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FY 2019-20 & 2020-21San Dieguito Water District Fiscal Years 2019/20 and 2020/21 Operating and Capital Budget San Dieguito Water District A Subsidiary District of the City of Encinitas San Dieguito Water District Fiscal Years 2019/20 and 2020/21 Operating and Capital Budget Board of Directors Jody Hubbard, President Catherine Blakespear, Vice President Tony Kranz, Director Joe Mosca, Director Kellie Shay Hinze, Director District Management Karen Brust, City Manager Carl Quiram, Director of Public Works Bill O'Donnell, General Manager Joe Aurora, Operations Superintendent Blair Knoll, Senior Engineer Mary Kazungu, Finance 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 Transmittal Letter Introduction 5 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 Plan 13 Overview Mission, Vision & Value Focus Areas & Objectives 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 Potential Future Water Supplies Budget Summary 22 Sources of Funds Uses of Funds Fund Budget Summaries Detail of Internal Fund Transfers Personnel & Organization 30 Overview Staffing Organization Salary and Benefits Personnel Summaries Classifications and Pay Ranges Revenue Overview Summary Detail M Operating Program 39 Overview Summary Administration Customer Services Water Purchases and Treatment Recycled Water Program Field Operations Engineering and Planning Capital Program 54 Overview Program Summaries Project Detail Sheets Long Term Debt (Debt Service) 71 Overview Schedules Fleet Replacement 73 Overview Summary Schedules Reserves and Lona-Term Planning 76 Overview Reserves Long -Term Planning Five -Year Cash Flow Glossary 79 Transmittal Letter A 'Am I am pleased to submit the proposed Fiscal Years 2019/20 and 2020/21 budget for the period of July 1, 2019 through June 30, 2021. The District's two-year budget is a detailed document that outlines proposed revenue and expenditure plans over the next two years, provides a seven year view at the District's capital program, and forecasts the overall financial plan over the next five years. This budget document is a comprehensive management and financial plan, which will guide the District in its mission of delivering safe, reliable water in a cost-effective and environmentally sustainable manner. The District prepares a budget utilizing a Strategic Plan (Plan). The Plan serves as a guide for the District as we strive to continuously meet the District's Mission, Vision, and Values, which were adopted by the Board of Directors. Specific objectives have been established for each of the District's five Strategic Focus Areas. The full Plan can be found on the District's website, and portions relevant to the budget are included later in this document. District staff continuously looks for ways to reduce costs, control expenditures, and enhance revenues, all with the intention of improving the financial stability of the District and minimizing rate impacts on customers, when possible. For this budget cycle, staffing has been maintained at 24 positions, and the one vehicle being replaced in the fleet will be cost shared with the City's Street Maintenance Division. Payments towards the District's CalPERS Unfunded Accrued Liability are being increased significantly as a result of the Board recently approving a 15-year level payment plan which will save the District approximately $5.1 million in interest expense when compared to the CalPERS required 30-year amortization schedule. In 2014, the District refunded its existing 2004 Water Revenue Refunding Bonds to take advantage of lower interest rates and improved bond covenant terms, saving approximately $250,000 annually through the remainder of the loan. The District has always valued cooperation and collaboration with neighboring agencies, and the District has continued to partner with neighboring agencies on several maintenance and construction contracts to take advantage of economies of scale in lowering contract costs. Like many other water agencies, the District faces numerous challenges during this upcoming two-year budget cycle. Continued commitments to capital improvements, including both District and Joint Facilities projects, require sizeable short and long-term investments to ensure the reliability, safety, and health of the District's infrastructure and the water served to our customers. Wholesale water costs, including both increasing volume -based commodity rates and fixed costs, are projected to continue to increase, both now and in the future. These costs directly affect the water purchase budget, which is the single largest category of expenses for the District. While the District benefits from having a local water source, large and mostly unpredictable swings in its availability create significant challenges and potentially large variances from year-to-year. The District recently completed an update to its water rate study. A study is performed every two years to ensure that water rates and service charges are sufficient to meet the financial needs of the District, including operating and capital costs, as well as fund balance targets and reserve requirements. The study was approved by the Board of Directors and resulted in a rate adjustment of 6.5% effective May 1, 2019. A second year adjustment of up to 6.5% will be made during a subsequent Board meeting in FY 2019/20. A significant issue sure to impact the District is the assessment of the Lake Hodges Dam. The California Division of Safety of Dams (DSOD) required and expanded the assessment of dams statewide following the Oroville Dam spillway failure in 2017. In conjunction with DSOD, the City of San Diego has imposed a water level limit for Lake Hodges while an assessment of the dam is conducted. Staff from the San Diego County Water Authority (SDCWA), City of San Diego, Santa Fe Irrigation District and San Dieguito will work together to develop an Annual Operating Plan for Lake Hodges. The goal of the plan will be to maximize local water yield while continuing the SDCWA's pumped storage operations. The agencies will also work together to manage withdrawals for the lake as runoff is received. As the dam assessment begins, it is anticipated that near term improvements to the dam may not be defined for at least a year while long term improvements, which will require a more extensive structural assessment, could potentially have substantial costs. Per the Amended Lake Hodges Agreement, San Dieguito is required to pay 10.7 percent of the O&M and Capital costs associated with Lake Hodges. Overall, the proposed FY 2019/20 and FY 2020/21 budget will allow the District to maintain its strong financial position, while continuing a 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 2019/20 and FY 2020/21 operating and capital budget. Respectfully Submitted, William O'Donnell General Manager (District Overview History In 1922, the San Dieguito Irrigation District (SDID) 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 to the land owned by the South Coast Land Company via the newly constructed Hodges Flume and San Dieguito Reservoir. The first water meters in the District were 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 Diego; however, SDID maintained water rights for 3,200 acre-feet of water annually from Lake Hodges. SDID overcame several financial difficulties in the 1930's. The 1940's brought many improvements to the District, including the installation of a new pumping plant and 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. 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 _ r recognize this change in operations. The District now 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 90t" 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 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 water to a population of over 37,500 residents via approximately 11,700 potable water meters and 93 recycled water meters. Rolling hills and valleys characterize the District, with elevations ranging from sea -level at the coast to approximately 400 feet above sea level. The District, which is over 90% built -out, is a mix of low -density urban development characterized by the following breakdown of customer rate classes: - 77% Residential - 9% Commercial - 8% Landscaping/Construction - 3% Public/Government - 3% Agricultural Of the District's residential accounts, approximately 84% of these properties are single family, with the remaining 16% 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 account 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 single monthly cycle. 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. The Board President is appointed on an annual basis, with the City of Encinitas Mayor holding the position of Board Vice President. 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 and SFID), the Water Rate Subcommittee, the Strategic Plan Subcommittee, and the Drought Subcommittee. 8 Facilities District Office - 160 Calle Magdalena, Encinitas, CA 92024 (Shared with City of Encinitas Public Works Department) District Facilities - 170 miles of distribution pipeline - 12 miles of transmission pipeline - 2,430 distribution system valves - 1,460 hydrant valves - 7.5 million gallon underground reservoir - 2.5 million gallon underground reservoir - 11 inter -connections with other water agencies - Over 11,700 water services and water meters - 19 pressure reducing stations - 1 emergency pump station Jointly Owned Facilities (with Santa Fe Irrigation District) - R.E. Badger Water Filtration Plant (40 mgd) - 8 miles of transmission pipeline - 2 pump stations - 1.4 megawatt hydroelectric power plant - 13 million gallon reservoir - 800 AF San Diegiuto Reservoir Budget • • 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 types of expenditures and revenues: - Operating Fund: Captures the District's day-to-day expenditures and revenues. The Operating Fund also houses 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 large equipment Basis of Accounting The District uses 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 Budaet Document This is the fourth 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 Budaet 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: iN - 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 supplies, and water politics can severely impact the District's ability to forecast information. Therefore, 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 October and November 2018. This preliminary information included projecting staffing levels and personnel expense account information. From January through March 2019, 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 2019 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 over a series of work group meetings. In conjunction with internal water demand projections, preliminary water rate and charge guidance from the San Diego County Water Authority (SDCWA) became available to the District in late -April 2019, which was utilized to develop preliminary water purchase and treatment expenditure projections. Recommended guidance on SDCWA wholesale rates and charges was made available in late -May 2019 for updating and incorporation in the final proposed budget. The budget was developed for preliminary review and feedback by District management in April and May 2019. A final version of the District budget was brought to the Board of Directors on June 19, 2019 for adoption. As approved by the Board on June 19, 2019, the budget was implemented on July 1, 2019. 