imported Untreated (Actual) (Actual) (Actual) (Actua) (Protected) (Estimated) Water costs are proposed to increase 2.3% in -SDCWA Untreated water Rate(incudestransportat'on) CY 2016 and then estimated to increase 7.0% in CY 2017. Fixed charges are proposed to see a net increase of 33% in CY 2016 and then estimated to increase 7.0% in CY 2017. Included is these fixed charge increases is a new fixed charge for CY 2016 related to costs for the new Carlsbad desalination plant, called the Supply Reliability Charge. This new charge is proposed to be $89,136 in FY 2015/16 and estimated to be $184,512 in CY 2016/17. Water treatment costs are another large and variable budget item which are dependent upon the cost of chemicals and supplies, the amount of water treated and the composition of that water source (local versus imported). Local water from Lake Hodges is generally more expensive to treat than imported water. However, this increase of water treatment costs is more than offset by the savings realized when purchasing local as opposed to imported water. Based upon estimated plant operating costs provided by the Santa Fe Irrigation District, demand projections and the projected supplies used to meet those demands, the District is projecting that water treatment costs will decrease by 8.4% in FY 2015/16 and then increase by 5.0% in FY 2016/17. Recycled Water Recycled water in the District, which is provided by the San Elijo Joint Powers Potable vs.Recycled water Authority (SEJPA), is available to customers in a limited area of the District. 5-Year Average Recycled water is used primarily for landscaping purposes and for use at the Encinitas Ranch Golf Course. The District purchases recycled water that has been treated at the San Elijo Water Reclamation Facility and sells it to customers within the District. SEJPA owns and maintains the recycled water distribution system within the District, while the District owns and maintains the recycled water meters and bills customers for consumption. Recycled water makes up approximately 8%to 11%of the District's water supply on an annual basis. Currently, the District has a take-or-pay commitment for a minimum of 400 AF of recycled water per year with SEJPA, excluding sales to the Encinitas Ranch Golf Course. In recent years, the District has been exceeding its minimum 18 take-or-pay amount as the number of recycled water accounts have been steadily growing, leading to more sales. Recently, several large and high profile accounts have come online, including Encinitas Community Park, and Scripps Hospital. Recycled water is purchased from SEJPA on a commodity basis with rates being adjusted every July 1. In FY 2015/16, the District is proposing to purchase 430 AF of recycled water at $1,356 /AF and then 470 AF at $1,424 / AF in FY 2016/17. 19 Sources of Funds The District has three main sources of operating Sources of Funds and non-operating revenue: potable and $18,066,006 recycled water sales, potable and recycled meter service charges and property taxes. Together, 516,000,000 these three sources comprise over 90% of the 790000 District's annual revenue. Remaining District $14.066.006 revenues are comprised of billing and engineering fees, capacity buy-in charges, 12.066,000 investment and property earnings and other miscellaneous revenue. Total District revenues16,o6a,o66 under the current water rates and charges are $ projected to be $16,019,443 in FY 2015/16 and $16,113,890 in FY 2016/17. g6,a6aoa6 Water Sales Water sales, both potable and recycled are the $2,DC0,660 largest source of revenue for the District. However, water sales are highly variable, $0 depending upon the environment, weather and FY 2015/16 Proposed FY 2016/17 Proposed customer demand, making budgeting for water ■Water Saks ■Water Meter Service Charges sales revenues a challenge. Recent potable prop"Taxes ■Other Revenues water sales trends have seen a recent low of 6,234 AF in CY 2010 during the last drought to a recent high of 7,660 AF in CY 2006. As discussed in the "Water Portfolio" section of this document, recent drought conditions have led the State to call for reductions in water demand from every water supplier in the state beginning in June 2015. While the State is tasking the District with a 28%demand in reduction from the Calendar Year 2013 baseline, staff is budgeting for a more realistic 20% reduction in water sales for both FY 2015/16 and FY 2016/17, or 5,244 AF for each year, as it is anticipated that it will take time for customers to change their habits enough to achieve the targeted reductions. In order to neutralize and maintain revenue stability during this time of reduced water sales, the District is proposing to implement a drought rate associated with a 14% reduction in water sales, which will temporarily increase the cost of water sold to customers. The 14% drought rate is recommended in the short term as a compromise between reducing the severity of the rate impact on customers while still accomplishing water conservation goals. If District needs related to revenue or reductions in water sales change, the drought rate could be modified at a later time. Under the current situation of reduced sales and drought rates, the District projects to receive $9,979,648 in revenue from potable water sales in both FY 2015/16 and FY 2016/17. The District is also projecting to receive $717,075 in recycled water sales revenue in FY 2015/16 and $773,103 in FY 2016/17. These figures are based upon projected sales of 430 AF in FY 2015/16 and 470 AF in FY 2015/16. Recycled water sales continue to increase, with new sites being to be added to the system every year, including the Encinitas Community Park. Together, potable and recycled water sales revenues project to comprise approximately 67%of total District revenue. At the time of the development of this budget, the District is currently conducting a water rate study to evaluate the District's revenue requirements and to determine if water rate and charge adjustments are necessary. The study is expected to be completed in the fall of 2015, with any necessary water rate adjustments being implemented at that time. Any such adjustments would positively impact water sales revenues. 20 Water Meter Service Charges The second largest source of revenue for the District is from water meter service charges, from both potable and recycled water meters. Water meter service charges are the fixed portion of a customer's water bill, based upon the size of the water meter serving the property. Based upon the District's current base of approximately 11,610 connections, and with a projected 0.5% increase in account growth per year, the District projects receiving $3,389,704 in revenue from potable water meter service charges in FY 2015/16 and $3,406,603 in FY 2016/17. Potable water meter service charges currently project to make up approximately 21%of total District revenue. Recycled Water Meter Service Charges were implemented on September 1, 2013 as part of the most recent completed Water Rate Study. Similar to potable water meter service charges, recycled water meter service charges are a fixed charge based upon the size of the water meter serving the property. The District projects to receive recycled water meter service charge revenue in the amount of$82,250 in FY 2015/16 and $85,000 in FY 2016/17. At the time of the development of this budget, the District is currently conducting a water rate study to evaluate the District's revenue requirements and to determine if water rate and charge adjustments are necessary. The study is expected to be completed in the fall of 2015 with any necessary water rate adjustments being implemented at that time. Any such adjustments would positively impact water meter service charge revenues. Property Taxes Property taxes are the final major category of District revenue, making up approximately 5% of total District revenue. Originally operating as an Irrigation District, the San Dieguito Water District has maintained its share of property tax revenue, even after becoming a subsidiary district of the City of Encinitas. While the real estate market has been volatile over the past several years, the District's property tax revenue has remained relatively stable and has seen a modest increase over the past few years as the market has slowly improved. The District is projecting property tax revenues to be $780,000 in both FY 2015/16 and FY 2016/17, reflecting an increase in this area. Other District Revenues Other District revenues include a wide range of smaller and sometimes less predictable revenue sources, including billing fees, engineering fees, capacity buy-in charges, interest earnings, property earnings and other miscellaneous revenue such as cost recovery, refunds, and Infrastructure Access Charge (IAC) revenue,which is passed-through to the San Diego County Water Authority. Since the last budget, the District has completed a Miscellaneous Fee and Charge Study, which ensured cost recoverability for services provided and resulted in the increase of certain engineering fees and billing charges. The District has also added several new and renegotiated several existing cellular tower site leases, resulting in additional property-related revenue. Combined, these other revenues comprise approximately 7% of total District revenue each of the next two budget years, totaling $1,070,766 in FY 2015/16 and $1,089,536 in FY 2016/17. Uses of Funds Estimated total District expenditures for are $16,361,954 for FY 2015/16 and $17,158,585 for FY 2016/17. Funds are used for a variety of purposes including operating expenses, capital projects, debt service and vehicle/equipment purchases. 21 Water Purchases and Treatment Including both potable and recycled water, Water Purchases and Treatment costs are the District's largest expenditure category, with a budget of $6,842,812 in FY 2015/16 and $7,424,835 in FY 2016/17, accounting for approximately 42% of the District's total budget. Uses of Funds As discussed in detail in the "Water Portfolio" $z4,o44,ba4 section of this document, budgeting for water $la x44000 purchases and treatment is a highly variable and complex process, with many assumptions being $16,040,044 S',257,99D $$11,,015738,,78998 6 made based upon historical and projected data. $14,044,000 $1.053,798 $�- $1,402,022 Based upon the State's drought target that the $12,004,000 $2,921,259 District reduce its potable water demand by 28% $2,855,332 from the calendar year 2013 baseline, the $10,044,044 District is budgeting for a reduction in water $2,954 $3,175'044 purchases from recent years. Staff is projecting a more realistic 20% reduction in water $6aoaaoo purchases for FY 2015/16, with that level of purchases remaining flat in FY 2016/17. This $410°°,0°° $6,842,812 $7,424,835 equates to projected potable water purchases of $2.00O.000 5,244 AF in both years. The District is planning to meet this demand with 38% local water, 5% $0 imported treated water and 57% imported FY 2415/16 Proposed FY 2416/17 Proposed untreated water, based upon historical trends of ■water Purchases&Treatment ■Cap ital Improvement Program supply availability. -Salaries&Benefits ■Debt Service ■Int ern aICostAIlocatlon ■Other Department Ekpendtures For the development of this budget, the District is using final rate and charge guidance from SDCWA for CY 2016. Estimates are used for the following calendar year as SDCWA has not yet developed their rates and charges for CY 2017. Imported Treated Water costs are proposed to increase 1.9% in CY 2016 and then estimated to increase 7.0% in CY 2017. Imported Untreated Water costs are proposed to increase 2.3% in CY 2016 and then estimated to increase 7.0% in CY 2017. Fixed charges are proposed to see a net increase of 33% in CY 2016 and then estimated to increase 7.0% in CY 2017. Included is these fixed charge increases is a new fixed charge for CY 2016 related to costs for the new Carlsbad desalination plant, called the Supply Reliability Charge. This new charge is proposed to be $89,136 in FY 2015/16 and estimated to be$184,512 in CY 2016/17. The cost methodology for local water purchases has changed since the last budget, moving from a commodity-based charge to a fixed-based charge, due to a renegotiated agreement between SDWD, SFID and the City of San Diego regarding water rights at Lake Hodges. Currently, the District is estimating costs at$63,600 annually for local water, which is less than what the District previously paid on a per acre-foot basis. With the projected reduction in water purchases over the next two years, budgeted water treatment costs are also seeing a reduction. Projected costs are seeing a net 8.4%decrease in FY 2015/16 due to the reduction in purchases and then a 5.0% increase in FY 2016/17 to account for annual cost increases. Recycled water costs are expected to increase each of the next two years due to increased demand as additional sites begin to use recycled water, including Encinitas Community Park. Recycled water purchases are budgeted at $583,000 for FY 2015/16 and $669,280 for FY 2016/17. Personnel The second largest District expenditure category is Personnel costs, including salary and benefits for the District's staff of 24.0 FTEs in FY 2015/16 and FY 2016/17. Personnel costs comprise approximately 17%of the District's total budget and are projected to be $2,855,332 in FY 2015/16 and $2,921,259 in FY 2016/17. As discussed in the 22 "District Personnel and Organization" section of this document, salary costs will remain relatively flat over the next two years, rising minimally for standard employee step increases and career advancements. Although negotiated employee benefits are remaining stable over the next two years, total benefit costs are projected to see a net increase of 18% in FY 2015/16 due to the beginning of scheduled payments towards the District's CalPERS unfunded liability, with an additional increase of 6% in FY 2016/17. This unfunded liability payment is also discussed further in the "District Personnel and Organization"section of this document. Capital Improvement Program (CIP) The District annually contributes funding for Capital Improvement projects. Major capital project categories include District infrastructure projects, District work projects and studies, and Joint Facilities projects with the Santa Fe Irrigation District (SFID). Projects are guided and scheduled by various needs and studies, including the District's Urban Water Management Plan,Water Master Plan and Joint Facilities Master Plan. The Capital Improvement Program is proposed to make up approximately 18% of the total District budget. New appropriations to the CIP are projected to be $2,950,000 in FY 2015/16 and $3,175,000 in FY 2016/17. These appropriations represent an increase from prior years due to additional requirements for several major Joint Facilities projects as part of the Joint Facilities Master Plan, and several new District project needs. Carry-over appropriations from prior years are projected to be $6,435,262 as of the 3rd Quarter of FY 2014-15, with most of these funds appropriated to projects under the Joint Facilities Master Plan, shared with SFID. See the "Capital Program"section of this document for more information on the CIP and its various individual projects. Debt Service The District's total debt obligation is$1,398,544 in FY 2015/16 and $1,401,309 in FY 2016/17, including principal and interest payments for the District's 2014 Water Revenue Refunding Bonds and 2007 R.E. Badger Water Refunding Bonds. The 2014 Water Revenue Refunding Bonds were a recent refunding of the District's existing 2004 Water Revenue Refunding Bonds, in order to take advantage of lower interest rates. The refunding saves the