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. 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. is 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 information readily available 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: - Standard employee step increases, career advancements, updated overtime and vacation buyout were incorporated into the budget while a new MOU effective July 1, 2019 was still being finalized. - Updated CalPERS estimates reflect no major changes to the District's CalPERS normal employer contribution rate in FY 2019/20 or FY 2020/21. - Based upon the approved 15-year level payment plan for the unfunded pension liability, CalPERS unfunded accrued liability payments are budgeted as $1,384,180 in FY 2019/20 and $897,000 in FY 2020/21. - SDCWA commodity rates are projected to increase by 2.5% for treated water and 2.7% for untreated water in CY 2020 and estimated to increase by 4.0% for both treated and untreated water in CY 2021. - SDCWA fixed charges are projected to see a net increase of 1.8% in CY 2020 and then are estimated to increase by 4.4% in CY 2021. - Customer account growth is projected at 0.5% each of the two years. - Water demand is projected to increase 0.5% each of the two years. - Due to recent local rainfall, the District is projected to be able to meet total water demand with 44% local water in FY 2019/20. However, based upon conservative estimates, only 31% of demand will be met with local water in FY 2020/21. - Water sales and meter service charge revenue projections in this budget assume the water rates approved on April 17, 2019 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 $625,976 in FY 2019/20 and $259,769 in FY 2020/21 in order to meet minimum target reserve levels. Ida Strategic Plan 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 the 2012 Joint Facilities Master Plan to help plan and create the Capital Improvement Program. The District's 2015 Urban Water Management Plan and 1999 Recycled Water Master Plan are both utilized to plan the District's long-term water supply strategy. A Water Supply Shortage Response Program helps the District strategically navigate drought and other water shortage situations. Staff also maintains a financial risk analysis to assist in projecting the fiscal impacts of potential adverse conditions which the District may face. The Fiscal Years 2019/20 and 2020/21 Operating and Capital Budget is the third District budget to incorporate a formal Strategic Plan (Plan). Although approved as a stand-alone document, elements from the Plan are included in the District's budget as a way to align the short-term (two -years) goals of the District and the resources that are required to meet these goals. Our Mission To deliver safe, reliable water in a cost-effective and environmentally sustainable manner. Our Vision To anticipate and plan for evolving regulatory requirements, varying water supplies and demands, and increasing customer expectations by effectively and responsibly managing our organization and water resources. Our Value — Our Customers Our customers are the foundation of the San Dieguito Water District, and we place great value in providing them with such a vital resource. Knowing that, we commit to providing exceptional service, performed by a dedicated and knowledgeable workforce, and making responsible, transparent decisions with the best interests of our customers in mind. Strategic Plan Focus Areas Fiscal Responsibility Customer Service, Education, and Outreach Organizational Effectiveness Asset Management Water Quality and Sustainability Fiscal Responsibility: Develop and maintain financial plans and policies that ensure that the District is always working in a fiscally responsible, transparent, and sustainable manner. FY19/20 and FY 20/21 Objectives Additional Focus Areas FY20 FY21 Complete Budget Development ✓ ✓ Update Long -Term CIP Plan Asset Management ✓ ✓ Develop Unfunded Pension Liability Payment Strategy ✓ Complete a Fee and Charge Study ✓ Update Asset Valuation Study (incorporate into Master Plan) ✓ Conduct Cost of Service Water Rate Study ✓ Complete Capacity Fee Study ✓ 13 Customer Service, Education, and Outreach: Provide quality service to our customers by being responsive to their needs and communicating with them through active education and outreach programs. FY19/20 & FY20/21 Objectives Additional Focus FY20 FY21 Areas Sponsor 2 landscape workshops Water Quality and ✓ ✓ Sustainabilit Attend 2 water conservation events Water Quality and ✓ ✓ Sustainabilit Produce 6 Constant Contact newsletters ✓ ✓ Participate in the North County Water Agencies 4 Ih Grade Poster ✓ ✓ Contest Complete Public Works Yard demonstration landscape project Water Quality and ✓ ✓ Sustainabilit Create Advanced Metering Infrastructure (AMI) Implementation Plan ✓ Comply with SB 998 (discontinuation of residential water service) ✓ ✓ State -mandated requirements Plan District's 100-year (in 2022) anniversary celebration ✓ Organizational Effectiveness: Develop and retain a knowledgeable and well trained workforce and continuously review and update the District's policies, procedures, and work methods in order to find opportunities to increase efficiencies. FY19/20 & FY20/21 Objectives Additional Focus Areas FY20 FY21 Complete SDWD's Administrative Code Update ✓ Complete electronic plan routing through EnerGov. ✓ Send 1 employee to the Supervisor/Public Management Academy ✓ ✓ Develop a cross training program (Maintenance to Systems) ✓ Conduct a Risk Assessment & Emergency Response Plan ✓ Continue working with OMWD and SFID on potential areas for collaboration Fiscal Responsibility ✓ ✓ Asset Management: Plan, prioritize, and adequately fund the maintenance and replacement of the District's infrastructure, equipment, and facilities in order to maximize useful life of the assets in a cost effective manner. FY19/20 & FY20/21 Objectives Additional Focus Areas FY20 FY21 Complete the transmission main air release and blow -off replacement project ✓ Complete 12" valve replacement on Santa Fe Drive ✓ Complete 24" valve replacement on Encinitas Blvd.- Willowsprings Drive ✓ Upgrade cathodic protection for 16" transmission main ✓ Update Water Master/Asset Management Plan ✓ Complete transmission main anode bed replacement project ✓ Complete SOP for pipeline replacement ✓ Complete design of a valve replacement project ✓ Encinitas Ranch Reservoir Rehabilitation ✓ Construct Burgundy PRV Station ✓ 14 Water Quality and Sustainability: Provide District customers with high quality water from a diverse, reliable, and sustainable water supply portfolio. FY19 & FY20 Objectives Additional Focus Areas FY20 FY21 Complete Annual Consumer Confidence Report Customer Service, Education, and Outreach ✓ ✓ Comply with SB7X-7 (20% by 2020) or any new State -mandated ✓ ✓ water use reduction requirements Complete storage/sales agreement with CWA and City of San Diego in order to maximize Lake Hodges yield undercurrent Fiscal Responsibility ✓ storage restrictions Complete Urban Water Management Plan ✓ Complete next phase study for Potable Reuse Project ✓ M �Water Portfolio ..J 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 and regional 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, local 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. t -.: + Lake Hodges resides in the San Dieguito River Watershed, the .. y ' largest watershed in San Diego County with an area of approximately 345 square miles. Currently, the District has rights to approximately 21% of the annual inflow into Lake Hodges. Prior to 2014, 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 2014, 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 Potable Water Supply+ existing Lake Hodges agreement to reflect these new changes to the 5-Year Average operations of the lake. This amendment was finalized in 2014 and _A�Er redefined how the District could utilize water from Lake Hodges. Typically, utilizing local water is significantly less expensive to the Local District than purchasing imported untreated water. Therefore, when Water available, the District aims to maximize its use of local water in order 27% to realize that cost benefit. However, given that the availability of local water is greatly impacted by local weather and rainfall Total conditions, it is not always possible to substantially meet demand Imported with local water, and the ratio of local to imported water can vary 7396 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 2014/15, local water only accounted for 10% of the supply. Over the past five years (FY 2013/14 through FY 2017/18), local water has accounted for an average of 27% of the District's potable water supply. Both imported treated and untreated water are purchased from SDCWA, which receives water from a variety of sources. The Metropolitan Water District of Southern California (MWD) accounts for nearly 41% of SDCWA's water supply and receives water from Northern California through the State Water Project and from the Colorado River through the Colorado River Aqueduct. 