District about $250,000 annually through the remainder of the loan. In addition to this, the District budgets $3,478 annually for administration costs on the debt. Debt service payments comprise approximately 9%of the total District budget. For further information on the District's outstanding debt, refer to the"Long-Term Debt"section of this document. Internal Cost Allocation The District pays an annual amount to the City of Encinitas for support services in the areas of Finance, Human Resources, Information Technology, Risk Management, Records Management and other support services. As a result of the City's recently updated Cost Allocation Study, the District's internal cost allocation for these services is increasing by 13% to $1,053,798 in FY 2015/16 and remaining flat in FY 2016/17. The Internal Cost Allocation, which has not seen a substantial increase since the last study four years ago, makes up approximately 6% of the District's operating budget. Other Department Budget Costs (Materials &Supplies/Contracts&Services/Debt&Finance) Other District expenditures includes costs for general operating needs in the form of materials, supplies, contracts and services. Such costs include, but are not limited to, insurance costs and legal fees, billing supplies and banking costs, safety and training costs, parts and materials for system maintenance and repair, water conservation and outreach funding, as well as professional and technical services contract costs. The District is budgeting $1,172,990 for these costs in FY 2015/16 and $1,118,896 in FY 2016/17, or approximately 7%of the District's operating budget. For additional detail related to these costs, refer to the individual Division pages in the "Operating Program"section of this document. Minor Capital and Vehicle Purchases The District budget includes appropriations for the replacement of vehicles and for the purchase of other minor assets not included in the larger Capital Program. The District is budgeting $40,000 for vehicle/equipment purchases and 23 $45,000 in other minor asset purchases in FY 2015/16. In FY 2016/17, the District is budgeting $40,000 for vehicle/equipment purchases and $20,000 for other minor asset purchases. Together, these costs make up less than 1%of the total District budget. Fund Budget Summaries The following summaries provide a look at the District's budget by Fund. This is a useful tool in examining how the all of the District's funds relate to each other in terms of transfers between funds and fund balances. Each table is a look at transactions within a single fiscal year and includes the beginning fund balance, revenues, expenditures, transfers between funds, the current year balance and the projected ending fund balance Projected changes in fund balances indicate corresponding changes in projected reserve levels, consistent with long-term planning by the District. It should be noted that planning documents such as the Fund Budget Summaries and the Cash Flow document in the "Long-Term Planning"section of the document, reflect an "additional revenue requirement" in order to meet target ending fund balances which will satisfy reserve requirements. These"additional revenue requirements are not otherwise reflected in the District's proposed two-year revenue projections,which projects revenues under the District's current water rates . The District is currently undergoing a Water Rate Study to determine potential water rate plans for FY 2015/16 and FY 2016/17,which are anticipated to satisfy this additional reserve requirement. After the Water Rate Study is completed and approved by the Board, the District will return to the Board with a budget adjustment to adjust the District's two-year revenue projections and reserve levels, if necessary, based upon the results of the Water Rate Study. 24 N N C U d) 'p U d O` R R N O N LdO) M (d0) N m M O O c0 M C U d m U (0 0 O O (fl 0 R R 7 f0 0 O m O O (O A m M M V I— d) V O V O c0 'O O O O V c N N O N Cl) W W r N r 0) W 0 m o LO N N W I— O N 0 (0 O N N N Nc0 d) r (0 00 d) O r V O O d) N N 'O —7 (O 69 'O N I� 69 0V N 'O N N V- ea N 69 69 U C Efl Efl C Efl Efl Efl LL IL R L V O N O O N R O c0 0) N N O O 00 V w R c0 (fl N N (0 O W Co N 0) V 0) V (O M O (A N N >- E LO M O m O >- E V 0) N I� W 00 c0 LO O (0 O E M N M c0 0 (0 O (0 M N (0 N LO V w C (0 I— N N M C r N m 0 0) 69 r W N 0 O (A cc `! fn (» O (A N 69 (fl co e» » 69 U U U y o o o o o o y m 0 0 0 m 0 y co O O O co O y co (» 69 (» co » y (» (» (» m » y N (» 69 (» N » y L v v y rS co y v v N N C �2 M N Efl ea — Efl ea — Efl (fl N N N R R R F F F d O O c0 O O C d O O 0) O O C O O r O O w ? 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EA Q K fA y Q O O •i y y t o o o o v y y co o o o o M L fp v N m y o O S o o o O o o o O (fl O (fl (fl O t fl O (fl ea V y 0) (fl O (fl (fl 0) I-- O r v O w w co O p m p r N N W � N O N 0) O 0 d 0 0 LL d LL N LL w f0 V/ c v co LO N O) 0) 00 c w rn N rn m rn N c u rn m o o co 0 7 r o o co m m m r O LO (o W r CO O O Ev (o C R N V O I� O V C R N V I'- r 0) V C R O V O c0 M C N CO N d) O r m co M d) N co r m N N O N M W y m 0 rn_ 0) co O M N y m 0 W rn_ r 'o M W y m 0 rn_ O r V r m L r N m L O O Co L N r 63 N 7 C 7 C e» e» (» 7 C e» (» (» LL LL LL LL LL LL V Ev 69 (» (» 69 U U M • 'L L L O N V LOO N V N N V LO M M Cl) Cl) Cl) M M Cl) M M M M M (0 (0 N N N N LO _ LO LL cc - C) o C) o C) o 04 04 (Q (Oj E LL U E LL U E LL • y N Q U U V ,N Q U U V ,N Q U U V Nv Z � � n � o_ v n n � o_ v n � U) U! R R N N 0 Q R R N N 0 LL LL O O LL F LL O O 0 LL F LL O O LL F ) / ° § [ m CL / \ \ ƒ / > / \ - / \ \ 3 CL a ] \ \\ LL ( � LL CL \ \ \_ I > L 5 $ ƒ f CL LL LL LL LL ) ( C ) C CL f f/ f § §g §§ / � \ � - � \ � - � / § / k \ _ 0 \ "t "t \ / ) \ k (E [ N f 2 m 0 / r- [ _ r a * - ƒ { k \ za - \ \ ƒ « $ /4- j j j - Q9 61Y 6c" ® 6c" ® 0 \ / \ _f - 0 $ K o \ \ 2 ® k 0 \ k CL r a r © CID CID - - - - § \ \ \ \ ~ LL f f f f 04 04 LL LL - - - - _ LL e _ 0 \ \ \ = o m a 2 \ 9 2 § E a 4 o LL CL LL - - - - 0 0 0 � / \ \ \ f ( j [ \ / 7 / / / § / o _ _ LL o � ~ / / } / _ \CL \ $ / 2 Q = o - . e e e e ) / 0 = J � ) / F- Personnel • Organization Overview The District is proposing a staffing level of 24.0 Full-Time Equivalents (FTE) in both FY 2015/16 and FY 2016/17 and a total Personnel Budget of$2,855,332 for FY 2015/16 and $2,921,259 for FY 2016/17, including salary and benefits. Staffing In recent years, the District has made an effort to strategically reduce staffing levels due to restructuring and reorganization of duties. Since FY 2012/13, staffing has been reduced from 25.4 FTE's to a current level of 24.0 FTE's. Recent reduction efforts since FY 2012/13 include: - Reduction of 0.30 FTE Public Works/Engineering Director. - Reduction of 0.10 FTE Senior Management Analyst: - Reduction of 1.00 FTE Utility&Maintenance Technician I/II/III/IV Since FY 2012/13, the District has also reclassified several positions to take advantage of restructuring and achieve greater efficiency in the workplace: - Reclassification of 1.00 FTE Program Coordinator to 1.00 FTE Finance Analyst I - Reclassification of 1.00 FTE Assistant General Manager to 1.00 FTE General Manager - Reclassification of 1.00 FTE Program Administrator to 1.00 FTE Superintendent(Administrative Services Manager) - Reclassification of 1.00 FTE Engineering Specialist to 1.00 FTE Engineer I The District is not proposing any restructuring or reclassifications in the current FY 2015/16 and FY 2016/17 budget. Organization Ratepayers Boats of uire�tors City Manager f)irector of Pu hlic Works General Manager Administrative Operations P"gra Seruires Manager Superintendent Assistant II senior Engineer Finance Conservation Utility&Maint" uiiliiy&Maint. Warehouse su., int. utility&Maini. Analyst specialist 11 Field Supervisor specialist II Coard inator Engineer I Specialist II Finan utility&Maint_ utility&Maint_ aint Technician Specialist I ist In Utility&Maint. ai nt Tec hnici ist I -til ry&Maint. 7echn" utility&Maint. 7echn Utility&Maint. Technician utility&Maint_ T—hrilriian 27 Salary and Benefits The San Dieguito Water District is currently operating under Terms and Conditions of Employment, which became effective in August 2012, following an impasse in negotiations between the City of Encinitas / San Dieguito Water District and Service Employees International Union—Local 221. Wages and Allowances While operating under the current Terms and Conditions of Employment, the District does not have any planned salary adjustments for employees and is still operating under salaries made effective on September 1, 2012. With salaries projected to remain flat, the only projected salary increases budgeted by the District for FY 2015/16 and FY 2016/17 are for standard step increases for District employees. The District is minimally increasing its other salary costs, including overtime, vacation buy-out and auto allowance costs in FY 2015/16 and FY 2016/17 to more accurately reflect actual spending in these areas. The amounts make up a small portion of the District's entire salary budget. Starting in FY 2015/16, the District has moved employee uniform costs, which were previously budgeted as a salary expense, to the Materials and Supplies category in order to better align with Ca1PERS reporting requirements. While this is a net zero change overall, the change is reflected as a reduction to the Salary and Benefits category. In FY 2015/16 only, the District is budgeting $3,600 in Temporary Salaries to hire part time assistance in the Engineering & Planning Division to electronically scan and archive historical engineering documents such as easements, quitclaims and vacations. This funding will support approximately 200 hours of work during the fiscal year. Total Salaries Overall with these changes, the District is budgeting for a 1.7% increase in salary costs in FY 2015/16 and a 0.7% increase in salary costs in FY 2016/17. Employee Benefits Under the current Terms and Conditions of Employment, the Flexible Benefit allowance provided by the San Dieguito Water District to employees is currently projected to remain flat in FY 2015/16 and FY 2016/17, with no increase in benefits provided. Ca1PERS and Pension The Terms and Conditions of Employment resulted in the commencement of Employer Paid Member Contributions to Ca1PERS by the San Dieguito Water District. Prior to August 22, 2012, the District would pay a portion of the employee share of contributions to the retirement system. Ending this practice resulted in employees paying their full share of the contribution and is a permanent annual savings to the District. The District has also recently undergone pension reform as a way to control long-term pension costs. Long-term employees, hired prior to October 13, 2012 maintain their status in the "classic" pension plan of 2.7% @ 55 (Tier 1). Prior to State-wide pension reform being enacted, the District adopted a second tier of pension benefits, effective October 13, 2012. Employees hired between October 13, 2012 and December 31, 2012 receive pension benefits in the 2.0% @ 60 plan (Tier 2). Employees hired on January 1, 2013 and after fall under the State of California Public Employees' Reform Act of 2013 (PEPRA)and receive benefits as part of the 2.0%@ 62 plan (Tier 3). Of the District's current active employees, 75% fall under Tier 1, 12.5% are in Tier 2 and 12.5% will receive Tier 3 benefits. Over time, as existing employees retire or leave their employment and new employees are hired, a greater percentage of employees will fall under Tier III benefits instead of Tier 1, which will ultimately reduce the District's benefit costs. 28 New to the District budget in FY 2015/16 is a line item to fund annual payments to CalPERS related to the District's shared risk pool unfunded liability. In late 2014, CalPERS released initial actuarial valuation reports to all agencies participating in their shared risk pool. Prior to this report, CalPERS was not able to provide agencies in the shared risk pool an individual accounting of their share of the liabilities in the pool. As a result of pension reform and new GASB requirements, CalPERS is now able to break out each agencies share of the risk pool and assign valuations to their share of normal costs,funded accrued liabilities and unfunded accrued liabilities. For the most current valuation period, ending on June 30, 2013, the District's unfunded accrued liability is stated as $4,636,079. The District's plan is funded at a level of 76.7% with a market value of$15,270,481 in funded assets. CalPERS is now expecting that agencies pay down their unfunded accrued liabilities, using a recommended minimum 30-year amortization schedule. Under this proposed repayment plan, an initial payment of$251,099 would be made in FY 2015/16 with annual payments increasing to a maximum of $671,286 in the 21St year and then ramping down until the liability is paid off in the 30th year. The liability is burdened with 7.5% interest annually. Given the amount of the unfunded liability, the ballooning payment structure of the recommended repayment plan and the high interest rate on the outstanding balance, the District has hired an independent actuarial to evaluate the benefits and risks of potential alternative repayment options for the District. Potential alternative repayment options include shorter amortization schedules (20-year or 25-year), level installments instead of ballooning installments, and evaluating the benefit of making strategic lump sum payments to pay down the balance. These alternatives may reduce interest costs to the District and therefore reduce the overall repayment cost. Currently the District is budgeting for the recommended 30-year amortization schedule in two-year budget. However, once the actuarial study is complete, the District may adjust its repayment strategy based upon the results and recommendations of the study, in an effort to provide payment stability and reduce interest costs over the life of the repayment. Such adjustments would most likely require an adjustment to the District budget and would be brought before the Board for approval. Total Benefits Overall, with the above stated benefit changes, the District is proposing an 18.3% increase in benefit costs for FY 2015/16 and another 5.9% increase in benefit costs for FY 2016/17. As discussed above, this increase is primarily due to the budgeting of payments to begin paying down the District's CalPERS shared risk pool unfunded accrued liability. However this new payment is offset slightly by reduced CalPERS normal benefit rates and an increased number of employees in the Tier II and Tier III retirement benefit plans. 29 District Personnel and Organization FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Classification Title Actual Actual Approved Proposed Proposed Public Works/Engineering Director 0.30 0.00 0.00 0.00 0.00 General Manager 0.00 0.00 1.00 1.00 1.00 Assistant District Manager 1.00 1.00 0.00 0.00 0.00 Senior Engineer 1.00 1.00 1.00 1.00 1.00 Senior Management Analyst(PW) 0.10 0.00 0.00 0.00 0.00 Superintendent 1.00 1.00 2.00 2.00 2.00 Engineer 1 0.00 0.00 1.00 1.00 1.00 Program Administrator 1.00 1.00 0.00 0.00 0.00 Utility&Maintenance Field Supervisor 1.00 1.00 1.00 1.00 1.00 Utility&Maintenance Specialist I/11 6.00 6.00 6.00 6.00 6.00 Finance Analyst 1 0.00 1.00 1.00 1.00 1.00 Engineering Specialist I/11/111 1.00 1.00 0.00 0.00 0.00 Water Conservation Specialist I/11 1.00 1.00 1.00 1.00 1.00 Program Coordinator 2.00 1.00 1.00 1.00 1.00 Utility&Maintenance Technician I/11/III/IV 7.00 7.00 6.00 6.00 6.00 Finance Technician I/11/111 2.00 2.00 2.00 2.00 2.00 Program Assistant I/11/111 1.00 1.00 1.00 1.00 1.00 District Total 25.40 25.00 24.00 24.00 24.00 Position Summary by • FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Division FTE's Actual Actual Approved Proposed Proposed Administration 0.00 0.00 0.00 0.00 0.00 Customer Services 4.70 5.25 5.25 5.25 5.25 Water Purchases and Treatment 0.00 0.00 0.00 0.00 0.00 Recycled Water 0.00 0.85 1.00 1.00 1.00 Field Operations 16.10 14.90 14.75 14.75 14.75 Engineering and Planning 4.60 4.00 3.00 3.00 3.00 District Total 25.40 25.00 24.00 24.00 24.00 FY 15/16 Proposed FTE by Division -Engineering and Planning 3.00 Customer Services Field Operations 5.25 14.75 Recycled Water 1.00 30 District Personnel and Organization FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Salaries/Benefits Actual Actual Approved Proposed Proposed Salaries $ 1,795,849 $ 1,898,733 $ 1,944,041 $ 1,976,647 $ 1,990,612 Benefits $ 744,011 $ 702,002 $ 742,488 $ 878,685 $ 930,647 District Total $ 2,539,859 $ 2,600,735 $ 2,686,529 $ 2,855,332 $ 2,921,259 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Division Salaries&Benefits Actual Actual Approved Proposed Proposed Administration $ 36,236 $ 37,333 $ 39,268 $ 287,893 $ 326,066 Customer Services $ 468,228 $ 525,499 $ 550,374 $ 543,224 $ 548,509 Water Purchases and Treatment $ - $ - $ - $ - $ - Recycled Water $ 2,129 $ 99,494 $ 124,218 $ 120,007 $ 121,173 Field Operations $ 1,450,042 $ 1,428,959 $ 1,555,943 $ 1,484,501 $ 1,503,595 Engineering and Planning $ 583,224 $ 509,450 $ 416,725 $ 419,707 $ 421,916 District Total $ 2,539,859 $ 2,600,735 $ 2,686,529 $ 2,855,332 $ 2,921,259 Other Personnel • Expenses FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Other Personnel Related Expenses Actual Actual Approved Proposed Proposed Board Member Meeting Stipends $ 5,400 $ 6,000 $ 8,000 $ 8,000 $ 8,000 Temporary Salaries $ - $ - $ - $ 3,600 $ - Personnel Transfers $ 44,343 $ - $ - $ - $ - Retiree Health OPEB Contribution $ 30,836 $ 31,268 $ 31,268 $ 28,794 $ 29,082 CalPERS Shared Risk Pool Unfunded Liability $ - $ - $ - $ 251,099 $ 288,984 Overtime $ 43,497 $ 40,933 $ 53,000 $ 54,000 $ 54,000 Vacation Buy-Out $ 38,207 $ 24,458 $ 34,000 $ 37,000 $ 37,000 Compensated Absences $ 7,361 $ (13,554) $ - $ - Uniforms/Clothing $ 4,878 $ 3,250 $ 6,000 $ - $ - Auto Allowance $ - $ 232 $ 1,015 $ 1,800 $ 1,800 District Total $ 174,522 $ 92,588 $ 133,283 $ 384,293 $ 418,866 FY 15/16 Proposed Salary to FY 15/16 Proposed Salary and Benefit Ratio Benefit Costs by Division Engineering and Planning $419,707 Benefits Administration $878,685 Field $287,893 Operations Salaries $1,484,501 $1,976,647 Customer Services $543,224 Recycled Water $120,007 31 District Personnel and Organization District Position . Pay Ranges Monthly Pay Rate Monthly Pay Rate Classification Title Pay Grade (Low) (High) Program Assistant 1 11 $ 2,821 $ 3,600 Finance Technician 1 13 $ 3,456 $ 4,411 Program Assistant 11 13 $ 3,456 $ 4,411 Utility &Maintenance Technician 1 13 $ 3,456 $ 4,411 Finance Technician 11 21 $ 3,595 $ 4,817 Program Assistant 111 21 $ 3,595 $ 4,817 Utility &Maintenance Technician 11 21 $ 3,595 $ 4,817 Finance Technician 111 22 $ 3,897 $ 5,223 Utility &Maintenance Technician 111 22 $ 3,897 $ 5,223 Program Coordinator 22 $ 3,897 $ 5,223 Utility &Maintenance Technician IV 23 $ 4,200 $ 5,628 Water Conservation Specialist 1 23 $ 4,200 $ 5,628 Finance Analyst 1 24 $ 4,579 $ 6,136 Utility &Maintenance Specialist 1 24 $ 4,579 $ 6,136 Water Conservation Specialist 11 24 $ 4,579 $ 6,136 Utility &Maintenance Field Supervisor 25 $ 5,033 $ 6,744 Utility &Maintenance Specialist 11 25 $ 5,033 $ 6,744 Engineer 1 44 $ 6,091 $ 8,570 Superintendent 45 $ 6,524 $ 9,179 Senior Engineer 63 $ 7,105 $ 10,498 General Manager 65 $ 8,254 $ 12,195 32 Overview As discussed in the "Sources of Funds"section of this document, the District has three main sources of operating and non-operating revenue which comprise of over 90%of the District's total annual revenue. These three main sources are water sales, meter service charges and property taxes. In addition to these primary revenue sources, the District receives minor revenue from a variety of other sources, including billing and engineering fees, capacity buy-in charges, investment and property earnings and other miscellaneous revenue. Water Sales, both potable and recycled, are proposed to comprise roughly 68%of total District revenue, however this category is the most volatile source of District revenue, highly dependent upon user consumption and weather/environmental factors. Meter Service Charges are proposed to make up approximately 21%of total District revenue and are a more reliable source of fixed revenue based upon the number of meters in the District's system. Both water sales and service charge revenue are based upon the District's schedule of water rates and charges which are developed during regular water rate studies conducted by the District. The proposed revenue shown for these categories is based upon the District's current water rates and charges from its most recent 2013 water rate study. The District is currently undergoing a new water rate study which may result in adjustments to the schedule of water rates and charges. Any water rate and charge adjustments approved by the Board would have a positive effect on District revenue and the District would make adjustments to these numbers at a future quarterly budget update to the Board. It should be noted that, as previously discussed in this document, proposed potable water sales revenues are based upon the implementation of a 14% drought rate, to maintain revenue stability during this period of drought and state- mandated water use reductions. Property Tax revenue comprises roughly 5%of total district revenue and has remained relatively stable on a year-to- year basis based upon the District's allocation as a special district. A slight increase is proposed during the upcoming two-year budget due to increasing property valuations. The SDCWA Infrastructure Access Charge (IAC) is a pass-through charge that is collected from our customers and paid to the District's water wholesaler. This is a revenue-neutral transaction with equal amounts being budgeted on both the expenditure and revenue sides of the budget. Earnings reflect various types of income the District receives from interest and property, such as interest on District funds, property rental and electricity generation. Other District revenues include billing charges, engineering fees, capacity fees and other miscellaneous proceeds. Billing charges and engineering fees are based upon the District's Miscellaneous Fee and Charge Study and are developed to be cost recoverable for services provided by the District. Capacity fees are charged to new users to "buy-in"to the District's built-out water system. The following pages further summarize and detail the District's revenue. 33 Revenue District Revenue Summary FY 13/14 FY 14/15 FY 15/16 FY 16/17 Revenue Source Actual Approved Proposed Proposed Taxes $ 787,242 $ 730,000 $ 780,000 $ 780,000 Engineering Fees $ 251,660 $ 214,550 $ 250,700 $ 250,700 Potable Meter Service Charges $ 3,227,823 $ 3,372,890 $ 3,389,704 $ 3,406,603 Potable Water Sales $ 10,649,157 $ 10,247,237 $ 9,979,648 $ 9,979,648 Recycled Water Program $ 520,431 $ 611,277 $ 799,325 $ 858,103 Pass-Through Charges $ 488,732 $ 490,000 $ 499,566 $ 518,336 Billing Charges $ 47,192 $ 64,000 $ 49,600 $ 49,600 Earnings $ 119,444 $ 100,000 $ 140,900 $ 140,900 Other District Revenue $ 65,323 $ 59,750 $ 30,000 $ 30,000 Capital Contributions $ 382,406 $ 75,000 $ 100,000 $ 100,000 Total $ 16,539,409 $ 15,964,704 $ 16,019,443 $ 16,113,890 FY 2015/16 Proposed Revenue by Category 5% 3% 62%, 2% 5% 2% 21% ■Taxes ■Engineering Fees Potable Meter Service Charges ■Potable Water Sales Recycled Water Program ■Pass-Through Charges Other Sources 34 Revenue District Revenue Detail FY 13/14 FY 14/15 FY 15/16 FY 16/17 Revenue Source Actual Approved Proposed Proposed Taxes Property Taxes-Secured $ 787,242 $ 730,000 $ 780,000 $ 780,000 Engineering Fees New Meter Installation Fees $ 198,795 $ 115,000 $ 135,000 $ 135,000 Hydrant Rental Fees $ 875 $ 1,500 $ - $ - Sales of Maps&Specifications $ 190 $ 2,000 $ 500 $ 500 Water Availability Letters $ - $ 1,050 $ 200 $ 200 Plan Check Fees $ - $ 40,000 $ 40,000 $ 40,000 Inspection Fees $ 10,356 $ 35,000 $ 35,000 $ 35,000 Interfund Revenue(Services provided to City) $ 41,444 $ 20,000 $ 40,000 $ 40,000 Potable Meter Service Charges Water Meter Service Charges-Potable $ 3,220,559 $ 3,362,890 $ 3,379,704 $ 3,396,603 Water Meter Service Charges-Construction $ 7,264 $ 10,000 $ 10,000 $ 10,000 Potable Water Sales Potable Water Sales-Single-Family Residential $ 5,996,944 $ 5,792,207 $ 5,588,603 $ 5,588,603 Potable Water Sales-Multi-Family Residential $ 1,993,482 $ 2,058,998 $ 1,846,235 $ 1,846,235 Potable Water Sales-Commercial $ 1,186,462 $ 1,230,652 $ 1,197,558 $ 1,197,558 Potable Water Sales-Landscaping $ 1,001,341 $ 860,388 $ 948,066 $ 948,066 Potable Water Sales-Agriculture $ 361,858 $ 283,631 $ 349,288 $ 349,288 Potable Water Sales-Construction $ 109,070 $ 21,361 $ 49,898 $ 49,898 Recycled Water Program Water Meter Service Charges-Recycled $ 60,048 $ 79,277 $ 82,250 $ 85,000 Recycled Water Sales $ 460,383 $ 532,000 $ 717,075 $ 773,103 Pass Through Charges SDCWA Infrastructure Access Charge(Pass-Through) $ 488,732 $ 490,000 $ 499,566 $ 518,336 Billing Charges Delinquent Charges $ 33,802 $ 46,000 $ 32,000 $ 32,000 Turn-Off Charges $ 1,960 $ 1,400 $ 1,800 $ 1,800 Turn-On Charges $ 1,280 $ 1,400 $ 1,800 $ 1,800 New Account Set-Up Fees $ 8,830 $ 13,200 $ 12,000 $ 12,000 Returned Check Charges $ 1,320 $ 2,000 $ 2,000 $ 2,000 Earnings Pooled Investment Earnings $ 28,497 $ 40,000 $ 40,000 $ 40,000 Property Rental Income $ 46,288 $ 50,000 $ 75,900 $ 75,900 Electricity Generation Income $ 44,659 $ 10,000 $ 25,000 $ 25,000 Other District Revenue Cost Recovery $ 15,072 $ 7,500 $ 10,000 $ 10,000 Proceeds of Fixed Asset Disposal $ 7,645 $ - $ - $ - Other District Revenues(Rebates/Refunds) $ 42,606 $ 52,250 $ 20,000 $ 20,000 Capital Contributions Capacity Fees $ 327,360 $ 75,000 $ 100,000 $ 100,000 Federal Capital Grants $ 50,056 $ - $ - $ - Contributions from Other Agencies $ 4,990 $ - $ - $ - District Total $ 16,539,409 $ 15,964,704 $ 16,019,443 $ 16,113,890 35 Operating Program Overview The District maintains an Operating Program of six distinct Divisions, each designed to detail and track the expenditures of the programs and services that it provides. These Divisions are: - Administration: Houses the budget for expenses not otherwise attributable to a specific Division. - Customer Services: Includes staffing and expense costs related to customer service, water conservation, budget administration and other general administration. - Water Purchases and Treatment: Houses the budget for costs related to potable water purchases and treatment. - Recycled Water Program: Includes staffing and expense costs related to the District's service of recycled water. - Field Operations: Includes staffing and expense costs for the day-to-day maintenance and operations of the District's water distribution system. - Engineering and Planning: Includes staffing and expense costs for the District's engineering and planning duties,such as capital project management, inspections,studies and other related functions. Each of these operating divisions fund the day-to-day activities of the District,which may include salaries and benefits for staff, the purchasing of materials and supplies, funding for contracts and services, and other miscellaneous expenditures. These day-to-day activities represent the District's short-term objectives, or initiatives to be accomplished within a single fiscal year. The pages to follow include summaries of Operating Program expenditures, as well as detail pages for each individual division which include: - Division Function - Division Programs and Activities - FY 2013/14 and FY 2014/15 Division Accomplishments - FY 2015/16 and FY 2016/17 Division Objectives - Division Staffing - Division Expenditure Summary - Division Expenditure Detail 36 Operating Program Operating Budget by • FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Division 91 r Actual Actual Approved Proposed Proposed Administration $ 1,157,967 $ 1,149,441 $ 1,209,799 $ 1,661,055 $ 1,657,014 Customer Services $ 621,420 $ 673,632 $ 746,674 $ 805,024 $ 810,309 Water Purchases&Treatment $ 5,431,049 $ 7,276,228 $ 8,394,049 $ 6,259,812 $ 6,755,555 Recycled Water Program $ 505,502 $ 616,232 $ 695,018 $ 713,407 $ 800,853 Field Operations $ 1,753,730 $ 1,806,684 $ 2,076,329 $ 2,052,827 $ 2,031,841 Engineering&Planning $ 594,463 $ 536,175 $ 475,825 $ 477,807 $ 483,216 Operating Budget Total $ 10,064,130 $ 12,058,392 $ 13,597,695 $ 11,969,932 $ 12,538,788 Operating • • by • • FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Category Actual Actual Approved Proposed Proposed Salaries $ 1,795,849 $ 1,898,733 $ 1,944,041 $ 1,976,647 $ 1,990,612 Benefits $ 744,011 $ 702,002 $ 742,488 $ 878,685 $ 930,647 Water Purchases $ 3,807,058 $ 6,297,819 $ 6,873,000 $ 4,945,686 $ 5,432,853 Water Treatment $ 2,121,250 $ 1,489,420 $ 2,071,049 $ 1,897,126 $ 1,991,982 Material&Supplies $ 277,021 $ 281,250 $ 352,350 $ 378,600 $ 379,800 Contracts&Services $ 391,447 $ 464,607 $ 630,441 $ 791,890 $ 736,596 Internal Cost Allocation $ 921,484 $ 927,190 $ 931,926 $ 1,053,798 $ 1,053,798 Capital Outlay(Fixed Assets) $ - $ - $ 50,000 $ 45,000 $ 20,000 Debt&Finance $ 6,010 $ (2,629) $ 2,400 $ 2,500 $ 2,500 Operating Budget Total $ 10,064,130 $ 12,058,392 $ 13,597,695 $ 11,969,932 $ 12,538,788 FY 15/16 Proposed Budget by FY 15/16 Proposed Budget by Division Category 4% 9% 0 17% 7% 0% 7% 3% 6% ' 16% 52% 41% •Administration ■Customer Services ■Salaries ■Benefits Water Purchases&Treatment ■Recycled Water Program ■Water Purchases ■Water Treatment •Field Operations ■Engineering&Planning ■Material&Supplies Contracts&Services Internal Cost Allocation Capital Outlay(Fixed Assets) Debt&Finance 37 Operating Program FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 53192690-Administration Actual Actual Approved Proposed Proposed Salaries $ 5,400 $ 6,000 $ 8,000 $ 8,000 $ 8,000 Benefits $ 30,836 $ 31,333 $ 31,268 $ 279,893 $ 318,066 Materials&Supplies $ 11,405 $ 6,646 $ 37,650 $ 34,600 $ 32,600 Contracts&Services $ 182,832 $ 180,901 $ 198,555 $ 282,264 $ 242,050 Internal Cost Allocation $ 921,484 $ 927,190 $ 931,926 $ 1,053,798 $ 1,053,798 Debt&Finance $ 6,010 $ (2,629) $ 2,400 $ 2,500 $ 2,500 Administration Total $ 1,157,967 $ 1,149,441 $ 1,209,799 $ 1,661,055 $ 1,657,014 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 53192691 -Customer Services Actual Actual Approved Proposed Proposed Salaries $ 339,502 $ 385,029 $ 403,802 $ 417,832 $ 420,071 Benefits $ 128,726 $ 140,470 $ 146,572 $ 125,392 $ 128,438 Materials&Supplies $ 45,980 $ 33,518 $ 67,000 $ 62,500 $ 62,500 Contracts&Services $ 107,212 $ 114,615 $ 129,300 $ 199,300 $ 199,300 Customer Services Total $ 621,420 $ 673,632 $ 746,674 $ 805,024 $ 810,309 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 53192692-Water Purchases&Treatment Actual Actual Approved Proposed Proposed Water Purchases $ 3,309,798 $ 5,786,808 $ 6,323,000 $ 4,362,686 $ 4,763,573 Water Treatment $ 2,121,250 $ 1,489,420 $ 2,071,049 $ 1,897,126 $ 1,991,982 Water Purchases&Treatment Total $ 5,431,049 $ 7,276,228 $ 8,394,049 $ 6,259,812 $ 6,755,555 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 53192693-Recycled Water Program Actual Actual Approved Proposed Proposed Salaries $ 1,594 $ 76,348 $ 91,369 $ 93,635 $ 94,149 Benefits $ 535 $ 23,146 $ 32,849 $ 26,372 $ 27,024 Water Purchases $ 497,260 $ 511,011 $ 550,000 $ 583,000 $ 669,280 Contracts&Services $ 6,113 $ 5,726 $ 20,800 $ 10,400 $ 10,400 Recycled Water Program Total $ 505,502 $ 616,232 $ 695,018 $ 713,407 $ 800,853 