22% of SDCWA's supply is received from a transfer agreement with the Imperial Irrigation District, and another 17% is received from the All -American and Coachella canal lining agreements. Approximately 6% of supply is produced by the newly active Carlsbad Desalination Plant, and the remaining 14% is supplied from other minor sources including groundwater, surface water, and recycled water. In reaction to the major drought that occurred in the early 1990's, SDCWA has been actively diversifying its water supply, going from only two sources and 95% reliance on MWD in 1991, to a projected 8 sources and 21 % reliance on MWD by 2020. Icy 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. Utilizing imported treated water from SDCWA is the most expensive option to the District and is only used when absolutely necessary. Potable Water Demand 1 0.2 Pa.,r State water PMed flay-o�l�} { CdDnWo Rivar .x 4 LflcalSuppliesj x' and Conservatia.n _,� _ Water use (demand) in the District is affected by many factors, including weather, population growth, the local economy, and conservation actions. Cycles of drought and recovery are common. The 1980's brought a steady increase in water use which peaked in Calendar Year (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 0 In April 2017, the State declared an end to the drought that had been announced by Governor Brown in January 2014. The State Water Resources Control Board (SWRCB) requires all water agencies to continue enforcement of the following mandatory prohibitions on water use: • Washing down paved surfaces or hardscape, including sidewalks, driveways, parking lots, tennis courts, and patios, except when it is necessary to alleviate safety or sanitation hazards. • Water waste, overspray, and runoff resulting from inefficient landscape irrigation systems and practices. • Washing vehicles without a positive shut-off nozzle. • Irrigating during or within 48 hours after measurable precipitation. • Not repairing leaks within a reasonable timeframe after notification from the District. • Using potable, non -recirculating water to operate ornamental fountains. In addition: • Restaurants and otherfood service establishments may only serve and refill water upon request. • Hotels, motels, and other commercial lodging establishments must offer guests the option of not laundering towels and linens daily. The District encourages customers to continue their water conservation practices by observing the following voluntary measures: • Limit landscape irrigation to 3 days per week. • Irrigate only between the hours of 6:00 p.m. and 8:00 a.m. (overnight to avoid evaporation) • Limit landscape irrigation to 10 minutes or less per station (unless weather -based controllers, drip/micro irrigation, or stream rotor sprinklers are used). • Use a positive shut-off nozzle when using a hose for outdoor watering. conservation measures, leading to a 24 /o drop In demand by CY 1992. As these drought conditions eased and the local economy grew in the late 1990's, demand again increased to an all-time high of 8,935 AF in 1997. From 1998 to 2007, demand stayed relatively consistent, although on a slight downward trend as more of a focus was placed on water conservation. In CY 2007, demand was at 7,753 AF. During the 2008 through 2011 drought, District customers again responded by significantly reducing their demand. By CY 2012, demand 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 6,727 AF in CY 2014. 2014 also brought the beginning to another period of drought conditions (see sidebar). In response to State -mandated water demand reductions, District enforced mandatory water -use restrictions, and increased water conservation efforts, a drastic decline in water demand occurred in CY 2015 and CY 2016. Demand in these years dropped to 5,690 AF and 5,367 AF respectively. CY 2016 demand was down 40% from the all-time high demand in CY 1997 and down 20% from as recently as CY 2014. Future Potable Water Supply and Demand Projections The District has two sources of potable water, local water from its share of rights to water from Lake Hodges, and imported water purchased from the San Diego County Water Authority (SDCWA). Budget and expenses for water purchases can vary greatly depending on the ratio of local water compared to imported water. Customer demand has been decreasing as a result of better conservation efforts as MA well as significant recent rainfall. With the District no longer in drought conditions, it is anticipated that customer demand will begin to gradually increase, due to the fact that customers are no longer being subject to mandatory water -use restrictions. Although District customers have always shown a commitment to water conservation, history shows that a rise in demand typically occurs when drought conditions end. Potable water purchases are projected to decrease 5.7% in FY 2019/20 and increase 18.8% in FY 20120/21. On top of this, annual account growth of 0.5% is factored in. With these assumptions, total potable water purchases are projected to be 6,330 AF in FY 2019/20 and 6,360 AF in FY 2020/21. The District is projecting to have approximately 1,400 AF of local water available to utilize from Lake Hodges as of July 1, 2019. In Water Supply Sources (Acre -Feet) addition to this, it is projected that an 12,00o additional 1,000 AF of local water may become available from local rainfall and 10,000 inflow into the lake during FY 2019/20. 8,000 Given this scenario, the District is projecting to be able to satisfy approximately 44% of 6,000 its demand, or 2,800 AF from local water in 4,000 FY 2019/20. As the District anticipates using most of its surplus of local water in FY 2,000 2019/20, it is projected that only 2,000 AF 0 of local water will be available to satisfyaN a`1\ a� a`� a`� a`ti a`, a� ati a1 demnd in FY 2020/21, or of demand aamount liso This i n FY 2020/21 based upon 11� 1�� conservative rainfall projections and lake tiyl`P y�1�P `�� bl� �Al� ��K� y � `�� `�� `�� 1 �ti°'1 inflow. —LocaIWater Imported Untreated ■Imported Treated Imported treated water is projected to comprise approximately 5% of total demand each year. Imported treated water is only utilized when the treatment plant is unavailable, either due to planned maintenance or capital project work. As such, imported treated water is projected to be 316 AF in FY 2019/20 and 318 AF in FY 2020/21. After local water and imported treated water is calculated, the remaining demand is satisfied by purchases of imported untreated water from SDCWA. Imported untreated water is projected to account for only 50% of water demand (3,214 AF) in FY 2019/20 and then 64% (4,042 AF) in FY 2020/21 as less local water is available. It should be noted that these projections may change, as future water supply conditions are highly variable depending on weather, customer demand, and local water availability. If supply conditions change drastically from estimates, the District will update its projections and adjust the budget accordingly during future updates. 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 50% to 60% of the District's O&M budget. Since FY 2015/16, by agreement, the District has been paying a fixed monthly charge to the City of San Diego for access to local water. The District is responsible for paying approximately 11% of the operations and maintenance costs for Lake Hodges, based upon local water rights. This fixed charge is set regardless of the amount of local water that the District utilizes and provides the District with greater stability when budgeting for local water purchases. Local water costs are predicted to be stable during the two-year budget at $6,250 monthly, or $75,000 annually, for both FY 2019/20 and FY 2020/21. Imported water, both treated and untreated, is purchased from SDCWA. The District pays a per acre-foot amount to SDCWA based on the volume of imported water purchased each month, referred to as the commodity cost. The District also pays various fixed charges to SDCWA each month for access to imported water as a member agency. 18 Over the years, both commodity costs and fixed charges from SDCWA have seen steady increases, with this two- year budget being no exception. These rising costs have been a consequence of increasing costs from MWD, capital SDCWA Imported Untreated Water improvements on SDCWA regional infrastructure, the $1,200 - $1,oeo 91,132 10.0% addition of the Carlsbad $1,009 9.0% Desalination Plan to the $1,000 $aes s.o% $829 regional water system, $$00 7.0% and a reduction in 6.0% regional water demand 5600 5.0% levels. $400 $zw $0 aX N a1 �l a1 eat eat e, ti��hLP ti�~h`P ¢�o ��P ��P � 6I` �% Change Per Year _SDCWA Untreated Water Rate (per acre-foot) 4.0% 3.0% Commodity costs are 2.0% adjusted on a calendar 1.0% year basis, every January 0.0% 1. The cost for imported untreated water is comprised of a supply component and a transportation component. Imported treated water is also comprised of these supply and transportation components, in addition to a water SDCWA Fixed Charges treatment component. The imported treated water rate is projected to W,500,oao increase 2.5% in CY 2020 and then estimated to increase another 4% in $2,000,000 CY 2021. The imported untreated water rate is projected to increase 2.7% in CY 2020 and then estimated $1,500,oco to increase another 4% in CY 2021. From these rates and the above discussed water purchase $1,o00,D00 projections, imported treated water costs are projected to be $432,999 in $500,000 FY 2019/20 and $453,169 in FY 2020/21. Imported untreated water costs are ro'lected to be 1-3 365 550 $o 2596 20% 15% 10% 5%ss a p 1 5% In FY 2019/20 and $4,399,333 In FY FY 14115 Yts/16 FY 16117 FY 17119 FY 18119 FY 19120 FY 20121 (Actual] (Actual) (Actual) (Actual) [Estimated] (Projected) (Projected) 2020/21. The large shift in imported %Change Per Year -SDCWA Fixed Charges (Total Dollars) untreated water costs between the two years is due to the greater amount of local water projected to be available in FY 2019/20 compared to FY 2020/21. 