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 53192694-Field Operations Actual Actual Approved Proposed Proposed Salaries $ 1,016,063 $ 1,038,106 $ 1,124,866 $ 1,123,015 $ 1,134,386 Benefits $ 433,979 $ 390,853 $ 431,077 $ 361,486 $ 369,209 Materials&Supplies $ 212,992 $ 235,736 $ 238,600 $ 273,400 $ 273,400 Contracts&Services $ 90,696 $ 141,989 $ 231,786 $ 249,926 $ 234,846 Capital Outlay(Fixed Assets) $ - $ - $ 50,000 $ 45,000 $ 20,000 Field Operations Total $ 1,753,730 $ 1,806,684 $ 2,076,329 $ 2,052,827 $ 2,031,841 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 53192695-Planning&Engineering Actual Actual Approved Proposed Proposed Salaries $ 433,290 $ 393,249 $ 316,004 $ 334,165 $ 334,006 Benefits $ 149,935 $ 116,201 $ 100,721 $ 85,542 $ 87,910 Contracts&Services $ 4,594 $ 21,376 $ 50,000 $ 50,000 $ 50,000 Materials&Supplies $ 6,645 $ 5,349 $ 9,100 $ 8,100 $ 11,300 Planning&Engineering Total $ 594,463 $ 536,175 $ 475,825 $ 477,807 $ 483,216 Operating Budget Total $ 10,064,130 $ 12,058,392 $ 13,597,695 $ 11,969,932 $ 12,538,788 38 Administration Division Fund: 531 O rg: 53192690 i=OMMAd A The Administration Division is utilized to capture District-wide costs and general administrative costs that benefit multiple Divisions of the District. Such costs may include insurance premiums, retirement program costs, legal fees, memberships, training costs, office supplies, utilities, and other minor District-wide costs. The District's Internal Cost Allocation to the City of Encinitas for finance, fleet maintenance, human resources, information technology, risk management, and records management support is also captured in this Division. Division • • and Activities Coordinate internal support services with the City of Encinitas Secure District membership in local, state and federal industry organizations Promote the professional development of District employees through education and training Provide for District communications, including 800 mhz radios, landlines and cellular phones Fund professional services contracts for the District's annual audit and controller's report Maintain electricity for all District facilities Renew maintenance contracts for District software systems Budget for District Board Member meeting stipends Consolidate District office supply, book, subscription and furniture purchases Fund the District's annual CalPERS shared risk pool unfunded liability payment FY 13/14 • FY 14/15 Division Accomplishments Ensured all District employees maintained current certifications and received required trainings Updated the District's Internal Cost Allocation study with City Selected a new auditing firm for the District's Comprehensive Annual Financial Report(CAFR) • • • • Maintain the District's low loss liability loss rate Continue the District's emphasis on employee training and certification Fund the District's share of the City's Planning System upgrade Fund the District's share of Wi-Fi installation at the Public Works Yard 39 Administration Division Fund: 531 Org: 53192690 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Classification(FTE) Actual Actual Approved Proposed Proposed No personnel are directly assigned to this Division Division Total 0.00 0.00 0.00 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Account Group Actual Actual Approved Proposed Proposed Salaries $ 5,400 $ 6,000 $ 8,000 $ 8,000 $ 8,000 Benefits $ 30,836 $ 31,333 $ 31,268 $ 279,893 $ 318,066 Materials&Supplies $ 11,405 $ 6,646 $ 37,650 $ 34,600 $ 32,600 Contracts&Services $ 182,832 $ 180,901 $ 198,555 $ 282,264 $ 242,050 Internal Cost Allocation $ 921,484 $ 927,190 $ 931,926 $ 1,053,798 $ 1,053,798 Debt&Finance $ 6,010 $ (2,629) $ 2,400 $ 2,500 $ 2,500 Division Total $ 1,157,967 $ 1,149,441 $ 1,209,799 $ 1,661,055 $ 1,657,014 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Non-Personnel Expense Account Actual Actual Approved Proposed Proposed Professional Services Contracts $ 10,400 $ 10,700 $ 11,500 $ 9,500 $ 10,000 Legal Contracts $ 17,024 $ 7,796 $ 15,000 $ 15,000 $ 15,000 Technical Service Contracts $ 4,949 $ - $ 2,250 $ - $ - Maintenance Contracts $ 8,575 $ 7,314 $ 15,500 $ 12,000 $ 12,000 Interagency Agreements $ 10,582 $ 10,908 $ 10,750 $ 11,450 $ 11,450 Utilities-Gas&Electricity $ 8,824 $ 9,023 $ 11,890 $ 13,725 $ 14,600 Permits $ 10,700 $ 10,688 $ 9,000 $ 9,450 $ 9,450 Insurance $ 60,664 $ 70,905 $ 63,000 $ 93,000 $ 93,000 Communications $ 9,136 $ 8,263 $ 14,480 $ 19,500 $ 12,000 Travel&Mileage $ 686 $ 5,794 $ 7,900 $ 7,900 $ 7,900 Training&Development $ 33,411 $ 33,606 $ 37,285 $ 46,650 $ 46,650 Internal Cost Allocation $ 921,484 $ 927,190 $ 931,926 $ 1,053,798 $ 1,053,798 Other Interfund Transactions $ - $ - $ - $ 34,089 $ - Office Supplies $ 2,078 $ 1,485 $ 2,000 $ 2,500 $ 2,500 Books and Subscriptions $ 514 $ - $ 1,150 $ 1,250 $ 1,250 Furniture&Fixtures(less than$5k) $ - $ 990 $ 10,000 $ 10,000 $ 10,000 Computer Software&Hardware $ 8,813 $ 4,172 $ 24,500 $ 20,850 $ 18,850 Claims Expense $ 7,880 $ 5,905 $ - $ 10,000 $ 10,000 Billing Adjustments $ 6,010 $ (2,629) $ 2,400 $ 2,500 $ 2,500 40 Customer Services Division Fund: 531 O rg: 53192691 TR�S�I r 5/8", 3/4" _ 7 CUkAC; Feet _3 3 6 5 IF The Customer Services Division is primarily responsible for the customer-related services in District, including utility billing and water conservation. The utility billing section is responsible for the accurate and timely billing of over 11,500 customers in the District and for providing general customer service and cashiering. The water conservation section is responsible for ensuring the District meets drought response and region-wide goals for water conservation by creating conservation programs and leading public outreach efforts. This Division is also responsible for budget development and administration, water rate study management and accounts payable/receivable. Division • • and Activities Accurate and timely billing for potable and recycled water customers Customer service and cashiering for the District's 11,500 customers Delinquency processing and collections management Budget development and administration Water rate study development and implementation Accounts payable and receivable Public outreach and education Water conservation program administration Drought and water supply shortage response FY 13/14 • FY 14/15 Division Accomplishments Maintained a separate budget document and financial reporting for the District Enhanced public outreach efforts through the use of electronic and social media Implemented a new automated call-out service for billing reminders Responded to worsening regional and state drought conditions • FA Onnar-ri Tel• Initiate the replacement of the District's utility billing system Continue to keep the District on track to meet short and long-term requirements for water conservation Perform an 2-year update to the District's water rate study Transition from bi-monthly to monthly billing for all water customers 41 Customer Services Division Fund: 531 Org: 53192691 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Classification(FTE) Actual Actual Approved Proposed Proposed General Manager 0.00 0.00 0.30 0.30 0.30 Assistant General Manager 0.30 0.30 0.00 0.00 0.00 Senior Management Analyst 0.10 0.00 0.00 0.00 0.00 Superintendent(Admin.Services Mgr.) 0.00 0.00 1.00 1.00 1.00 Program Administrator 1.00 1.00 0.00 0.00 0.00 Finance Analyst 1 0.00 1.00 1.00 1.00 1.00 Program Coordinator 0.30 0.00 0.00 0.00 0.00 Water Conservation Specialist 1/11 1.00 1.00 1.00 1.00 1.00 Finance Technician I/11/111 2.00 1.95 1.95 1.95 1.95 Division Total 4.70 5.25 5.25 5.25 5.25 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Account Group Actual Actual Approved Proposed Proposed Salaries $ 339,502 $ 385,029 $ 403,802 $ 417,832 $ 420,071 Benefits $ 128,726 $ 140,470 $ 146,572 $ 125,392 $ 128,438 Materials&Supplies $ 45,980 $ 33,518 $ 67,000 $ 62,500 $ 62,500 Contracts&Services $ 107,212 $ 114,615 $ 129,300 $ 199,300 $ 199,300 Division Total $ 621,420 $ 673,632 $ 746,674 $ 805,024 $ 810,309 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Non-Personnel Expense Account Actual Actual Approved Proposed Proposed Professional Service Contracts $ 52,827 $ 59,960 $ 50,300 $ 72,900 $ 72,900 Information Technology Contracts $ 17,827 $ 21,305 $ 20,000 $ 20,000 $ 20,000 Other Purchased Services $ 6,557 $ 6,162 $ 9,500 $ 6,400 $ 6,400 Office Supplies $ 11,344 $ 10,612 $ 15,000 $ 15,000 $ 15,000 Postage $ 31,785 $ 20,945 $ 50,000 $ 45,000 $ 45,000 Repair&Maintenance Supplies $ 2,850 $ 1,961 $ 2,000 $ 2,500 $ 2,500 Public Education/Outreach $ 30,000 $ 10,113 $ 22,500 $ 50,000 $ 50,000 Water Conservation $ - $ 17,074 $ 27,000 $ 50,000 $ 50,000 42 Water Purchases & Treatment Division Fund: 531 O rg: 53192692 - •po Department • The Water Purchases&Treatment Division is utilized to capture the cost of potable water purchased by the District to be sold to District customers, as well as the cost of water treatment. The District has two sources of water; local water from Lake Hodges,which it maintains rights to, and imported water purchased from the San Diego County Water Authority (SDCWA). Water treatment is provided at the R.E. Badger Water Filtration Plant which is jointly owned with the Santa Fe Irrigation District(SFID). Division • • and Purchase potable water to supply District customers Untreated local water from Lake Hodges Untreated imported water from SDCWA Treated imported water from SDCWA Optimize water purchases to achieve long-term supply goals at the lowest cost to our customers Treat raw water at the R.E. Badger Water Filtration Plant Ensure the safety and reliability of the District's water supply FY 13/14 • FY 14/15 Division Accomplishme-AP Optimized the filling of District reservoirs to maximize efficiency at the R.E. Badger Water Filtration Plant Produced the District's annual Water Quality Report Completed negotiations to amend the Lake Hodges agreement between SDWD, SFID and City of San Diego Participated in SDCWA's Fiscal Sustainability Process to ensure proper regional allocations and rate stability • =- 1 • • Maximize the use of lower cost local water when local water supply conditions allow Proactively assess and respond to changing conditions in the water supply environment Negotiate water sales agreements with other agencies for when excess local water is available Continue to partner with SFID to ensure the optimal operation of the R.E. Badger Water Filtration Plant 43 Water Purchases & Treatment Division Fund: 531 Org: 53192692 EEMMEMEML FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Classification(FTE) Actual Actual Approved Proposed Proposed No personnel are directly assigned to this Division Division Total 0.00 0.00 0.00 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Account Group Actual Actual Approved Proposed Proposed Salaries $ $ $ $ $ Benefits $ $ $ $ $ - Water Purchases $ 3,309,798 $ 5,786,808 $ 6,323,000 $ 4,362,686 $ 4,763,573 Water Treatment $ 2,121,250 $ 1,489,420 $ 2,071,049 $ 1,897,126 $ 1,991,982 Division Total $ 5,431,049 $ 7,276,228 $ 8,394,049 $ 6,259,812 $ 6,755,555 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Non-Personnel Expense Account Actual Actual Approved Proposed Proposed Treatment Costs $ 2,121,250 $ 1,489,420 $ 2,071,049 $ 1,897,126 $ 1,991,982 Imported Treated Water $ 186,154 $ 336,677 $ 225,000 $ 299,754 $ 312,441 Imported Untreated Water $ 1,724,879 $ 4,322,775 $ 4,813,000 $ 2,608,016 $ 2,724,026 Local Untreated Water $ 197,054 $ - $ 121,000 $ 63,600 $ 63,600 MWD Readiness to Serve $ 160,984 $ 114,299 $ 130,000 $ 119,544 $ 127,912 CWA Infrastructure Access $ 470,208 $ 478,578 $ 490,000 $ 499,566 $ 518,336 CWA Emergency Storage Fee $ 365,081 $ 350,766 $ 352,000 $ 435,445 $ 529,850 MWD Capacity Reservation $ 54,239 $ 47,401 $ 58,000 $ 82,275 $ 101,891 CWA Customer Service Fee $ 151,199 $ 136,311 $ 134,000 $ 165,350 $ 201,005 CWA Supply Reliability Charge $ - $ - $ - $ 89,136 $ 184,512 44 Recycled Water Division Fund: 531 O rg: 53192693 The Recycled Water Division promotes the use of recycled water in the District. The District sells recycled water to customers provided by the San Elijo Joint Powers Authority (SEJPA). The District is responsible for customer service and billing, site inspections, plan approvals and meter maintenance,while SEJPA is responsible for the production and distribution of recycled water. Division • • and Activities Review projects to determine the use of recycled water where economically and financially possible Plan checks for site developments to ensure consistency with the District's Rules and Regulations Construction inspection of new developments where recycled water is utilized Cross-connection testing and inspection at new and existing recycled water sites FY 13/14 • FY 14/15 Division Accomplishments Established procedures for recycled water use on grading and dust control operations Established a recycled water oversight consent agreement with the County of San Diego Approved dual plumbed sites for Encinitas Community Park and Olivenhain Sewer Pump Station Approved use of recycled water in the cooling tower at Scripps Hospital Added seven new recycled water meters to the system FY 15/16 • FY 16/17 Division Objectives Perform an update to the District's Recycled Water Rules and Regulations Encourage site conversions for existing development located near recycled water infrastructure Establish a water demand offset fee for potential use during drought conditions Establish site specific shutdown procedures for each recycled water site 45 Recycled Water Division Fund: 531 Org: 53192693 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Classification(FTE) Actual Actual Approved Proposed Proposed General Manager 0.00 0.00 0.10 0.10 0.10 Assistant General Manager 0.00 0.10 0.00 0.00 0.00 Senior Engineer 0.00 0.10 0.10 0.10 0.10 Superintendent 0.00 0.00 0.05 0.05 0.05 Engineer 1 0.00 0.00 0.10 0.10 0.10 Utility&Maintenance Specialist I/11 0.00 0.40 0.50 0.50 0.50 Engineering Specialist I/11/111 0.00 0.10 0.00 0.00 0.00 Utility&Maintenance Specialist I/11 0.00 0.10 0.10 0.10 0.10 Finance Technician I/11/111 0.00 0.05 0.05 0.05 0.05 Division Total 0.00 0.85 1.00 1.00 1.00 Expenditure FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Account Group Actual Actual Approved Proposed Proposed Salaries $ 1,594 $ 76,348 $ 91,369 $ 93,635 $ 94,149 Benefits $ 535 $ 23,146 $ 32,849 $ 26,372 $ 27,024 Water Purchases $ 497,260 $ 511,011 $ 550,000 $ 583,000 $ 669,280 Contracts&Services $ 6,113 $ 5,726 $ 20,800 $ 10,400 $ 10,400 Division Total $ 505,502 $ 616,232 $ 695,018 $ 713,407 $ 800,853 Expenditure FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Non-Personnel Expense Account Actual Actual Approved Proposed Proposed Technical Service Contracts $ 6,113 $ 5,726 $ 20,800 $ 10,400 $ 10,400 Recycled Water $ 497,260 $ 511,011 $ 550,000 $ 583,000 $ 669,280 46 Field Operations Division Fund: 531 O rg: 53192694 i The Field Operations Division operates and maintains the District's water distribution system, including over 175 miles of pipeline and over 11,600 service connections. We also maintain 19 pressure reducing stations, a 2.5 MG and 7.5 MG reservoir, an emergency pump station, and other appurtenances. District personnel provide on-going maintenance of the water system's distribution valves,water mains, service lines,water meters, and fire hydrants. Staff also performs meter reading, customer service,water quality sampling, utility mark-out and emergency repairs. Division • • and Activities Operations, maintenance and repair of water infrastructure Construction and installation of new water facilities Monitoring and sampling of water quality compliance Management of the cross connection program Responding to customer inquiries and requests for assistance, including 24-hour emergency response Reading of water meters Performing mark-outs for underground utilities FY 13/14 • FY 14/15 Division Accomplishments., Installed between 20-25 new water services and meters each year Monitored and sampled water quality at over 830 sites Responded to over 2,800 customer inquiries Performed major system shut-downs in support of large CIP projects Completed the Cross Connection Survey for the District Enhanced the District's inventory control procedures Collaborated with neighboring agencies on joint corrosion control and asphalt repair contracts FY 15/16 • FY 16/17 Division Objectives Perform non-destructive assessment of critical pipelines Install a minimum of 12 new water main valves Exercise 1,500 water main valves as part of the District's valve maintenance program Complete an Operations Plan to further document policies and procedures 47 Field Operations Division Fund: 531 Org: 53192694 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Classification(FTE) Actual Actual Approved Proposed Proposed Public Works/Engineering Director 0.30 0.00 0.00 0.00 0.00 General Manager 0.00 0.00 0.30 0.30 0.30 Assistant General Manager 0.40 0.30 0.00 0.00 0.00 Superintendent 1.00 1.00 0.95 0.95 0.95 Utility&Maintenance Field Supervisor 1.00 1.00 1.00 1.00 1.00 Utility&Maintenance Specialist I/II 4.00 3.60 4.50 4.50 4.50 Utility&Maintenance Technician 1/11/11 7.00 7.00 6.00 6.00 6.00 Program Coordinator 1.40 1.00 1.00 1.00 1.00 Program Assistant I/11 1.00 1.00 1.00 1.00 1.00 Division Total 16.10 14.90 14.75 14.75 14.75 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Account Group Actual Actual Approved Proposed Proposed Salaries $ 1,016,063 $ 1,038,106 $ 1,124,866 $ 1,123,015 $ 1,134,386 Benefits $ 433,979 $ 390,853 $ 431,077 $ 361,486 $ 369,209 Materials&Supplies $ 212,992 $ 235,736 $ 238,600 $ 273,400 $ 273,400 Contracts&Services $ 90,696 $ 141,989 $ 231,786 $ 249,926 $ 234,846 Capital Outlay $ - $ - $ 50,000 $ 45,000 $ 20,000 Division Total $ 1,753,730 $ 1,806,684 $ 2,076,329 $ 2,052,827 $ 2,031,841 • - • FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Non-Personnel Expense Account Actual Actual Approved Proposed Proposed Technical Services Contracts $ 2,540 $ 3,817 $ 5,700 $ 6,000 $ 6,000 Maintenance Contracts $ - $ 113 $ - $ 56,880 $ 41,800 Interagency Agreements $ - $ 50,652 $ 56,286 $ 35,946 $ 35,946 Construction&Building Contracts $ 61,891 $ 58,510 $ 140,000 $ 115,000 $ 115,000 Other Purchased Services $ - $ - $ - $ - $ - Permits $ 23,111 $ 26,475 $ 22,300 $ 30,350 $ 30,350 Rentals $ 3,154 $ 1,493 $ 4,500 $ 3,750 $ 3,750 Communications $ - $ 928 $ 3,000 $ 2,000 $ 2,000 Field Supplies $ 12,341 $ 6,511 $ 8,500 $ 8,500 $ 8,500 Safety&Emergency Supplies $ 6,920 $ 4,859 $ 7,000 $ 7,000 $ 7,000 Repair&Maintenance Supplies $ 20,791 $ 9,918 $ 20,000 $ 20,000 $ 20,000 Small Tools&Instruments $ 7,501 $ 10,984 $ 10,500 $ 10,500 $ 10,500 Uniforms-Non-PERSable $ 3,111 $ 5,581 $ 6,800 $ 11,600 $ 11,600 Fuel $ 40,082 $ 41,916 $ 50,000 $ 45,000 $ 45,000 Inventory Expense $ 122,017 $ 154,235 $ 135,000 $ 170,000 $ 170,000 Equipment<$5k $ - $ 1,288 $ - $ - $ - Other Supplies $ 229 $ 445 $ 800 $ 800 $ 800 Machinery&Equipment $ - $ - $ 50,000 $ 45,000 $ 20,000 48 Engineering & Planning Division Fund: 531 O rg: 53192695 ——— 2 lir CONTROL VALVE i nl Y METER WI STRAINER HEATER —— ! " F1—— HEATER I DEHUM. (FUTURE) [FUTURE) I (FUTURE)I FCA B'GATE VALVE _J l W METER W1 •^ GATE VALVE — ! V CONTRD nl STRAINER L�� The Engineering & Planning Division manages the design and construction of improvements to the District's water system infrastructure, plans to ensure water reliability needs and other requirements of the water system are met, advises on the operation of the distribution system, performs development and CIP inspection, and oversees the District's recycled water program. Division • • and Activities Manage the District's Capital Improvement Program (CIP) Process water service applications Perform plan checks for water improvement and grading plans Inspection of water improvement and capital improvement projects Manage the District's recycled water program FY r and FY 14/15 • Accomplishmentsd 7. Completed the replacement of 8 large (30"and 36")transmission main valves Completed the replacement of 60 distribution system valves in the Downtown/Neptune area Update the District's CIP contracts and specifications Selected new emergency construction pipeline repair contractors FY 15/16 • FY 16/17 Division Objectives Perform non-destructive pipeline testing of critical pipeline infrastructure Abandon the remaining 30"transmission main at SEJPA and provide an alternative fire service Oversee the R.E. Badger Water Filtration Plan Electrical Distribution and Substation Improvements Oversee the San Dieguito Pump Station Replacement construction Construct a 30" low pressure transmission main at Manchester in coordination with the 1-5 widening Complete the 2015 Urban Water Management Plan update 49 Engineering & Planning Division Fund: 531 Org: 53192695 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Classification(FTE) Actual Actual Approved Proposed Proposed General Manager 0.00 0.00 0.30 0.30 0.30 Assistant General Manager 0.30 0.30 0.00 0.00 0.00 Senior Engineer 1.00 0.90 0.90 0.90 0.90 Engineer 1 0.00 0.00 0.90 0.90 0.90 Utility&Maintenance Specialist 1/11 1.00 1.90 0.90 0.90 0.90 Engineering Specialist I/11/111 2.00 0.90 0.00 0.00 0.00 Program Coordinator 0.30 0.00 0.00 0.00 0.00 Division Total 4.60 4.00 3.00 3.00 3.00 Expenditure FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Account Group Actual Actual Approved Proposed Proposed Salaries $ 433,290 $ 393,249 $ 316,004 $ 334,165 $ 334,006 Benefits $ 149,935 $ 116,201 $ 100,721 $ 85,542 $ 87,910 Materials&Supplies $ 4,594 $ 21,376 $ 50,000 $ 50,000 $ 50,000 Contracts&Services $ 6,645 $ 5,349 $ 9,100 $ 8,100 $ 11,300 Division Total $ 594,463 $ 536,175 $ 475,825 $ 477,807 $ 483,216 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Non-Personnel Expense Account Actual Actual Approved Proposed Proposed Professional Service Contracts $ 4,577 $ 21,376 $ 50,000 $ 50,000 $ 50,000 Travel&Mileage $ 17 $ - $ - $ - $ - Field Supplies $ 35 $ 157 $ 1,600 $ 1,600 $ 4,800 Repair&Maintenance Supplies $ 95 $ - $ 1,500 $ 1,500 $ 1,500 Fuel $ 6,514 $ 5,192 $ 6,000 $ 5,000 $ 5,000 50 Overview The process of providing a safe and reliable water supply to customers requires substantial infrastructure and numerous facilities. District infrastructure and facilities require long-term investments in order to ensure continued safe and reliable operation. Further adding to these investments are increases in service demands and more stringent regulatory requirements over time. The District takes pride in maintaining its water system at the highest level possible and believes that its customers are best served by this continued investment in its assets. District staff uses numerous tools to evaluate its current and future capital program needs, including the following: - 2010 Water Master Plan: The San Dieguito Water District's Water System Master Plan analyzed the distribution system for reliability, water quality, adequacy of fire flow demands and storage requirements. The plan identifies and prioritizes capital improvement projects for the distribution system. This plan is updated every 10 years. - 2012 Joint Facilities Master Plan: The San Dieguito Water District and Santa Fe Irrigation District jointly own infrastructure and treatment facilities utilized to convey and treat raw water supplies and then store and transport treated water to the Districts. The plan identifies and prioritizes projects for a 10-year Joint Facilities Capital Improvement Program in order to maximize local water use and meet ever increasing water quality regulations. - 2010 Urban Water Management Plan: Water agencies throughout the state are required by the California Department of Water Resources to prepare Urban Water Management plans every five years in order to show that adequate water supplies are available to meet existing and future water demands. Using these plans and other system knowledge, staff systematically determines and prioritizes capital projects which best serve the needs of the District and its customers. As many of these capital projects are large projects which may span multiple fiscal years, funding is then proposed and scheduled as available over a 7-year long-term financial plan in order to reasonably smooth out the financial impacts. The District's Capital Program has four main components: - SDWD Infrastructure Projects: Projects which will upgrade and improve District infrastructure, such as water mains, valves, meters, reservoirs and other major water system components. - SDWD Consultant Services and Studies: Projects which will fund various consultant services and studies for the District, such as the development of master plans, the implementation of new computer systems, and other studies. - SDWD Capital Acquisitions: Provides for the purchase of major District assets and equipment which will have long-term use. - Joint Facilities Projects and Capital Acquisitions: Projects and purchases which will upgrade and improve Joint Facilities infrastructure shared with the Santa Fe Irrigation District. These Joint Facilities include the R.E. Badger Water Filtration Plant, San Dieguito Reservoir and associated infrastructure. The following section first summarizes the overall District Capital Program and then details the individual projects. Individual projects sheets are shown for projects that will be active during the two-year budget period. 51 N N O O O O ' ' ' ' ' O O O O O O O O O O O O O O N N N N O O O O O Clio 00 N O O Ln O O O Ln LO N N N O N r V N } N M } N M } M LL LL LL 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 <A 69 69 69 69 <A 69 O O O ' O O O ' ' O O O ' O O O O O O O O O O O O O O O O O O O O O O O O O O O N O O O O O O O N O O O O N O G O Ln O O Ln O O G O �2 Ln O G O N N N O M N r V M N M } N M } N M } Cl) LL LL LL 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 <A 69 69 69 69 VA ea O O O ' O ' ' ' ' O O O O O O o O O O O O O O O O O N O O O O O N O O O N O O LO O O O L() N N O r V } N M } N M } M LL LL LL 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 <A 69 69 69 69 <A 69 O O O ' O ' O ' ' ' O O O O ' O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O LO O N O LO O N LO O LO O O I� Ln O N Ln O N CO I- N N } N M } N M } M LL LL LL 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 <A 69 69 69 69 <A 69 O O O O ' O ' ' ' ' O O O O O W O o o O O O co O O O W o O O O O O O O O O 17 O O O LO O O N O LO N t- LO O N O O W N O O } N M } N M } M LL LL LL 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 <A 69 69 69 69 <A 69 O O O O ' O ' O ' ' ' O O O ' O O O O O O O O O O O O O O O o o o o o o O r- o o o c r- o O O O LO O O N — LO O O N LO O LO LO I— O O r O O M I— N O O O } M } - N M } M LL LL LL 69 69 69 69 69 69 69 69 69 69 69 69 69 69 69 <A 69 69 ea ea VA ea O O O O ' O ' ' ' O O O O O ' O O O O O O O O O O O O O O O O O O O O O O O O f0 O O O O f0 O O O O O O O O O O O O O O O Ln Ln O Ln Ln N O o O N Ln M I� Ln Gi O O) a m } N } — — N } N LL LL LL ea ea ea ea ea ea ea ea ea ea ea ea ea ea ea <A ea ea ea ea VA ea O o V O CO m M O N O O O ' ' N V N N O O m O r m o O W O O O V m r O co o O V o o o O O O N o o N LO N s O d) o O O r r r N O O O O N E o o CO O N O } o V N I� O o M o o V } I� Cl) O) } 'O Il co m Ln r o m r a r V V f� 'O I� O L O O M afl O O O a LL a LL a u. EV) V) V) V) V) V) V) V) V) V) V) V) V) V) V) fA V) V) V) V) fA V) E //0� V/ E iE C o E Y a m o o E IL E E d > a) -c 0 u o Q o m `m E > u 0 0 O o d U E o E w E m > o 0 0 a) o .� O d • a) m -6 a) m o > QC o Q U Y Ul • � � ' inQ a) a) v -o U E O a) a a c a) _j o CJ ° E i d m m ii /� O m _ _ Q a) D D Y N N W Ul -6 • C ii F Q tom/) C .0 U N >� (6 3:O (�6 O .0 O m E V Q E m Li Li > � a) a) . a) .W 0 U Q Q o o D Q u a) ' i� W Q IL ll� Q m C) Q W IL (7 T f'i p p p LL ' c Q CO O N LO LO LO LO LO LO LO LO C) C) IL U U U U U U U U U U U U cn cn cn LL cn SCADA Automation Upgrade Program 1,-,. ..e ,, Project# CW98E Start Date 1998 Location District-wide Completion Date On-Going Project Description The District's SCADA(Supervisory Control and Data Acquisition)system provides staff with real-time data related to system pressures, reservoir water levels, and flows in and out of the reservoirs.This system provides supervisors and staff the ability to make adjustments to distribution system pressures and flows at any time. Funding in this project provides for the installation, upgrading and replacement of SCADA hardware,software, radios and transmitters.The District endeavors to replace central SCADA Servers and components on a 5-year schedule and is also considering the installation of new controls in more District pressure reducing stations to allow for real-time pressure and flow monitoring. Project Justification The installation and upgrading of technology will allow for real-time pressure and flow monitoring of the distribution system by staff from the office,thus reducing the need for staff to enter confined spaces. This project will also allow staff greater control of the District's pressure reducing stations at our reservoirs. Future upgrades will further increase functionality of the SCADA system from the central office location. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Infrastructure Project $750,000 $0 $0 $0 $750,000 Project Total $750,000 $0 $0 $0 $750,000 Anticipated Future Annual Operating Expense: $ - 53 Transmission Line Maintenance (formerly Transmission Line Valve Replacement) Project • • Project# CW01A Start Date January 2014 Location Various locations Completion Date June 2018 Project Description This project facilitates the repair and replacement of valves and appurtenances on the District's 30-inch and 36-inch transmission mains. Prior project phases included the replacement of large valves on the transmission mains. Upcoming phases include the replacement of additional valves, as well as the replacement of corroded and inoperable blow-offs and automatic air releases along the transmission main, as discovered during prior work. Project Justification The 30-inch and 36-inch transmission mains are critical infrastructure which provide treated water from the R.E. Badger Water Filtration Plant and San Diego County Water Authority pipelines to the District's main distribution system. The replacement of the valves and appurtenances on the transmission mains will not only extend the useful life of these pipelines, but also allow staff to better isolate smaller sections of the pipelines when necessary, in order to limit outages and water loss. OMMEW FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Infrastructure Project $819,306 $300,000 $300,000 $100,000 $1,519,306 Project Total $819,306 $300,000 $300,000 $100,000 $1,519,306 Anticipated Future Annual Operating Expense: $ - 54 District Interconnect Study (Formerly Saxony Road Interconnect) Project Information Project# CW10F Start Date TBD Location TBD Completion Date TBD Project Description The 2010 Water Master Plan update identified the Saxony Road Interconnect as a high priority project. District staff has operationally re-analyzed the connection and noted potential water quality problems with this location which would result in excess flushing of the system. District staff will collaborate with the Olivenhain Municipal Water District(OMWD)in analyzing other possible locations. Project Justification Emergency interconnects provide the District with alternative water connections with other agencies that can be used either during a planned or emergency water outage. To ensure customer service and public safety,emergency interconnects provide a mechanism for limiting interruptions of service by allowing for system redundancy via secondary connections to the distribution system. • • FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Infrastructure Project $145,694 $0 $0 $0 $145,694 Project Total $145,694 $0 $0 $0 $145,694 Anticipated Future Annual Operating Expense: $ - 55 Utility Billing System Replacement Y35MCH SRN OI Egl3i TO LIRTER DISTRICT '�J�8/X Customer Ynformation Systems 11:on:x lace of ehe follow lny- 1.oCustvmer Maintenance Menu 12. Cycle Billing Menu 2. Cuueamer Xnqukry Menu f.8. Exception Bkti kng Menu 3. File Maintenance Menu 14. Update Processing Mvnu 4. Meier Funct}one Menu 15. Uel inquency Processing Menu 3. Mwewr Rw#d Lng Fund inn'a Mwnu f.