19.3% A4.3% 6546 The District pays six distinct fixed charges to SDCWA for access to imported water. Four of these fixed charges are paid directly to SDCWA, while two are pass -through charges to MWD. Five of the six fixed charges are adjusted on a calendar year basis, every January 1, while the remaining charge is updated on a fiscal year basis, every July 1. Fixed Charges are generally based upon each agency's historical average of purchases of imported water from SDCWA (either 3-year, 5-year or 10-year averages) with that average amount being charged on a per acre-foot rate. The SDCWA fixed charges are projected to see a net decrease of 1.8% in FY 2019/20 and then are estimated to increase by 4.4% in FY 2020/21. As has been the trend recently, overall the District's fixed charge costs are increasing due to several factors; SDCWA per acre-foot rates for fixed charges are increasing, new fixed charges have been added in recent years, and the District's average purchases used to calculate the charges are increasing iN (due to some lower imported water use years rolling off the average and some higher imported water use years rolling on). Fixed charges are projected to be $1,981,567 in FY 2019/20 and $2,029,208 in FY 2020/21. Water treatment costs are another large and variable budget item which are dependent upon total demand and the composition of water utilized (local versus imported). Water treatment costs are generally more expensive when the District utilizes more local water and less expensive when more imported water is used. Local water requires additional chemicals and energy to treat and therefore sees higher costs in those areas. With a projected 44% local water to 56% imported water split in FY 2019/20, water treatment costs are projected to increase to an average rate of $400/AF. However, they are expected to decrease to $350/AF in FY 2020/21, when a 31% local water to 69% imported water split is projected. Overall, the water treatment projection shows a 18% increase in FY 2019/20 and a 3.4% decrease in FY 2020/21. Water treatment costs are projected to be $2,950,670 in FY 2019/20 and $2,850,000 in FY 2020/21. Recycled Water Recycled water, which is provided by the San Elijo Joint Powers Authority (SEJPA), is available to customers in a limited area of the District. Recycled water is used primarily for landscaping purposes at parks, on roadway medians, and for commercial properties, as well as 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 9% to 11% of the District's water supply on an annual basis. Potable vs. Recycled Water 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. The District is projecting to purchase 440 AF of recycled water in FY 2019/20 and 450 AF in FY 2020/21, due to the addition of some new customers and from small increases in demand now that the District is removed from drought conditions. Recycled water is purchased from SEJPA on a commodity basis with rates typically being adjusted every July 1. SEJPA has informed the District that 4% increases are planned for July 1, 2019 ($1,580 / AF) and July 1, 2020 ($1,640 / AF). At those rates and purchase levels, recycled water purchase expenditures are proposed at $695,200 in FY 2019/20 and $738,000 in FY 2020/21. Potential Future Water Supplies 5-Year Average Recycled ate r 10f Potable Water 90 % The District is also exploring the potential for other local potable water supplies which are economically viable. The most promising potential project is potable water reuse. Potable water reuse is defined as the reclamation and treatment of wastewater and the eventual returning of that water to the potable water treatment plant for further treatment, either directly or through surface water augmentation. Several agencies are exploring potable water reuse projects and some regional agencies currently have demonstration projects underway, including the City of San Diego and the Padre Dam Municipal Water District. The State of California is currently working with industry groups and agencies to further develop regulations which would pave the way for the safe implementation of future potable reuse projects. The District, in partnership with the Santa Fe Irrigation District (SFID) and the San Elijo Joint Powers Authority (SEJPA), has been exploring the potential for a joint potable reuse project. Due to the fact that much of the infrastructure is already in place to treat wastewater at the San Elijo Water Reclamation Facility and transport that water up to San Dieguito Reservoir and ultimately to the R.E. Badger Water Filtration Plant, a viable potable reuse project may have long-term potential. K11 In 2016, the three agencies hired Trussell Technologies to perform a Potable Reuse Feasibility Study which delivered three technical memorandums outlining the potential opportunities and challenges of a potable reuse project. The primary conclusion of the Study is that a potable reuse project utilizing surface water augmentation could be permitted with the Division of Drinking Water. A near -term project could produce enough drought -proof water to satisfy approximately 9% of the District's potable water demands, while the ultimate project could satisfy approximately 35% of the District's demands. The cost of potable reuse water is estimated to range between $1,500 and $2,000 per acre-foot, which is not excessive considering the current cost of fully treated water and potential future cost increases for imported water. Should grant funding be received for this project, the cost per acre-foot would be lower. A follow-up Potable Reuse Implementation Study was completed and presented to the Board in May 2019 by a Project Management Team (PMT) consisting of District, SFID, and SEJPA staff along with engineering, finance/grant, operations, public outreach, and water resource consultants that have experience in potable reuse and/or water supply development projects. Significant operational and regulatory challenges remain with implementing such a project, the District feels that the potential benefits of developing an additional local, drought -proof water source make pursuing a potable reuse project worthy. The next steps in the project include: developing a financial model to determine the costs for each participating agency, identifying and pursuing outside funding opportunities, and discussing an appropriate governance structure between participating agencies. Staff will keep the Board and public informed of future developments as the project progresses. PAI Sources of Funds The District has three main sources of operating and non -operating revenue: potable and recycled water sales, potable and recycled $25,000,000 meter service charges and property taxes. Together, these three sources comprise over 92% of the District's annual revenue. The $20,000,000 remaining 8% of District revenues are comprised of billing and engineering fees, pass -through charges, capacity buy -in fees, investment and property earnings, and other $15,000,000 miscellaneous revenue. Total District revenues under the current water rates and charges are projected to be $19,769,646 in FY $10,000,000 2019/20 and $21,057,372 in FY 2020/21. Potable Water Sales $5,000,000 Sources of Funds Potable water sales are the single largest source of revenue for the District, projected to make up approximately 61% of total District $0 revenue. However, water sales are highly FY 2019/20 Proposed FY 2020121 Proposed variable, depending upon customer demand, weather, and legislative mandates (drought), ■ Water Sales ■ Water Meter Service Charges making budgeting for water sales revenues a ■Property Taxes ■OtherRevenues challenge. Recent potable water sales trends have been as high as 6,734 AF in FY 2013/14and as low as 5,239 AF in FY 2015/16. Storms throughout the state in Winter/Spring 2019 resulted in significant snowfall and rainfall, which have drastically improved the Sierra snowpack and filled local and State reservoirs. As a result of these improved conditions and customer conservation efforts reducing demand, potable water sales are projected to increase 14.3% in FY 2019/20 and 6.4% in FY 2020/21. Additionally, account growth is anticipated at 0.5% annually, which further increases sales projections. Under currently approved water rates, with these projected sales levels, potable water sales revenue is projected to be $12,349,723 in FY 2019/20 and $13,141,803 in FY 2020/21. Recycled Water Sales Recycled water sales comprise roughly 5% of total District revenue. While recycled water is a drought -proof water supply, recycled water customers also decreased their demand during the drought. With the drought now over, the District is projecting a small increase in recycled water sales each of the next two years. Recycled water sales are projected at 440 AF in FY 2019/20 and 450 AF in FY 2020/21. Based upon currently approved water rates, with these projected sales levels, recycled water sales revenue is projected to be $848,815 in FY 2019/20 and $912,476 in FY 2020/21. Together, potable and recycled water sales revenues are projected to comprise approximately 67% of total District reve n u e. Potable Water Meter Service Charges The second largest source of revenue for the District is from potable water meter service charges, which make up roughly 21% of total District revenue. 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. Calculated upon the District's current base of approximately 11,666 connections, the District is projecting to receive $4,053,742 in revenue from potable water meter service charges in FY 2019/20 and $4,357,722 in FY 2020/21. The small increase is based upon projected 0.5% annual account growth. Recvcled Water Meter Service Charaes Similar to potable water meter service charges, recycled water meter service charges are a fixed charge based upon the size of the recycled water meter serving a property. With new customers installing recycled water meters over the past year, the District projects to receive recycled water meter service charge revenue in the amount of $91,375 in FY 2019/20 and $98,228 in FY 2020/21. Due to the more infrequent installation of recycled water meters, no account growth is projected over this period. Projected recycled water meter service charge revenue equates to less than 1 % of total District revenue. Together, potable and recycled water meter service charges project to comprise approximately 21 % of total District reve n u e. 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 rightful share of property tax revenue, even after becoming a subsidiary district of the City of Encinitas. The District has seen property tax revenues increase each of the last five years due to the continued strength of the local real estate market and increasing valuations. Property tax revenues are projected to be $1,040,000 in FY 2019/20 and $1,081,600 in FY 2020/21. Other District Revenues Other District revenues include a wide range of smaller and sometimes less predictable revenue sources, including billing charges, engineering fees, capacity buy -in fees, interest earnings, property earnings and other miscellaneous revenue such as cost recovery, refunds, and Infrastructure Access Charge (IAC) revenue, which is collected by the District and passed -through to the San Diego County Water Authority (SDCWA). The District's billing charges and engineering fees are dictated by its Miscellaneous Fee and Charge Study, which was last conducted in 2013 and approved by the Board in 2014. In the current budget, existing fees and charges are being utilized to calculate revenues in these areas. Engineering and billing fees are both projected to decrease due to revised volume estimates. An update to the District's Miscellaneous Fee and Charge Study is planned for early FY 2019/20. Interest and property earnings have been trending upwards in recent years and are projected to increase in the two- year budget. Interest rates on invested funds have improved slightly, resulting in better returns. Furthermore, improved rental terms with users of District property and renegotiated terms on several cellular site leases have resulted in increased revenues from property usage. Capacity fee revenue is derived from the District's Capacity Fee Study, which sets an amount that customers must pay to "buy -in" to the water system when a new water meter is purchased. Based upon current development projections, capacity fee revenue is projected to remain flat each of the next two years. Infrastructure Access Charge (IAC) revenue is received from customer billings. Updated every January 1, with customers being billed based upon the size of the water meter serving their property, SDCWA sets the IAC amount, which is for access to the regional water system, and bills the District as a fixed charge. The District then collects this revenue from its customers and passes the amount received to SDCWA in -kind, essentially making this a revenue - neutral item with a corresponding amount on the expenditure side of the budget. Combined, these other revenues comprise approximately 7% of total District revenue, projected to total $1,477,366 in FY 2019/20 and $1,563,771 in FY 2020/21. 