�. Col lres Son ProGwasknq Mwnu B_ Service Order Menu 17. Lien Processing Mynu 7. Oepvsii Processing Menu 18. Period End Processing Menu 8. Mkwcwlkanaaus Cnwrga Mwnu 19. 17amwntl Report• Mwnu 9. Rdjustments Menu 2U. Custom Opti Menu 1O. Ea sFi Receipts Processing Menu 21. Llv rFc Order Menv 11. RvvvrswJTransfwr pwy.�+wnt Hsnla �2. Land/Parcel Hwn agw.++wns 9Q. Sign off a version: s.n.1.1.04 Date - siallede 10/19/2012 �.Exft F3vFknf rein F6vOksplay mwssagws F9vCemmane[17}ne Rn=Work itn ubmittvtl jobs F24=More lcvys Project Information Project D. - October Location District Office Completion Date December 2016 The Utility Billing System Replacement project includes software and implementation costs to replace the Districts existing utility billing system and associated software which is over 20 Project Description years-old. Implementation of a modern utility billing system ensure integration with the new City of Encinitas financial and planning systems and will pro e District and its customers greater functionality an. efficiencies. This project will address deficiencies with the current system, including technology obsolescence, feature gaps, lack of process automation, lack of vendor support and product development, integration difficulty with new systems and high cost of ownership and maintenance. Key project benefits include greater employee efficiency, improved business processes,enhanced customer service, improved data reporting and timely access to critical business information. Project Justification Funding Funding FY 15/16 FY 16/17 Category Prior . Consultant Services 000 000 Project Total 000 000 Future Anticipated Annual •.- Expense: Joint Facilities Master Plan Projects r •f, Project# CW15A Start Date On-Going Location Joint Facilities locations Completion Date On-Going Project Description Joint Facilities Master Plan Projects fund upgrades and improvements to facilities jointly owned between SDWD and SFID as per recommendations in the Joint Facilities Master Plan, completed in 2012. The joint facilities, including, but not limited to the R.E. Badger Water Filtration Plant and San Dieguito Reservoir, provide for the conveyance and treatment of potable water to be delivered to customers. Projects recommended over the next two years include: - San Dieguito Pump Station Replacement - Installation of Permanent Chlorine Dioxide Generator - Electrical Distribution System Improvements - Installation of 30" Parallel Pipeline from Cielo Pump Station to San Dieguito Reservoir 1 r[U C�•�i�17��i fl U* 141-ilk The R.E. Badger Water Filtration Plant is 45-years old and many of its components have reached the end of their useful life. The Joint Facilities Master Plan recommends projects to replace infrastructure that has reached the end of its useful life and to improve existing water treatment processes to achieve compliance with current and foreseeable future water quality and water treatment regulations. Compliance with regulations ensures that District customers have a safe and reliable water supply. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Joint Facilities Projects $5,920,478 $1,750,000 $1,750,000 $10,600,000 $20,020,478 Project Total $5,920,478 $1,750,000 $1,750,000 $10,600,000 $20,020,478 Anticipated Future Annual Operating Expense: $ - 57 Joint Facilities Capital Acquisitions '1 Project • • Project# CW15B Start Date On-Going Location Joint Facilities locations Completion Date On-Going Project Description The Joint Facilities Capital Acquisitions project provides for scheduled capital upgrades and purchases,which are not otherwise accounted for in the Joint Facilities Master Plan Projects. These projects include items such as large valve replacements, SCADA upgrades, miscellaneous plant improvements, and vehicle replacements. This continuing project will fund these minor capital improvements as necessary with costs shared between the District and SFID. Project Justification This project accounts for minorjoint facilities projects that are not planned as part of the Iargerjoint facilities CIP process. The District desires to not have these projects funded by the Operating Fund as it would distort actual water treatment costs. As such, a capital project was created to capture these costs,shared with SFID. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Joint Facilities Projects $577,699 $150,000 $250,000 $1,250,000 $2,227,699 Project Total $577,699 $150,000 $250,000 $1,250,000 $2,227,699 Anticipated Future Annual Operating Expense: $ - 58 Water Infrastructure Improvements Project Information Project# CW15C Start Date On-Going Location Various locations Completion Date On-Going Project Description The Water Infrastructure Improvement project annually funds various repairs or upgrades to District facilities. Projects scheduled to be funded during the next two-year budget cycle include: large main anode bed replacements, abandoning the 30"transmission main at SEJPA, District-wide vault lid replacements, cathodic protection on 16"transmission main, Orpheus PRV station improvements and the Cardiff valve replacement project. Project Justification The 2010 Water Master Plan identified thirty-four projects to be completed over the next ten years,eleven of which were identified as high priority. Additionally, new projects are included as deemed necessary by staff during on-going maintenance and inspection of District infrastructure. Most projects are motivated by fire-flow,system redundancy or water quality, as well as extending the life of critical facilities. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Infrastructure Project $707,653 $550,000 $675,000 $3,000,000 $4,932,653 Project Total $707,653 $550,000 $675,000 $3,000,000 $4,932,653 Anticipated Future Annual Operating Expense: $ - 59 Neptune / Downtown Valve Replacement L 1i Project • • Project# CW15D Start Date October 2014 Location Neptune/Downtown Completion Date March 2015 Project Description The Neptune/Downtown Valve Replacement Project provides for the removal and replacement of 60 water valves located within Neptune Avenue and Third Street. The existing valves are approximately 50-years old and have reached the end of their useful life. Some of the valves have begun to malfunction in recent years. Replacing these aging water valves increases operational efficiency and decreases customer impacts during shutdowns for both routine maintenance and emergency situations. Project Justification Properly functioning valves in the distribution system ensure that water loss is minimized and customer impacts are lessened in the event of system shutdowns for both routine maintenance and emergency situations. Replacing valves which have reached the end of their useful life is a necessary part of maintaining the District's infrastructure. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Infrastructure Project $567,500 $0 $0 $0 $567,500 Project Total $567,500 $0 $0 $0 $567,500 Anticipated Future Annual Operating Expense: $ - 60 Meter Replacement and Automation Program �.d y� Project# CW15E Start Date On-Going Location District-wide Completion Date On-Going Project Description The Meter Replacement and Automation Program provides for the scheduled upgrading and replacement of older water meters and endpoints(registers and radio transponders)throughout the District. Funding may also be utilized for the evaluation and implementation of new water meter technology, as well as hardware and software upgrades. • - Justification American Water Works Association (AWWA)studies and standards have shown that water meters over 12 years-old have a tendency to under-register the amount of water being consumed. Providing for the on-going replacement of water meters ensures accurate meter readings and also enables us to implement advanced meter technology as it becomes available and practically feasible. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Infrastructure Project $932,182 $100,000 $100,000 $500,000 $1,632,182 Project Total $932,182 $100,000 $100,000 $500,000 $1,632,182 Anticipated Future Annual Operating Expense: $ - 61 Urban Water Management Plan San Dieguito Water District 2410 Urban Water Management Plan June 2011 - FINAL REPORT Project Information Project# TBD Start Date January 2016 Location N/A(Study) Completion Date December 2016 Project Description The Urban Water Management Plan (UWMP)provides a detailed analysis of the District's water supply status to help guide short and long-term water supply strategies. The plan addresses system demands,system supplies, reliability,shortage contingency plans, baseline demands and target goals. The 2015 UWMP,due by December 31,2016,will bean update of the 2010 plan, and will include a water sustainability section for the District. Project Justification The California State Water Code requires water agencies update their Urban Water Management Plan at least once every five years in years ending in "one"and "six." The District last updated its UWMP in 2010,this update will occur in 2016. FY 13/14 FY 14/15 Category Prior Funding Funding Funding Future Funding Total Funding Consultant Services $50,000 $0 $0 $50,000 $100,000 Project Total $50,000 $0 $0 $50,000 $100,000 Anticipated Future Annual Operating Expense: $ - 62 Water Rate Study i San i • - Water Rate Study_ Project Information M Project# CW15G Start Date January 2015 Location District-wide Completion Date December 2015 Project Description The Water Rate Study project provides for the hiring of a consultant to study and update the District's water rates and service charges in accordance with cost of service principles. The 2015 Water Rate Study will update the previous study, performed in 2013. In addition to the water rate study, a fee study, asset management study or water allocation study may be performed in future years. Project Justification As an enterprise fund,the District is highly dependent on water rates and service charges in order to meet its financial obligations. Due to the volatile nature of the water industry,water rates and service charges need to be evaluated and updated regularly in order to ensure relevance and accuracy,to ensure the financial stability of the District. • FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Consultant Services $50,000 $0 $100,000 $175,000 $325,000 Project Total $50,000 $0 $100,000 $175,000 $325,000 Anticipated Future Annual Operating Expense: $ - 63 Potable Reuse Feasibility Study AL ANT Project • • Project# CW15H Start Date February 2015 Location District-wide Completion Date August 2015 Project Description The San Dieguito Water District, Santa Fe Irrigation District and San Elijo Joint Powers Authority currently have most of the facilities in place to develop a potable water reuse project once State regulations allow the introduction of such a system to the water supply. The three agencies are collaborating on a feasibility study for a potable water reuse project. Trussel Technologies has been selected to analyze the technical and financial feasibility of both a short-term and long-term potable reuse project. Project Justification Adding a Water Sustainability Section to the District's 2016 update to the Urban Water Management Plan is also an Environment focus area goal of the City's Strategic Plan. The District's water sustainability efforts include studying the feasibility of potable water reuse in hopes of diversifying its water supply portfolio. If financially viable, potable reuse would provide SDWD with a drought-proof local water supply once State regulations are established to allow its use. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Consultant Services $40,000 $0 $0 $0 $40,000 Project Total $40,000 $0 $0 $0 $40,000 Anticipated Future Annual Operating Expense: $ - 64 Potable Reuse Facilities Plan molt et cility �Y h- 1 v 4 r. Project Information Project# TBD Start Date TBD Location District-wide Completion Date TBD Project Description As part of the Potable Reuse Feasibility Study(CW15H),the consultant will be submitting an application for the State Water Resources Control Board Facilities Planning Grant Program. If grant funding is received, it would be used to conduct a comprehensive facilities plan for a potential potable water reuse project. The grant would require matching funds,with $50,000 being estimated as the District's share of those matching funds. Project Justification Adding a Water Sustainability Section to the District's 2016 update to the Urban Water Management Plan is also an Environment focus area goal of the City's Strategic Plan. The District's water sustainability efforts include studying the feasibility of potable water reuse in hopes of diversifying its water supply portfolio. If financially viable, potable reuse would provide SDWD with a drought-proof local water supply once State regulations are established to allow its use. FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Consultant Services $0 $50,000 $0 $0 $50,000 Project Total $0 $50,000 $0 $0 $50,000 Anticipated Future Annual Operating Expense: $ - 65 Public Works Yard Landscaping Improvements slim Project Information Project# TBD Start Date July 2015 Location District Office Completion Date June 2016 Project Description This project will remove ornamental turf(grass)and hardscape (concrete)from the front public entrance of the shared City/SDWD Public Works Yard. Turf and hardscape will be replaced with drought tolerant and sustainable landscaping which better meets landscaping needs related to water conservation and storm water capture. The re-landscaped area is envisioned to act as a demonstration area for the public on many water conservation related landscaping techniques. Project Justification By removing ornamental turf and hardscape and replacing it with drought tolerant and sustainable landscaping,the City and SDWD aims to save water, reduce irrigation costs, improve storm water capture and provide examples to the public on water conservation related landscaping techniques. The District will look to leverage partnership opportunities on this project, including rebates and incentives for turf removal and irrigation upgrades, as well as potential storm water grant funding, both of which may reduce the overall cost of the project. • FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Infrastructure Project $0 $50,000 $0 $0 $50,000 Project Total $0 $50,000 $0 $0 $50,000 Anticipated Future Annual Operating Expense: $ - 66 Water Master Plan Update Project Information Project# TBD Start Date September 2018 Location District-wide Completion Date March 2019 Project Description The Water Master Plan analyzes existing and future planned developments, as well as planned population increases, against current infrastructure sizing and then recommends improvements for any potential deficiencies in the system. Project Justification Consistent with good infrastructure planning practices,the District reviews and updates the Master Plan of the water distribution system every ten years. The Master Plan prioritizes and phases future projects in the District's Capital Improvement Program. • FY 15/16 FY 16/17 Category Prior Funding Funding Funding Future Funding Total Funding Consultant Services $0 $0 $0 $150,000 $150,000 Project Total $0 $0 $0 $150,000 $150,000 Anticipated Future Annual Operating Expense: $ - 67 • Term Debt (Debt Overview The District is currently repaying two debt issuances which were used to fund prior District and Joint Facilities capital projects. 2007 District Note Payable to R.E. Badger Water Facilities Financing Authority On November 20, 2007, the Authority issued $20,685,000 of 2007 Water Refunding Bonds while concurrently redeeming all of its outstanding 1999 Water Revenue Bonds, on behalf of its member agencies, the Santa Fe Irrigation District and the San Dieguito Water District. The transaction was a current refunding intended to save the member agencies future interest costs due to lower market interest rates. No new funds were raised by either agency. New Installment Purchase Agreements were executed, which save the District approximately $60,000 per year on debt service. The overall Bond issue consists of $20,685,000 of serial bonds maturing from 2008 through 2024. The District's portion of the refinancing totaled $7,705,000. Principal is due and payable annually in amounts ranging from $360,000 to $620,000. Interest is due and payable semi-annually at rates ranging from 3.5% to 4.5%. The District accounts for its share of the bonds as a Note Payable to the Authority. 2014 Water Revenue Refunding Bonds On September 30, 2014, the District issued $5,870,000 of revenue refunding bonds, Series 2014. The Series 2014 bonds redeemed all of the District's outstanding 2004 Water Revenue Refunding Bonds, which were themselves a refunding of the District's original 1993 Water Revenue Bonds. The 2014 refunding was intended to save the District approximately $250,000 annually in debt service costs, due to lower market interest rates and the elimination of a reserve previously required on the 2004 bonds. The 2014 Water Revenue Refunding Bonds consist of$5,870,000 of serial bonds maturing from 2015 through 2023 in annual principal installments of$570,000 to $755,000. Interest is due and payable annually at rates ranging from 3.0%to 4.0%. These bonds are not subject to optional or mandatory redemption prior to maturity. Debt Covenants The two District debt issues described above contain various covenants and restrictions, principally that the District pledge its net revenues (as defined)equal to at least 1.15 times the loan installments coming due and payable during any fiscal year. The District maintains compliance with these covenants. Administrative Fees The District is also proposing to budget $3,478 annually for trustees fees and continuing disclosure compliance related to these debt issuances. 68 Long Term Debt FY 1 15/16 & FY 2016/17 Deb - • Fiscal Year 2015/16 Principal Interest Total 2007 R.E. Badger Water Refunding Bonds $ 415,000 $ 211,144 $ 626,144 2014 Water Revenue Refunding Bonds $ 570,000 $ 202,400 $ 772,400 Debt Administration Fees $ - $ - $ 3,478 Total $ 985,000 $ 413,544 $ 1,402,022 Fiscal Year 2016/17 Principal Interest Total 2007 R.E. Badger Water Refunding Bonds $ 440,000 $ 191,244 $ 631,244 2014 Water Revenue Refunding Bonds $ 585,000 $ 185,075 $ 770,075 Debt Administration Fees $ - $ - $ 3,478 Total $ 1,025,000 $ 376,319 $ 1,404,797 Mure Debt Service Schedule 11 • • -r Water Refunding Bonds Fiscal Year Principal Interest Total Prior Years(2007-2015) $ 2,575,000 $ 2,002,588 $ 4,577,588 2016 $ 415,000 $ 211,144 $ 626,144 2017 $ 440,000 $ 191,244 $ 631,244 2018 $ 455,000 $ 171,619 $ 626,619 2019 $ 475,000 $ 152,919 $ 627,919 2020 $ 490,000 $ 133,619 $ 623,619 2021 $ 525,000 $ 111,466 $ 636,466 2022 $ 545,000 $ 89,397 $ 634,397 2023 $ 570,000 $ 66,044 $ 636,044 2024 $ 595,000 $ 40,916 $ 635,916 2025 $ 620,000 $ 13,950 $ 633,950 Total $ 7,705,000 $ 3,184,906 $ 10,889,906 Future Debt Service Schedule - 2014 Water Revenue Refunding Bonds Fiscal Year Principal Interest Total Prior Years(2015) $ - $ 106,061 $ 106,061 2016 $ 570,000 $ 202,400 $ 772,400 2017 $ 585,000 $ 185,075 $ 770,075 2018 $ 605,000 $ 167,225 $ 772,225 2019 $ 625,000 $ 148,775 $ 773,775 2020 $ 645,000 $ 126,500 $ 771,500 2021 $ 665,000 $ 100,300 $ 765,300 2022 $ 695,000 $ 73,100 $ 768,100 2023 $ 725,000 $ 44,700 $ 769,700 2024 $ 755,000 $ 15,100 $ 770,100 Total $ 5,870,000 $ 1,169,236 $ 7,039,236 69 Overview The Fleet Replacement Fund is responsible for the planning, budgeting and purchasing of vehicles and equipment in a single consolidated fund and purchasing program. In Fiscal Year 2010/11, the San Dieguito Water District separated its Fleet Replacement fund from that of the City of Encinitas in order to obtain more direct control and oversight over its vehicle fleet. Prior to this move, the District would contribute funding to the City's replacement fund and City staff would oversee the replacement schedule for District vehicles. By separating the District's fund, District staff has greater flexibility and control when determining when to replace vehicles and has increased oversight on contributions to the fund. District staff contributes funding to the Fleet Replacement Fund by following a 7-year vehicle replacement schedule. When a new vehicle is purchased, the District determines the cost of replacement for that vehicle in the future (typically the current purchase price plus 10%) and amortizes that amount over a period of 7 years in equal annual contributions. When the 7 years have passed, the District ceases the contribution of funds for that vehicle, even if the vehicle is in use for longer than 7 years. Doing this calculation for all of the District's vehicles determines the annual contribution that the District makes to its Fleet Replacement Fund. The method levels out annual contributions to the fund and helps avoid drastic fluctuations in contributions by spreading out the costs of the vehicles. Even with the use of a 7-year vehicle replacement schedule, District staff has the flexibility to delay replacement of vehicles beyond 7 years of use. In many cases, due to continuous maintenance and upkeep, District vehicles last much longer than 7 years, and in many cases vehicles have lasted 10-15 years. The District conducts regular vehicle condition assessments on its fleet and only replaces vehicles once they have passed their useful life span and are no longer able to function safely or efficiently. Summary Since separating the District's Fleet Replacement Fund in Fiscal Year 2010/11, the District has made an effort to strategically reduce the number of vehicles in its fleet, in order to reduce fleet purchase and maintenance costs. After a minor reorganization in Fiscal Year 2011/12, two vehicles were eliminated from the District's fleet, reducing the number of vehicles from 27 to 25. The District's current fleet of 25 includes a mix of light and heavy-duty service trucks, large construction vehicles and other specialized equipment necessary to perform the day-to-day activities of the District. During the previous two-year budget cycle, FY 2013/14 and FY 2014/15, the District replaced 8 of the vehicles in its fleet. All of the vehicles were between 11 and 15 years old when replaced, well beyond their scheduled 7-year Iifespan. The District is proposing to replace one vehicle in FY 2015/16, a 12 year-old Ford F-150 Service Truck, with a like replacement. The cost of this vehicle is projected to be$40,000 after purchase and outfitting. In FY 2016/17, the District is proposing to replace a 15 year-old Ford Explorer 4x4 with a more environmentally friendly Ford Escape Hybrid. The replacement cost of this vehicle is projected to be$40,000. The District's Fleet Replacement Fund is projected to end FY 2015/16 with a fund balance of$442,869 and end FY 2016/17 with a fund balance of $527,497. These ending fund balance figures represent 27.5% and 32.7% of the current replacement value of the District's entire vehicle and equipment fleet, respectively. 70 Fleet Replacement Fund Replacement Schedule " New Vehicle Information Replaced Vehicle Information Vehicle# Vehicle Description Vehicle# Vehicle Description Age Purchase Cost Fiscal Year 2012-13 Actual FM-284 2012 Ford F-150 FM-164 2001 Ford Ranger 12 $ 25,335 FM-285 2012 Ford F-150 FM-168 2001 Ford Ranger(4x4) 12 $ 28,424 Total $ 53,759 Fiscal Year 2013-14 Actual FM-249 GMC-6500 Service Truck FM-183 2002 F-550 Service Body 12 $ 34,703 FM-296 ST Vacuum Trailer FM-175 2003 Ford F-450 11 $ 57,834 FM-288 2014 Ford F-150 FM-165 2001 Ford Ranger 13 $ 34,798 FM-305 Ford F-650 Service Truck FM-138 1999 Ford F-550 Service 15 $ 121,597 FM-309 F-450 Valve Truck FM-184 2002 F-350 Valve 12 $ 54,270 Total $ 303,202 Fiscal Year 2014-15 Approved FM-312 Ford F-150 FM-169 2001 Ford Ranger(4x4) 14 $ 31,900 FM-313 Ford F-150 FM-182 2004 Ford F-150 14 $ 31,900 TBD Bobcat Trailer FM-238 2004 Bobcat Trailer 11 $ 31,900 Total $ 95,700 Fiscal Year 2015-16 Proposed TBD Ford F-150 FM-236 2004 Ford F-150 12 $ 40,000 Total $ 40,000 Fiscal Year 2016-17 Proposed TBD Ford Escape Hybrid FM-185 2002 Ford Explorer(4x4) 15 $ 40,000 Total $ 40,000 71 Fleet Replacement Fund Fund Revenue' " FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Revenue Source Actual Actual Approved Proposed Proposed Transfer from Operating Fund $ 45,000 $ 132,145 $ 124,630 $ 133,900 $ 124,628 Total $ 45,000 $ 132,145 $ 124,630 $ 133,900 $ 124,628 Fund Expenditures FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Expenditure Actual Actual Approved Proposed Proposed Vehicle/Equipment Purchases $ 53,759 $ 303,202 $ 95,700 $ 40,000 $ 40,000 Total: $ 53,759 $ 303,202 $ 95,700 $ 40,000 $ 40,000 Fund Balance FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Transaction Actual Actual Approved Proposed Proposed Beginning Fund Balance $ 499,855 $ 491,096 $ 320,039 $ 348,969 $ 442,869 Revenue (Transfer-In) $ 45,000 $ 132,145 $ 124,630 $ 133,900 $ 124,628 Expenditures $ (53,759) $ (303,202) $ (95,700) $ (40,000) $ (40,000) Ending Fund Balance $ 491,096 $ 320,039 $ 348,969 $ 442,869 $ 527,497 72 Reserves • Long—Term Planning Overview An important component in maintaining the District's financial stability is the maintenance of proper reserve funds in order to help protect the District in the event of emergencies or unforeseen conditions. The District currently maintains three reserve funds; an Operations Reserve, a Rate Stabilization Reserve and a Capital Replacement Reserve. Each reserve serves a specific purpose and has their own target funding levels, set in accordance with the District's water rate studies. All three reserves are "unrestricted," meaning that while the reserves are designed to serve a specific purpose, they are not legally limited in their use. The District performs long-term financial projections to ensure these reserves are funded to a proper level. Reserves Operations Reserve The District's Operations Reserve is kept to meet the on-going operating expenses of the District in the event of an emergency or unforeseen event. This reserve is set at 60 days'worth of annual operating expenses for the District. Rate Stabilization Reserve The District's Rate Stabilization Reserve is maintained to help offset unexpected or unforeseen costs for purchased water or system repair, or is used to help mitigate short-term water rate increases due to sudden rises in costs. This reserve is set at 15%of the District's annual rate revenue. Capital Replacement Reserve The District's Capital Replacement Reserve is used to ensure adequate funding is available for capital projects in the event of an emergency or sudden loss of funding. This reserve is set at 2 to 3 times the District's 5-year average of annual capital expenditures. Long-Term Planning In addition to short-term (two-year) budgeting, the District also performs long-term planning in order to try to anticipate and plan for potential issues in future years. The District currently performs long-term planning in the form of a five-year cash-flow document, designed to look at overall projected revenue requirements, expenditures, and reserve levels. This five-year cash-flow includes the current proposed two-year budget as well as three additional years for planning purposes. While the District can reasonably project many items, due to the volatile and ever-changing nature of the water industry, it is difficult to perform accurate long-term planning beyond five years. Items which comprise a large portion of the District's revenue and expenditures, such as wholesale water rates, local vs. imported water supplies and customer water demand, can change drastically over a short period of time, potentially leading to shifts in the District's financial situation. The following five-year cash-flow projects the major categories of revenue and expenditures for the District through FY 2019/20, and how these projections will impact the District's fund balance and reserve distributions. 73 O 00 O 00 (D V O Cl) O O M ' O (O O O f,- Cl) O O M Cr Cl) O O 1* O O O) O N (O 00 O O 00 O 00 O Il (D N LO V O LO) O LO) 00 m O LO) 00 (D LO) O O O (D (D O O 00 fl- O LO) f-- (D O Cl) O V (D y (D M- N LO) CO O N N (D CO = 00 c7 (D N (O N O V Lr C7 O N N N N a LL r r r r N O V LO V V 00 O O 00 ' M O N 00 O ' O O N LO) O Cl) 00 O O O O O N O (O LO) O 00 O 'D O M 00 O LO) M O = N O O N O LO O O LO) O) LO r O O N Cl) V LO) O) LO) LO) O L L6 O O 1f) (� 00 (O O I— Cl) N O N O` O` Il- R co 00 00 00 O (D y f,- (O = 00 (D 00 V N N (D (D N O 00 V (D N (O 00 C Lr C7 00 N N N N � LL a 1* 00 O N O O` V O O r ' OD N LO) O O ' = N M (O O O (D N V I— O O I- OD N V O O 00 N 'D O M O 00 O I— M O O O O 0) M Cl) O LO) Cl) Cl) O V O LO) O LO) N 00 O O 00 N 00 N 00 T- (� N (h O LO O O O LO) LO) (D OD r I— V I— r y LO CO V 00 V LO) O (D O O LO) f- N (O f. C V C7 f. N N � LL a O O O O O 00 O` LO) O O LO ' R v O 00 O ' O v r O O O 00 O 00 O O 00 N M O (h O O Cl) r Cl) 00 O O` (D I— O` LO) O O LO O Cl) O O O V Cl) U) M C7 O O 00 V C7 LO) O 00 (O O 00 I— LO) I— O 0 0 r O O r CO O V O` V LO LO N (O O N N N 0 r O V LO LO) V () M LO O O O LO) LO N (O f. C� C C7 f. N N N N 2LL a LO c7 O O O N N V O O I ' LO O O m O ' 00 O co V O LO) O (h N LO) O O LO R r (h O O (O O l V O C7 fl CA O O) O O O O M O V O 00 M U) r CA O 00 fl- CA N O O � Ln M LO) LO) O N M O � O CO LO (O O O` LO) V (D 0) 1- O` O LO) V fl- Q LO 00 m (O (D M V Cl) O Cl) N r O O I� V r O LO CO N co N N N 2LL a Oo IT O v LO v rn 1— O co N Lo m Lo m co m Lo co O O O O) 00 O` N O O O co = O LO) = (O (D N LO r` O r O O c7 O r` r O 1* (O V I— O` O I* > , r O LO) I— 00 O N LO) 4 O r 00 C7 O) O 00 1% O 00 I— co O O O O O O co r LO N N = V fl- 2 LO 00 O LO) 00 V O LO CO 00 CO- O I— co 00 Q- N L LO C L N 1% O O O CL LL a 0) a co O co C � (6 t LL m V C ^ CO M } 0) t Cl) (O Q t N — co O V 7 N t O 0) co a) 0) Q t y O 0) N y c c U CO 0) > 0) Q' y O O 7 N m y W U Y y .N fl `y 0) W O W Q N 7 0) 0) y c N N c K > LL c (o of W N (6 0) W N O U O O C (6 (n 6 (n U m O z Q O 0 co U > H U W O of U 00 > H O N m eh LO O O O O O r N (h V 1O (O O` 00 O r r 20x2020 — A Bill by the State of California (Senate Bill X7 7) with the goal of achieving a 20-percent reduction in urban per capita water use in California by the year 2020 Acre-Feet—A unit of measurement defined as the amount of water needed to cover an acre, one foot deep in water, or 325,851 gallons. Acquisition -The process of gaining assets. ACWA/JPIA- Association of California Water Agencies/Joint Powers Insurance Authority. ADA- Americans with Disabilities Act of 1990. Allocate - To divide a lump-sum appropriation which is designated for expenditure by specific organization units and/or for specific purposes, activities or