23 Uses of Funds Estimated total District expenditures are $20,495,622 for FY 2019/20 and $21,417,141 for FY 2020/21. Funds are used for a variety of purposes including operating expenses, capital projects, debt service, and fleet purchases. $22,QD0,000 $20,000,000 $18,000,000 $16,000,000 $14,000,000 $1200,000 $10,000,000 $8,000,000 $6,0M,000 $4,000,000 $2,000,000 $0 Uses of Funds ,688 $4,222,484 $9,500,986 FY 2019/20 Proposed ■ Water Purchases & Treatment ■Salaries & Benefits ■ Internal Cost Allocation $1,231,955 $1,336,323 $1,404,966 $3,794,187 $3,105,000 $10,544,710 FY 2020/21 Proposed ■ Capital Improvement Program ■ Debt Service ■ Other Department Expenditures Potable Water Purchases Potable water purchases are the largest component of the District's budget and can range from 30% to 50% of the District's operating budget. As discussed in detail in the "Water Portfolio" section of this document, budgeting for water purchases is a highly variable and complex process, with many assumptions being made based upon historical and projected data. The District has two sources of potable water, local water from its share of rights to water from Lake Hodges, and imported water purchased from SDCWA. The District's budget for potable water purchases can vary greatly depending upon the ratio of local water used compared to imported water. As previously discussed, gradual increases in potable water purchases are projected each of the next two years. Potable water purchases are projected at 6,330 AF in FY 2019/20 and 6,360 AF in FY 2020/21, with 0.5% annual account growth projections factored in. Due to significant local rainfall, which has filled Lake Hodges, the District currently has a large volume of local water available. Therefore it is estimated that 44% of demand in FY 2019/20 will be met with local water, potentially offering sizeable relief to the budget in that year. However, based upon conservative projections, it is projected that only 31% of demand will be met with local water in FY 2020/21. The District pays a fixed monthly amount by agreement to the City of San Diego for access to local water from Lake Hodges. For each of the two years, this amount is estimated to be $6,250 per month, or $75,000 annually, regardless of the amount of local water utilized. Imported water is purchased from SDCWA. The District pays a per acre-foot amount based upon the volume of water purchased each month (commodity) and also pays various fixed charges to SDCWA as a member agency for access to imported water. It is estimated that 5% of total potable water demand will be satisfied from imported treated water each year. Treated water is used during times when the District's water treatment plant is unavailable, either due to planned maintenance or capital project work. The SDCWA imported treated water rate is estimated to increase 2.5% in CY 2020 and then projected to increase another 5% in CY 2021. Overall imported treated water costs are estimated to increase 7.3% in FY 2019/20 and 4.6% in FY 2020/21. SDCWA imported untreated water is estimated to account for 50% of total potable demand in FY 2019/20 and 64% of demand in FY 2020/21. Untreated water is utilized when local water is not available. The SDCWA imported 24 untreated water rate is estimated to increase 2.7% in CY 2020 and then projected to increase another 4% in CY 2020. Due to the sizeable changes in estimated local water availability each of the next two years, reliance on more expensive imported untreated water will also vary greatly and thus reflect large swings in estimated expenditures. Overall, potable water purchases are estimated to decrease 5.7% in FY 2019/20 (based upon increased local water availability) but then increase 18.8% in FY 2020/21 (as local water availability is estimated to be reduced). Fixed costs from SDCWA are also estimated to decrease in FY 2019/20 then increase in FY 2020/21. The District currently pays six distinct fixed charges (four directly to SDCWA and two pass -through charges to the Metropolitan Water District) for access to imported water. Fixed Charges are generally based upon each agency's historical average of purchases of imported water from SDCWA with that average amount being charged on a per acre-foot rate. As has been the trend recently, overall the District's fixed charges are increasing as generally fixed charge costs from SDCWA have been increasing and the District's average purchases used to calculate the charges have increased (due to some lower imported water use years rolling off the average and some higher imported water use years rolling on). Overall, SDCWA fixed charges are estimated to decrease 1.8% in FY 2019/20 and increase 2.4% in FY 2020/21. Overall, the Potable Water Purchases expenditures are projected to be $5,855,116 in FY 2019/20 and $6,956,710 in FY 2020/21. Water Treatment All local and imported untreated water is treated at the R.E. Badger Water Filtration Plant, which is jointly owned with the Santa Fe Irrigation District. Water treatment costs are generally more expensive when the District utilizes more local water and less expensive when more imported water is used. Local water requires additional treatment processes to treat the water and therefore sees higher costs in this area. With a projected 44% local water to 56% imported water split in FY 2019/20, water treatment costs are projected to increase to an average rate of $400/AF. However, they are expected to decrease to $350/AF in FY 2020/21, when a 31% local water to 69% imported water split is projected. As discussed above, total volume treated is expected to increase slightly each year. Overall, water treatment expenditures are projected to be $2,950,670 in FY 2019/20 and $2,850,000 in FY 2020/21. Recvcled Water Purchases Recycled water is purchased from the San Elijo Joint Powers Authority (SEJPA) to serve to District customers. Recycled water purchases are projected to be 440 AF in FY 2019/20 and 450 AF in FY 2020/21 as small increases in demand are projected. In addition, SEJPA is scheduled to implement a 4% increase on wholesale recycled water costs on both July 1, 2019 and July 1, 2020. Overall, recycled water purchases expenditures are projected to be $695,200 in FY 2019/20 and $738,000 in FY 2020/21. Ininricc The proposed two-year budget provides salary and benefit costs for a staff of 24.0 Full Time Equivalents (FTE), including Administrative, Customer Service, Field Operations and Engineering staff. This level of staffing has been consistent since FY 2013/14. The District's Salaries budget includes standard employee step increases and career advancements within multi -level classifications, along with updates to overtime and vacation buyouts. Like the City, the District's July 1, 2015 Memorandum of Understanding (MOU) with SEIU Local 221 was set to expire on June 30, 2019 and negotiations were still ongoing at the time this budget was being prepared. Overall, salary expenditures in this budget are projected to be $2,156,110 in FY 2019/20 and $2,194,457 in FY 2020/21. This projection may change once negotiations are completed, and if significant, may necessitate a budget adjustment by the Board. Benefits Employee benefits, including health coverage and other insurance costs, are projected to increase significantly during FY 2019/20 and then decrease in FY 2020/21. While the CalPERS "normal" retirement contribution rates for active employees are remaining relatively stable over the course of the two-year budget, the District's payments towards its CalPERS Unfunded Accrued Liability (UAL) are projected to increase going forward as a result of the recently approved 15-year level payment plan. The District's UAL payment is discussed further in the "District Personnel and MIA Organization" section of this document. Overall, benefit expenditures are projected to be $2,066,374 in FY 2019/20 and $1,599,730 in FY 2020/21. Capital Improvement Program (CIP) The District annually appropriates 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, Joint Facilities Master Plan, Strategic Plan, and field observation. The Capital Improvement Program is proposed to make up approximately 13% to 14% of the total District budget. New appropriations to the CIP are projected to be $2,730,000 in FY 2019/20 and $3,105,000 in FY 2020/21. These appropriations are consistent with appropriation levels in recent years, as the District is jointly funding major improvement to various Joint Facilities and performing several major District projects and studies. Carry-over appropriations from prior years were projected to be $8,733,176 as of the 3rd Quarter of FY 2018/19, with about 61% of this funding appropriated to Joint Facilities projects and 39% to District projects. 