objects. Appropriation - An authorization made by the Board which permits the District to incur obligations and to make expenditures of resources. APWA—American Public Works Association. AWWA—American Water Works Association. Assessed Value - A dollar valuation set upon real estate or other property by the County Assessor as a basis for levying property taxes. Asset-Anything having commercial or exchange value that is owned by a business, institution or individual. Audit- Conducted by an independent Certified Public Accounting (CPA) firm, the primary objective of an audit is to determine if the District's Financial Statements present the District's financial position fairly and results of operations are in conformity with generally accepted accounting principles. Balanced Budget-A budget in which planned expenditures do not exceed projected funds available. Balance Sheet-A financial statement reporting the organization's assets, liabilities and equity activities. Bond - A written promise to pay a specified sum of money (principal) at a specific date in the future, together with periodic interest at a specific rate. In the Operating Budget, these payments are identified as Debt Service. Bonds are used to obtain long-term financing for capital improvements. Budget-A financial plan for a specified period of time that matches planned revenues and expenditures to municipal services. CaIPERS—California Public Employee Retirement System. Calendar Year—Period of January 1 through December 31 of any given year. Capacity-The maximum that can be contained in a system whether it be a tank or a pipe, etc. Capital Budget - The annual adoption by the Board of project appropriations. Project appropriations are for the amount necessary to carry out a capital project's expenditure plan, including multi-year contracts for which a total appropriation covering several years' planned expenditures may be required. Capital Improvement Program - The annual updated plan or schedule of project expenditures for District infrastructure and facilities (pipelines filtration plant, etc.)with estimated project costs, sources of funding, and timing of work over a five-year period. For financial planning and general management, the capital program is a plan of work and expenditures, and is the basis for annual appropriations and bond issues. Capital Outlay - Expenditures which result in the acquisition of or addition to fixed assets. Per District policy, fixed assets will normally have a useful life greater than two years and with a cost greater than $1,500. Capital Project - Any project, or phase of a project, that is to be a permanent physical improvement to District infrastructure or facilities, where the total cost of the project will be greater than $10,000. Equipment, as a rule, will not be considered as a capital project. Commodity Rate—Cost per unit of water. Consumer Price Index (C.P.I.) -A statistical description of price levels provided by the U.S. Department of Labor. The change in this index from year to year is used to measure the cost of living and economic inflation. 75 Contingency-An appropriation of funds to cover unforeseen events that occur during the fiscal year, such as flood emergencies, Federal mandates,shortfalls in revenue and similar eventualities. Continuinq Appropriation -Funds committed for a previous fiscal year expenditure which were not spent in the year of appropriation but are intended to be used in the current year. Contractual Services - Services rendered to District activities by private firms, individuals or other governmental agencies. Examples of these services include engineering, law enforcement and attorney services. Debt - All long-term credit obligations of the District, whether backed by the District's full faith and credit or by pledged revenues, and all interest-bearing short-term credit obligations. Designated Fund Balance -A portion of unreserved fund balance designated by District policy for a specific future use. Distribution System - The piping system and appurtenances necessary to deliver adequate quantities of water at sufficient pressures at all times under continually changing conditions,while at the same time protecting water quality. Division—An organizational unit of the District to track costs related to specific programs and services. Encumbrance - The legal commitment of appropriated funds to purchase an item or service. To encumber funds means to set aside or commit funds for a future expenditure. Enterprise Fund —An governmental accounting entity that operates similar to a private business enterprise, where the cost of providing goods and services is either partially or fully recovered by user charges. Environmental Impact Report (EIR) - An in-depth analysis of potential environmental impacts of a project which includes strategies to mitigate the impacts. Either an Environmental Impact Report or a Negative Declaration (ND) is required of certain projects by the California Environmental Quality Act. Expenditure-The outflow of funds paid for goods or services obtained. Fees for Services - Charges paid to the District by users of a service to help support the costs of providing that service. Financial Plan - The document created by the staff and approved by the Board which establishes the broad policy guidance on the projection of revenues and the allocation toward various types of expenditures. Financial Report-A comprehensive annual document providing a snapshot of the District's financial position on the final day of the fiscal year. A formal audit performed by an independent CPA firm supports the report's financial information. Fines, Forfeitures and Penalties - Revenues received and/or bail monies forfeited upon conviction of a misdemeanor or municipal infraction. Fiscal Year (FY) -The beginning and ending period for recording financial transactions. The District has specified July 1 to June 30 as its fiscal year. Fixed Assets -Assets of long-term nature such as land, buildings, machinery, furniture and other equipment. The District has defined such assets as those with an expected life in excess of one year and an acquisition cost in excess of$ 1,500. FTE—Full-Time Equivalent. Full Accrual Basis— Basis of accounting where revenues are recognized when they are earned and expenses are recognized when the liability is incurred. Fund-An accounting entity that records all financial transactions for specific activities or government functions. Fund Balance - The excess of current assets over current liabilities, and represents the cumulative effect of revenues and other financing sources over expenditures and other financing uses. Goal -A statement of broad direction, purpose or intent. Grant - Contributions of cash or other assets from another governmental agency to be used or expended for a specified purpose, activity or facility. Imported Water — Water purchased from SDCWA, which is typically transported from Northern California or the Colorado River. Infiltration - The seepage of rain and/or groundwater into underground pipes and utility holes via cracks in the system. 76 Infrastructure - The District's basic system of its physical plant, i.e., pipelines, valves, filtration plant and other facilities. Infrastructure Access Charge —A pass-through charge from SDCWA based upon meter size to finance projected fixed annual costs including the construction, operation and maintenance of aqueducts and the Emergency Storage Project. Internal Cost Allocation—The annual amount paid by the District to the City of Encinitas for services provided in the areas of Finance, Human Resources, Information Technology, Records Management, Risk Management and Vehicle Maintenance. Internal Service Fund -A fund which provides services to other internal entities and bills for services rendered. The District receives internal services from the City of Encinitas in the areas of Finance, Human Resources, Information Technology, Records Management, Risk Management and Vehicle Maintenance. Investment Earnings - Earnings received as interest from the investment of funds not immediately required to meet cash disbursement obligations. Joint Facilities — Infrastructure jointly owned by SDWD and SFID for the mutual benefit of both agencies, including the R.E. Badger Water Filtration Plan, San Dieguito Reservoir and associated facilities. Joint Powers Authority(J.P.A.)-A joint venture comprised of two or more governmental entities sharing the cost of providing a public service. Key Objective -A statement of specific direction, purpose or intent based on the needs of the community and the goals established for a specific program. LAFCO-Local Agency Formation Commission. Lake Hodqes-A lake in North San Diego County which the District maintains water rights to. Liability-A claim on the assets of an entity. Line-Item Budget -A budget that lists detailed expenditure categories (salary, materials, telephone service, travel, etc.) separately, along with the amount budgeted for each specified category. The District uses a program rather than line-item budget, although detail line-item accounts are maintained and recorded for financial reporting and control purposes. Local Water—Water utilized by the District from Lake Hodges. Master Plan -A comprehensive planning document which encompasses all aspects of current and future needs of the District. Material and Supplies-A general category used for clarifying expenditures for various materials and supplies which are normally used within a fiscal year. Municipal - In its broadest sense, an adjective which denotes the state and all subordinate units of government. In a more restricted sense, an adjective which denotes a city or village as opposed to other local governments. MWD—Metropolitan Water District of Southern California OMWD—Olivenhain Municipal Water District. OPEB—Refers to "Other Post Employment Benefits", meaning other than pension benefits which consist primarily of retiree health care benefits, but may also include other benefits such as life insurance and long-term care that employers have promised to employees. Operating Financial Plan -The portion of the budget that pertains to daily operations of providing basic services. Personnel Services - Costs associated with providing the staff necessary to provide the desired levels of service. Included are both salary and benefit costs. Phase -A project carried out in planned incremental stages, usually with the highest priority items being addressed first in Phase 1. Policy -A direction that must be followed to advance toward a goal. The direction can be a course of action or a guiding principle. Potable Water - Water that does not contain objectionable pollution, contamination, minerals or ineffective agents and is considered satisfactory for drinking. Program-A grouping of activities organized to accomplish basic goals and objectives. 77 Program Budget-A budget that focuses upon the goals and objectives of an agency or jurisdiction rather than upon its organizational budget units or object classes of expenditure. Property Tax - An ad valorem tax imposed on real property (land and permanently attached improvements) and tangible personal property(movable property). Proposition 13 - Article XIIIA of the California Constitution, commonly known as Proposition 13, which limits the maximum annual increase of any ad valorem tax on real property to 1%of the full cash value of such property. R.E. Badger Water Filtration Plant -A Water Treatment plant that is jointly-owned by San Dieguito Water District and Santa Fe Irrigation District, located in Rancho Santa Fe.The treatment plant provides the necessary treatment to make the water safe and suitable for drinking. Real Property Transfer Tax - Also called Documentary Transfer Tax, this tax is imposed on the transfer of ownership in real estate at a rate of$0.55 per$500.00 of property value. Recycled Water-Non-potable water used primarily for landscaping and floriculture irrigation. Reclamation -The process of recovering usable, but non-potable water from the tertiary treatment of wastewater. Regional Water Quality Control Board-A State agency which among other responsibilities regulates the discharge of water into streams, groundwater and bodies of water. Reimbursement for State Mandated Costs-Article XII IB, Section 6 of the California Constitution which requires the state to reimburse local agencies for the cost of state-imposed programs. Process is commonly called "SB 90" after its original 1972 legislation. Rents - Revenues received through the rental of public properties to private parties such as convention space and library facilities. Reserve-The portion of any fund's balance that is restricted for a specific purpose and is, therefore, not available for general appropriation. Revenue - Funds that the government receives as income. It includes such items as tax payments, fees from specific services, receipts from other governments, fines, forfeitures, grants,shared revenues and interest income. Revenue Bonds - Bonds issued to acquire, construct or expand public projects for which fees or admissions are charged. Bonds are repaid solely from the income generated by use of that project. Risk Management - An organized attempt to protect an organization's assets against accidental loss in the most cost-effective manner. San Dieqo Association Of Governments (SANDAG) - A public agency formed by local governments to assure overall area-wide planning and coordination for the San Diego region. SCADA-Supervisory Control And Data Acquisition. A computer system to monitor and control the water system. SDCWA—San Diego County Water Authority. SDID—San Dieguito Irrigation District. SDR Pump Station—San Dieguito Reservoir Pump Station. SDWD—San Dieguito Water District. SEJPA—San Elijo Joint Powers Authority. SEWRF—San Elijo Water Reclamation Facility. SFID—Santa Fe Irrigation District. SWRCB—State Water Resources Control Board. Second-Year Revise—The process in which the District adopts the second year of its two-year budget with revisions from the original document. Service Charqes - Charges imposed to support services to individuals or to cover the cost of providing such services. The fees charged are limited to the cost of providing the service or regulation required (plus overhead). Special Revenue Funds - Funds used to account for the proceeds from specific revenue sources (other than trusts or major capital projects)that are legally restricted to expenditures for specific purposes. 78 Subsidiary District— A district of limited powers for which a city council is designated as the ex officio board of directors of the district. Take-or-Pay Agreement - A contractual agreement in which one party agrees to purchase a specific amount of another party's goods or services or to pay the equivalent cost even if the goods or services are not needed. Unrestricted Reserve—A reserve which is not limited or restricted in its use and may be utilized for any purpose. Unsecured Property-As the property tax is guaranteed by placing a lien on the real property, unsecured property is that real property in which the value of the lien is not sufficient to assure payment of the property tax. User Fees-The payment of a fee for direct receipt of a service by the party benefiting from the service. Work Protects Program -A program to provide for the maintenance or replacement of existing public facilities and assets and for the construction or acquisition of new ones. Workinq Capital -Difference between current assets and current liabilities. Zero Based Budgeting - A method of budgeting in which all expenditures must be justified each new period, as opposed to only explaining the amounts requested in excess of the previous period's funding. 79