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 $1,398,319 in FY 2019/20 and $1,404,966 in FY 2020/21, 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 2004 Water Revenue Refunding Bonds, in order to take advantage of lower interest rates. The refunding saved the District about $250,000 annually through the remainder of the loan. The District debt obligation budgets include $3,200 annually for administration costs on the debt. Debt service payments comprise approximately 7% 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 Internal Cost Allocation to the City for services provided in the areas of Finance, Fleet Maintenance, Human Resources, Information Technology, Records Management, Risk Management, and other support services. The City typically updates the Cost Allocation Plan (CAP) every two years in conjunction with the budget, to ensure that allocations for the services provided are current. The City was in the process of finalizing the CAP as this budget was being prepared therefore District staff projected a 5% increase each year and budgeted $1,272,688 for FY 2019/20 and $1,336,323 for FY 2020/21. This amount is approximately 6% of the total District budget and 10% of the operating budget. Other Department Budget Costs (Materials & Supplies / Contracts & Services / Debt & Finance) Other District expenditures include costs for general operating needs in the form of materials, supplies, contracts and services. Such costs include, but are not limited to, insurance costs, utilities, legal fees, billing supplies, banking costs, computer software and hardware expenses, safety and training costs, postage, parts and materials for system maintenance and repair, water conservation and outreach funding, as well as professional, maintenance and technical services contract costs. The District is budgeting $1,371,145 for these costs in FY 2019/20 and $1,231,955 in FY 2020/21, or approximately 7% of the District's operating budget. For additional details related to these costs, refer to the individual Division pages in the "Operating Program" section of this document. Fleet Purchases The District budget includes appropriations for the replacement of existing vehicles that are past their useful Iifespan and for the purchase of new vehicles which are deemed necessary to improve District operations. The District is appropriating $60,000 from its Fleet Replacement Fund for the purchase of a Backhoe in FY 2019/20. This will replace a Backhoe/Loader that has been in use for 19 years. The District will realize savings by sharing 50% of the $120,000 purchase price with the City's Street Maintenance Division which also utilizes the equipment. No K-11 replacements are projected for FY 2020/21. The Backhoe purchase is funded by previous contributions to the Fleet Replacement Fund. Fund Budget Summaries The following summaries provide a look at the District's budget by fund. This is a useful tool in examining how 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 documents 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 but were anticipated in the just completed Water Rate Study which reduced reserves to minimum levels so as to minimize the impacts to customers. MA y w c T O) I- O O V O y w o N V O' O) V y w O N 0 In O ' O w Z ._ (O 0o O O) 0 In 2.2 r V O In r Z ._ N M O 00 U --' O In N O O) u +-' O O) (O O In C7 +-' o V V 0 In V d> y M (O M In r d j y M w O) In r d> y M r- 06 O In 'p O (� co N N O) O O O w (O w N O) 00 O O w r N V V N N LL O O (M N (o M w d 0 (M V (O (C O) LL O (M In N O) V LL V N Cl) O d w V M a) LL V Cl) a) 6% EA R R y w o In o O V 0 y w O N M I- O O V V y w O N N V 0 O) Lo Z. V o) N O) O Lo Z Lo 0o O O) V f- Z (O V O O) O 'U •• o (o - M rn - 'U = o (o u) 0 0o - 'U r_ o r- (o o rn v_ a.w rI y M N O) O fz w Of y M N M In d) w O) y M N O) In O O` 'O d 0 OV) 00 0) M 'O LL O O M M OM) (000 O� a O I, 00 N CO N V M n O d C N- V O LL C M N M a) d C M M W ER W ER EA W EA ER R P O O O r N R (O ' OO (O R O) ' O ' 0 a) W R V : 0 (O In r W R O 'Itf- w R O O V w } E -- O (M a } E O) O O) a } E N 0 V f� E (O I- 0 V 00 E () O I- LO E M O (M a) N In O O f- C I� O 'It N C O) O (o U) a) ` O) N W ` (O CO N CO CO 7 7 7 U U U o o 0 0 0 o 0 c w Lo LO64, = w c It (fl =w c cEn t: LL (o Cl) LL O) O) LL V It V V y r, r y M M O 0 "'- Cl) Cl) C y C y Cl) Cl) C y (o Cl) C C C R R R F F F N O Q O) O) ' ' O) ' O Q O) (O ' ' (o O O) u Cl) Cl) Ef) w uVi w u (O (O EA = Q •` (O (O Q •` M M Q '` O) (3) = y o 0 O y O OM) OM) y O 0 O S M � Sy ~ ~ ~ 7 y R 00 00 � y R 00 00 � y R 00 00 � S y Q o o U)Q o o y Q o 0 y C R L In C R 0 O y C R 0 In R U N N y R U co (o R U O O C O O r C - ~ (M Cl)(M - ~ N N - ~ V M M ) ER ER ER J c (o c0 o c o,,,,wm O v w o t: p EA O ER (A = w O V3 R R R Lo Lov y N_ v y N_ C y V V C y C y N RV> N R N R R CO R V) R V) N N (o w N N N w 0) y (O O O) w y O O O N y - 0 (O f 0ofi c o o(o (o a m w w (n omO W a ofi orn c w w in ui 0 LO W c °/ w o 00 o ui N c °/ w 0 ui c rZ ' N O Q N N O In N N O Q O (o O) (O a) N N O Q O O 0 X O) O V M X M I� M `-' V X O) V LL a W .M..�. Q LL LL W( .N..�. N Q LL a W .M..�. N o o L L Lr)w w v y �, o y �, v y w w, O L N W W00 L N O) O) r , O r S (O O (O R (O O (O R O (o O Cl) p O) (O O w E p w O) 0 a) E 0 W I� O fz N O > O f- N O > (O O w N O > LO 0 1n } a 0) N - M E } d I� 00 E } a 0) O s LL 00 00 LL O) 0 LL EA U) Vi U) N Vi i V 00 - 0 (O 1 N � � V� O) I� O O V O � C w N V O ' O) V S 00 N In V N 7 a (O 00 O O) 0 Lo 7 u I� V O In r C R I7 ( M In ( m C R N N O O) - m I •C R O) (O O In (O O I� (O (O CO In r 00 O) In r yR r I- (o O) 00 00 R r co N N O) O R r (O 00 N O) 00 m 0 (O (M (O In Cl! y m 0 0 Cl) N (O Cl) y m 0 Cl) V (O w s m a Cl) N V M V N M O m V-7 M � 7 Vi LL 7 EA LL 7 LL LL LL U » U » •L •L 'O N V In An 'O N V In (! 'O N V In LO LO LO LO LO LO LL C LL LL N N O N � y N E a� N E§ O U E LL O U E LL O U E LL a) tO) y .N Q U R O) y 'N Q U R O) y 'N Q U R E - - . E - - . E - -CL . R O R Q' y R O R Q' y R O R y S Z Q f4 Z O f4 Z. Q LL 0MUQLLF LL LL OMUQLLF LL LL 0MUQLLF N CL a � � � m L- F- � � LL o � M � 2 c � 2 � o § _ LL � o qm a)04 o CL 04 o 04 LL � LL § U k _ = % 3 > e = Q- ( \ \ C) \ > 0 ./ } G = % '2 Q- 0 & # 7 E LL\ _ \ \ LL E \ LL 2 0 LL 0 k E ° ® k 2 a ( o a a m a a _ Q- \ \ _ C) c E ƒ a a a / / � 0)LL / � LL 0) 2 z E _ CL kSk k3k 2 o m 0 0 a a 0 0 _ o o \ \ k \ » U { ».= \ g r = r = m > eae5e=e2 � � � � E \ § �_ _ k e \ S \ 2 k ƒ ( L ƒ e m a \ o c E o ■ § ..N - LL _ _ _ _ _ _ \ _ o \ \ \ C/) _ ° � 0 0 0 } © E E \ / mcn / f \ � ¥ � 0 q = U } e e e e m e 0 m 0 G \ m / co / 00 Al e G @ 2 ' / o (0 co / � / / m e \ _ / LL \ \ § \ 7 k 3 G 2 2 J ( 0)§ / ® Of 6 \ 'E / j ƒ } o \ k \ co ¥ � 0 � _ LL. § k \ ¥ a � � � 6 LL. g ■ $ 2 _ ¥ \ ; 2 c c-4CL < � L > _ 2 � ■ � c � LL 0 i>-% ■ E E m m 0 04 CD 0 2 q = 0 }U- \ co 'T e \ co 'T k co ¥ _ § � ¥ e ._ 3 (0g m co / (D 'T v e _ f -o\ LL/ R § e m o } m Overview The District is proposing a staffing level of 24.0 Full -Time Equivalents (FTE) in both FY 2019/20 and FY 2020/21, with a total Personnel Budget of $4,222,484 for FY 2019/20 and $3,794,187 for FY 2020/21, including salary and benefits. Staffing District staffing has remained consistent at 24.0 FTE's since FY 2012/13, after a District reorganization reduced staffing from 25.4 FTE's to the current level of 24.0 FTE's. The District is not proposing any restructuring or reclassifications in the current FY 2019/20 and FY 2020/21 budget. While not considered permanent staffing, the District also budgets for 250 hours per year of temporary, on -call staffing in support of customer service functions to ensure that the needs of our customers are met when regular customer service employees are out of the office or at meetings or trainings for long periods of time. Including salary and benefits, this temporary staffing is budgeted at $7,500 in both FY 2019/20 and in FY 2020/21. Organization Staffing is primarily divided between three Divisions; the Customer Services Division (includes Administration functions), the Field Operations Division, and the Engineering & Planning Division. Additionally, portions of certain positions are administratively charged to the District's Recycled Water Program in order to separate the costs between serving potable and recycled water customers. Staffing is organized as follows: Ratepayers Board of Directors City Manager (City) T Public Works Director (City) T General Manager Finance Manager Operations Program Senior Superintendent Assistant Engineer Finance Conservation Utility & Maint. Utility & Maint. Warehouse Utility & Maint. Utility & Maint. Engineer Analyst Specialist Field Supervisor Specialist Coordinator Specialist Specialist Finance Utility & Maint. Utility & Maint. Utility & Maint. Technician Technician Specialist Specialist Finance Utility & Maint. Utility & Maint. Utility & Maint. Technician Technician Technician Specialist Utility & Maint. Utility & Maint. Technician Technician Utility & Maint. Technician Salary and Benefits The San Dieguito Water District is currently operating under the July 1, 2015 Memorandum of Understanding (MOU) between the City of Encinitas / San Dieguito Water District and Service Employees International Union — Local 221 (SEIU). The MOU has a four-year term and is scheduled to expire on June 30, 2019. As labor negotiations were still underway during the developing of this budget, only standard merit step increases for employees and advancements within multi -level classifications have been factored into this two-year budget. SalariaG Once negotiations are completed and the full impact on salaries and benefits has been determined, staff may request a budget adjustment if the negotiations result in a significant change. It should be noted that management and non - represented staff typically see their salary and benefits mirror what was negotiated under the MOU. As of July 1, 2018, 14 of the District's 24 employees are "topped -out" in their current classifications, meaning they have no ability for further step increases or level advancements. The other 10 employees still have room to either advance in their classification or earn additional merit increases. AIIrnNancas The District is making minor modifications to other employee allowances, such as overtime, vacation buy-out, and auto allowance costs, which make up a small portion of the District's entire budget for Salaries. The District's overtime budget is increasing from $62,500 in FY 2018/19 to $72,000 each of the two years. The overtime budget has not increased substantially since FY 2013/14, even though wages and salaries have increased annually since July 1, 2015 due to negotiated increases in the MOU. Overtime is also increasing due to proposed night work and associated standby pay in support of the District's valve maintenance program. Overall, overtime comprises approximately 3.2% of the District's salary budget and only 2.2% of the District's total personnel budget. Vacation buy-out, which accounts for payments when employees decide to cash -out earned vacation credits as allowed by the MOU, is increasing slightly in the two-year budget based upon historical averages and projected usage. This District's General Manager earns an auto allowance of $1,800 per year. This amount is unchanged in the two- year budget from prior years. Total Salaries Overall, with these changes noted above, the District is budgeting for step and career advancement increases in the FY 2019/20 and FY 2020/21 while negotiations are underway. Benefits The Flexible Benefit allowance provided by the San Dieguito Water District to employees is budgeted to remain flat during the two-year budget at an amount of $13,300 per year per employee. This too may be impacted by the labor negotiations. Retirement Contributions and Other Insurance Other employee benefit costs include CalPERS Employee Contributions (for currently active employees) and various insurance costs, such as for Medicare, City District Pension Reform In recent years, the District, like many agencies, has undergone pension reform as a way to control long-term pension costs. The District currently has three tiers of retirement plans, with differing levels of benefits, depending on when the employee was hired: TIER ONE (Classic Plan) Employees hired on or before October 12, 2012 2.7% for each year of service at age 55 Final compensation based upon single highest year of pay TIER TWO (City Plan) Employees hired between October 13, 2012 and December 31, 2013 2.0% for each year of service at age 60 Final compensation based upon highest three-year average pay TIER THREE (PEPRA Plan) Employees hired on or after January 1, 2013 2.0% for each year of service at age 62 Final compensation based upon highest three-year average pay Of the District's current employees, 63% fall under Tier One benefits, 12% are in Tier Two and 25% will receive Tier Three benefits. Over time, as existing employees retire or leave their employment with the District, and new employees are hired, a greater percentage of employees will fall under Tier Three benefits instead of Tier One, which will ultimately reduce the District's pension costs. 311 workers' compensation, unemployment, and life insurance. Overall, costs for currently active employees in these areas are increasing slightly in FY 2019/20 and in FY 2020/21. CaIPERS Unfunded Accrued Liabilitv (UAL Beginning in FY 2015/16, in response to new Government Account Standards Board (GASB) and CaIPERS regulations, the District began budgeting for and making payments towards its UAL. Starting with the District's June 30, 2013 valuation report, and annually thereafter, CaIPERS began providing agencies that participated in their shared risk pool (agencies with less than 100 employees) with individual accounting of their share of the liabilities in the pool. With this information now available, CaIPERS is now able to assign valuations to each agency's share of normal costs, funded accrued liabilities, and unfunded accrued liabilities. For the most current valuation period, ending on June 30, 2015, the Districts total UAL is stated as $5,431,524. The District's total UAL is funded at a level of 74.2%, with a market value of $15,673,384 in funded assets. The liability is charged with 7.5% interest annually. CaIPERS is expecting that agencies pay down their UAL, using a minimum recommended 30-year amortization schedule. In order to ease the burden on agencies in terms of budgeting for these new payments, the CaIPERS recommended amortization has payment amounts that ramp up over the first 21 years and then ramp back down until the liability is paid off in the 30t" year. In FY 2018/19 the District made the minimum required payment of $409,820. In the two-year budget, with a new 15- year level pay plan adopted by the Board in April 2019, payments are scheduled to be $1,384,180 in FY 2019/20 and $897,000 in FY 2020/21. The larger payment in FY 2019/20 is due to an additional payment of $487,180 that was to be made in FY 2018/19 as part of the new 15-year payment plan. The additional payment was not made pending direction from the Board on whether to pay it directly to CaIPERS or place it in a Trust account. That additional payment has been budgeted, along with the full payment in FY 2019/20. $1, 600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Projected CalPER5 UAL Payments 15-year Level Plan ��P �`lp ��1ti �Alti ■ Annual Installin ent Amau nt Future payments under the 15-year level payment plan will remain steady at $897,000 per year resulting in a total UAL cost of approximately $13.2 million, a savings of over $5 million under the CaIPERS minimum required 30- year amortization schedule. Total Benefits Overall, with the above -stated benefit changes, the District is proposing a 92% increase in benefit costs for FY 2019/20 then decrease nearly 23% in FY 2020/21. As discussed above, this increase is primarily due to the budgeting of payments related to the District's CaIPERS UAL. 0A District Personnel and Organization Classification Title FY 17/18 FY 18/19 FY 19/20 Actual Revised Proposed FY 20/21 Proposed General Manager 1.00 1.00 1.00 1.00 Senior Engineer 1.00 1.00 1.00 1.00 Superintendent 1.00 1.00 1.00 1.00 Finance Manager II 1.00 1.00 1.00 1.00 Engineer I/11 1.00 1.00 1.00 1.00 Utility & Maintenance Field Supervisor 1.00 1.00 1.00 1.00 Utility & Maintenance Specialist I / II 6.00 6.00 6.00 6.00 Finance Analyst I / 11 / III 1.00 1.00 1.00 1.00 Water Conservation Specialist I / 11 1.00 1.00 1.00 1.00 Program Coordinator 1.00 1.00 1.00 1.00 Utility & Maintenance Technician I / 11 / III / IV 6.00 6.00 6.00 6.00 Finance Technician I / 11 / 111 2.00 2.00 2.00 2.00 Program Assistant I / 11 / 111 1.00 1.00 1.00 1.00 District Total 24.00 24.00 24.00 24.00 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Division FTE's Actual Revised Proposed Proposed Administration 0.00 0.00 0.00 0.00 Customer Services 5.25 5.25 5.25 5.25 Water Purchases and Treatment 0.00 0.00 0.00 0.00 Recycled Water 1.00 1.00 1.00 1.00 Field Operations 14.75 14.75 14.75 14.75 Engineering and Planning 3.00 3.00 3.00 3.00 District Total 24.00 24.00 24.00 24.00 FY 2019/20 Proposed FTE's by Division Field Operations 14.75 Engineering and Planning 3.00 Customer Services 5.25 Recycled Water 1.00 33 District Personnel and Organization Salaries / Benefits FY 17/18 FY 18/19 FY 19/20 Actual Revised Proposed FY 20/21 Proposed Salaries $ 1,893,756 $ 2,069,462 $ 2,156,110 $ 2,194,457 Benefits 916,982 1,076,269 2,066,374 1,599,730 District Total $ 2,810,738 $ 3,145,731 $ 4,222,484 $ 3,794,187 MVIsion rersonnel Summary Division Salaries & Benefits FY 17/18 FY 18/19 FY 19/20 FY 20/21 Actual Revised Proposed Proposed Administration $ 365,164 $ 470,992 $ 1,440,880 $ 954,700 Customer Services 509,252 566,399 601,223 618,430 Water Purchases and Treatment - - - - Recycled Water 119,844 188,710 123,578 124,893 Field Operations 1,387,707 1,562,911 1,582,660 1,608,259 Engineering and Planning 428,771 356,719 474,143 487,905 District Total $ 2,810,738 $ 3,145,731 $ 4,222,484 $ 3,794,187 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Other Personnel Related Expenses Actual Revised Proposed Proposed Board Member Meeting Stipends $ 3,750 $ 8,000 $ 8,000 $ 8,000 Temporary Salaries & Benefits 27,103 15,500 12,500 12,500 Retiree Health OPEB Contribution 34,933 48,200 48,700 49,700 CalPERS Shared Risk Pool Unfunded Liability 326,436 409,820 1,384,180 897,000 Overtime 49,470 62,500 72,000 72,000 Vacation Buy -Out 60,788 43,850 84,600 84,600 Compensated Absences 34,802 - - - Uniforms/Clothing 6,272 10,620 10,620 10,620 Auto Allowance 1,800 1,840 1,800 1,800 District Total $ 545,354 $ 600,330 $ 1,622,400 $ 1,136,220 FY 19/20 Salary to FY 19/20 Salary and Benefit Costs by Benefit Ratio Division Benefits $2,066,374 Salaries $2,156,110� Field Operations 81.582.660 Recycled Wa $123,578 Custo $601,223 -Engineering and Planning $474,143 Administration $1,440,880 34 District Personnel and Organization Monthly Pay Rate Monthly Pay Rate Classification Title Pay Grade (Low) (High) Program Assistant 1 11 $ 3,053 $ 3,897 Finance Technician 1 13 $ 3,741 $ 4,775 Program Assistant 11 13 $ 3,741 $ 4,775 Utility & Maintenance Technician 1 13 $ 3,741 $ 4,775 Finance Technician 11 21 $ 3,891 $ 5,215 Program Assistant 111 21 $ 3,891 $ 5,215 Utility & Maintenance Technician 11 21 $ 3,891 $ 5,215 Finance Technician 111 22 $ 4,219 $ 5,654 Utility & Maintenance Technician 111 22 $ 4,219 $ 5,654 Program Coordinator 22 $ 4,219 $ 5,654 Utility & Maintenance Technician IV 23 $ 4,546 $ 6,093 Water Conservation Specialist 1 23 $ 4,546 $ 6,093 Finance Analyst 1 24 $ 4,956 $ 6,642 Utility & Maintenance Specialist 1 24 $ 4,956 $ 6,642 Water Conservation Specialist 11 24 $ 4,956 $ 6,642 Finance Analyst 11 25 $ 5,448 $ 7,301 Utility & Maintenance Field Supervisor 25 $ 5,448 $ 7,301 Utility & Maintenance Specialist 11 25 $ 5,448 $ 7,301 Finance Analyst 111 42 $ 5,891 $ 8,289 Engineer 1 44 $ 6,594 $ 9,278 Engineer 11 45 $ 7,062 $ 9,937 Superintendent 45 $ 7,062 $ 9,937 Finance Manager 11 61 $ 7,098 $ 10,486 Senior Engineer 63 $ 7,692 $ 11,364 General Manager 65 $ 8,935 $ 13,201 Note: Effective July 1, 2019 W 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 92% 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 63% of total District revenue, however this category is the most volatile source of District revenue, highly dependent upon customer demand, weather, and regulatory factors. Meter service charges from both potable and recycled customers 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 water rate study. The study had been scheduled for late 2017 but was delayed due to staffing changes and was completed in early 2019 with rates and charges effective May 1, 2019 The District receives a share of property tax revenue, which comprises roughly 5% of total District revenue and has remained relatively stable on a year-to-year basis. A slight increase is proposed during each of the upcoming two years due to increasing property valuations. Pass -through charges are from the SDCWA Infrastructure Access Charge (IAC) which is collected from District customers and paid to the District's water wholesaler. This is a budget -neutral transaction, with equal amounts being budgeted on both the expenditure and revenue sides of the budget. Interest & property earnings reflect various types of income that the District receives, such as returns on District investments, 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 water system. The following pages further summarize and detail the District's revenue. Kii Revenue Revenue Source FY 17/18 Actual FY 18/19 Revised FY 19/20 Proposed FY 20/21 Proposed Property Taxes $ 1,030,168 $ 1,000,000 $ 1,040,000 $ 1,081,600 Engineering Fees 329,116 296,200 266,200 266,200 Potable Meter Service Charges 3,772,759 3,778,497 4,053,743 4,357,723 Potable Water Sales 11,222,736 10,800,000 12,349,723 13,141,803 Recycled Meter Service Charges 86,098 84,440 91,375 98,228 Recycled Water Sales 852,829 650,000 848,815 912,476 Pass Through Charges 542,129 560,634 605,166 674,718 Billing Charges 39,852 42,600 59,625 59,625 Investment Earnings 53,880 274,777 285,104 293,201 Income from Property 109,229 145,223 149,896 151,799 Other District Revenue 153,142 644,324 20,000 20,000 Capital Contributions 194,040 100,000 100,000 100,000 Total $ 18,385,977 $ 18,376,695 $ 19,869,646 $ 21,157,372 62% FY 2019/20 Proposed Revenue by Category ■ Potable Water Sales ■ Potable Meter Service Charges ■ Recycled Water Program ■ Property Taxes ■ Pass -Through Charges ■ Engineering Fees ■ Interest & Property Earnings ■ Other Sources 5% 37 District Revenue Detail -MMMMENd Account Revenue Source Property Taxes 53100000-311.1 Property Taxes - Secured Engineering Fees 53100000-344.1 New Meter Installation Fees 53100000-391 Interfund Revenue (Services provided to City) Potable Meter Service Charges 53100000-348.1 Water Meter Service Charges- Potable 53100000-348.2 Water Meter Service Charges- Construction 53100000-348.21 Water Meter Service Charges- Fire Line / Fire Meter Potable Water Sales 53100000-348.6 Potable Water Sales- Single -Family Residential 53100000-348.7 Potable Water Sales- Multi -Family Residential 53100000-348.8 Potable Water Sales- Commercial 53100000-348.9 Potable Water Sales - Agriculture 53100000-348.10 Potable Water Sales- Landscaping 53100000-348.11 Potable Water Sales- Construction 53100000-348.13 Potable Water Sales - Public 53100000-348.14 Potable Water Sales- Government Recycled Water Program 53100000-348.4 Water Meter Service Charges- Recycled 53100000-348.31 Recycled Water Sales- Landscaping 53100000-348.32 Recycled Water Sales- Government 53100000-348.33 Recycled Water Sales- Construction 53100000-348.3 Recycled Water Sales Pass Through Charges 53100000-348.5 SDCWA Infrastructure Access Charge (Pass -Through) Billing Charges 53100000-351.7 Delinquent Charges 53100000-351.7 Turn -Off Charges Interest & Property Earnings 53100000-361.1 Pooled Investment Earnings 53100000-361.12 Pooled Investment- Contractual 53100000-362 Property Rental Income 53100000-361.2 Electricity Generation Income/Change In Invest. Value Other District Revenue 53100000-336 Local Revenues- Other 53100000-341.2 Administration - Other Charges 53100000-392 Proceeds of Fixed Asset Disposal 53100000-393.4 Accretion of Bond Premium (Deferred) 53100000-394 Cost Recovery 53100000-399 Other Revenues Capital Replacement (Fund 532) 53200000-395 Capacity Fees Debt Service (Fund 534) 53400000-361.3 Other Investment Earnings Fleet Replacement (Fund 535) 53500000-392 Proceeds of Fixed Asset Disposal District Total FY 16/17 Actual FY 17/18 Actual FY 18/19 Revised FY 19/20 FY 20/21 Proposed Proposed $ 958,873 $ 1,030,168 $ 1,000,000 $ 1,040,000 $ 1,081,600 $ 958,873 $ 1,030,168 $ 1,000,000 $ 1,040,000 $ 1,081,600 $ 484,451 $ 329,116 $ 296,200 $ 266,200 $ 266,200 $ 420,588 $ 267,787 $ 246,200 $ 266,200 $ 266,200 $ 63,863 $ 61,329 $ 50,000 $ 3,544,758 $ 3,772,759 $ 3,778,497 $ 4,053,743 $ 4,357,723 $ 3,264,759 $ 3,483,609 $ 3,495,063 $ 3,739,577 $ 4,020,045 $ 19,333 $ 12,022 $ 12,000 $ 12,000 $ 12,893 $ 260,666 $ 277,128 $ 271,434 $ 302,166 $ 324,785 $ 9,467,085 $ 11,222,736 $ 10,800,000 $ 12,349,723 $ 13,141,803 $ 5,073,137 $ 6,164,657 $ 5,839,453 $ 6,898,497 $ 7,281,738 $ 1,658,422 $ 1,919,441 $ 1,999,507 $ 2,107,868 $ 2,265,958 $ 1,018,737 $ 1,145,338 $ 1,093,771 $ 1,241,687 $ 1,334,813 $ 503,307 $ 495,379 $ 405,378 $ 465,287 $ 500,183 $ 858,389 $ 1,066,841 $ 1,000,007 $ 1,161,850 $ 1,248,988 $ 29,046 $ 64,072 $ 71,958 $ 77,830 $ 83,667 $ 276,484 $ 306,357 $ 325,691 $ 332,968 $ 357,940 $ 49,563 $ 60,650 $ 64,235 $ 63,736 $ 68,516 $ 795,557 $ 938,927 $ 734,440 $ 940,190 $ 1,010,704 $ 78,732 $ 86,098 $ 84,440 $ 91,375 $ 98,228 $ 610,585 $ 810,791 $ 613,158 $ 679,052 $ 729,981 $ 106,240 $ 42,038 $ 36,842 $ 169,763 $ 182,495 $ 504,429 $ 542,129 $ 560,634 $ 605,166 $ 674,718 $ 504,429 $ 542,129 $ 560,634 $ 605,166 $ 674,718 $ 48,630 $ 39,852 $ 42,600 $ 59,625 $ 59,625 $ 48,630 $ 39,852 $ 42,600 $ 59,625 $ 59,625 $ 172,944 $ 161,756 $ 420,000 $ 435,000 $ 445,000 $ 111,002 $ 180,664 $ 274,777 $ 285,104 $ 293,201 $ (1,569) $ (626) $ - $ 91,247 $ 109,229 $ 145,223 $ 149,896 $ 151,799 $ (27,736) $ (127,511) $ - $ 125,355 $ 153,142 $ 644,324 $ 20,000 $ 20,000 $ 7,067 $ 6,992 $ 20,000 $ 10,000 $ 10,000 $ 6,295 $ 8,285 $ 614,324 $ 74,371 $ 74,372 $ - $ 12,342 $ 26,199 $ 10,000 $ 10,000 $ 10,000 $ 25,279 $ 37,294 $ - $ 161,700 $ 194,040 $ 100,000 $ 100,000 $ 100,000 $ 161,700 $ 194,040 $ 100,000 $ 100,000 $ 100,000 $ 269 $ 1,353 $ - $ - $ - $ 269 $ 1,353 $ - $ 16,264,051 $ 18,385,977 $ 18,376,695 $ 19,869,646 $ 21,157,372 38 OperatingProgram 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 2017/18 and FY 2018/19 Division Accomplishments - FY 2019/20 and FY 2020/21 Key Division Objectives - Division Staffing - Division Expenditure Summary - Division Expenditure Detail Kk] Operating Program l Jul.i�..•71.1��-..-..�.lti��l��I��._.._.. FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Division Approved Proposed Proposed Proposed Proposed Administration $ 2,062,736 $ 2,346,921 $ 2,016,072 $ 3,028,538 $ 2,609,348 Customer Services $ 737,627 $ 719,525 $ 837,753 $ 851,588 $ 865,450 Water Purchases & Treatment $ 7,096,256 $ 6,907,166 $ 8,709,118 $ 8,805,787 $ 9,806,710 Recycled Water Program $ 684,794 $ 741,358 $ 772,805 $ 830,778 $ 874,893 Field Operations $ 1,864,711 $ 1,845,078 $ 2,074,688 $ 2,255,470 $ 2,205,269 Engineering & Planning $ 445,395 $ 446,429 $ 520,505 $ 535,143 $ 545,505 Operating Budget Total $ 12,891,519 $ 13,006,477 $ 14,925,969 $ 16,307,303 $ 16,907,175 Operating • • by • • FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Category Approved Proposed Revised Proposed Proposed Salaries $ 1,885,766 $ 1,893,756 $ 2,069,054 $ 2,156,110 $ 2,194,457 Benefits $ 1,352,258 $ 1,441,066 $ 1,081,649 $ 2,066,374 $ 1,599,730 Potable Water Purchases $ 5,525,793 $ 4,640,950 $ 6,208,317 $ 5,855,117 $ 6,956,710 Water Treatment $ 1,570,463 $ 2,266,216 $ 2,500,801 $ 2,950,670 $ 2,850,000 Recycled Water Purchases $ 556,629 $ 615,545 $ 640,500 $ 695,200 $ 738,000 Material & Supplies $ 307,356 $ 389,130 $ 478,570 $ 517,920 $ 518,170 Contracts & Services $ 627,467 $ 543,765 $ 736,966 $ 770,225 $ 710,785 Internal Cost Allocation $ 1,053,908 $ 1,210,730 $ 1,212,084 $ 1,272,688 $ 1,336,323 Capital Outlay (Fixed Assets) $ 7,322 $ - $ - $ 20,000 $ - Debt & Finance $ 4,557 $ 5,319 $ 3,000 $ 3,000 $ 3,000 Operating Budget Total $ 12,891,519 $ 13,006,477 $ 14,925,969 $ 16,307,303 $ 16,907,175 FY 19/20 Proposed Budget by Division 3% 14% ■Administration ■ Water Purchases & Treatment ■ Field Operations 18% ■ Customer Services ■ Recycled Water Program ■ Engineering & Planning FY 19/20 Proposed Budget by Category 4% 3% 5% 17% ■Salaries ■ Water Treatment ■ Contracts & Services ■ Debt & Finance 9% 15% ■ Benefits ■ Recycled Water Purchases ■ Internal Cost Allocation ■ Potable Water Purchases ■ Material & Supplies ■ Capital Outlay (Fixed Assets) 40 Operating Program O nd Category 53192690 -Administration FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Actual Actual Revised Proposed Proposed Salaries $ 4,900 $ 3,750 $ 8,000 $ 8,000 $ 8,000 Benefits 780,681 885,498 462,992 1,432,880 946,700 Materials & Supplies 17,374 22,106 40,650 49,000 49,250 Contracts & Services 201,316 219,518 289,346 262,970 266,075 Internal Cost Allocation 1,053,908 1,210,730 1,212,084 1,272,688 1,336,323 Debt & Finance 4,557 5,319 3,000 3,000 3,000 Administration Total $ 2,062,736 $ 2,346,921 $ 2,016,072 $ 3,028,538 $ 2,609,348 53192691 - Customer Services FY 16/17 FY 17/18 MOPY 18/19 FY 19/20 FY 20/21 Actual Actu. Revised Proposed Proposed Salaries $ 415,793 $ 400,495 $ 440,822 $ 469,974 $ 482,568 Benefits 123,783 108,757 125,551 131,249 135,862 Materials & Supplies 45,919 44,917 67,500 59,000 59,000 Contracts & Services 152,132 165,356 203,880 191,365 188,020 Customer Services Total $ 737,627 $ 719,525 $ 837,753 $ 851,588 $ 865,450 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 53192692 - Water Purchases & Treatment Actual Actual Revised Proposed Proposed Potable Water Purchases $ 5,525,793 $ 4,640,950 $ 6,208,317 $ 5,855,116 $ 6,956,710 Water Treatment 1,570,463 2,266,216 2,500,801 2,950,670 2,850,000 Water Purchases & Treatment Total $ 7,096,256 $ 6,907,166 $ 8,709,118 $ 8,805,786 $ 9,806,710 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 53192693 - Recycled Water Program Actual Actual Revised Proposed Proposed Salaries $ 95,009 $ 94,477 $ 93,480 $ 96,845 $ 97,402 Benefits 26,019 25,367 26,025 26,733 27,491 Recycled Water Purchases 556,629 615,545 640,500 695,200 738,000 Contracts & Services 7,137 5,969 12,800 12,000 12,000 Recycled Water Program Total $ 684,794 $ 741,358 $ 772,805 $ 830,778 $ 874,893 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 53192694 - Field Operations Actual Actual Revisedi Proposed Proposed Salaries $ 1,056,690 $ 1,053,185 $ 1,161,148 $ 1,208,823 $ 1,224,918 Benefits 339,065 334,522 369,780 373,837 383,341 Materials & Supplies 234,983 307,884 320,420 359,920 359,920 Contracts & Services 226,651 149,487 223,340 292,890 237,090 Capital Outlay (Fixed Assets) 7,322 - - 20,000 - Field Operations Total $ 1,864,711 $ 1,845,078 $ 2,074,688 $ 2,255,470 $ 2,205,269 FY 16/17 FY 17/18 FY 18/19 I FY 19/20 FY 20/21 53192695 - Planning & Engineering Actual Actual Revised Proposed Proposed Salaries $ 313,374 $ 341,849 $ 365,604 $ 372,468 $ 381,569 Benefits 82,710 86,922 97,301 101,675 106,336 Materials & Supplies 9,080 14,223 50,000 50,000 50,000 Contracts & Services 40,231 3,435 7,600 11,000 7,600 Planning & Engineering Total $ 445,395 $ 446,429 $ 520,505 $ 535,143 $ 545,505 Operating Budget Total $ 12,891,519 $ 13,006,477 $ 14,925,969 $ 16,307,303 $ 16,907,175 41 Administration Division Fund: 531 O rg : 53192690 Division FunctiorMg 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, records management, and risk management support is also captured in this Division. 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 utilities 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 Ensured all District employees maintained current certifications and received required trainings Updated the District's Reserve Policy Completed the 2019 update to the District's Water Rate Study Completed the District's SOP Manual FY 19/20 a ey Divitslull Objective7mml Complete a Capacity Fee Study Complete a Fee and Charge Study Finalize the District Administrative Code Update Develop a UAL payment strategy for the District's 15-year plan Complete a Risk Assessment and Emergency Response Plan EPA Administration Division Fund: 531 Org: 53192690 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Classification (FTE) Actual Actual Revised Proposed Proposed No personnel are directly assigned to this Division Division Total 0.00 0.00 0.00 0.00 0.00 Expenalture Summary FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Group Actual Actual Revised Proposed Proposed Salaries $ 4,900 $ 3,750 $ 8,000 $ 8,000 $ 8,000 Benefits 780,681 885,498 462,992 1,432,880 946,700 Materials & Supplies MS 17,374 22,106 40,650 49,000 49,250 Contracts & Services CS 201,316 219,518 289,346 262,970 266,075 Internal Cost Allocation ICA 1,053,908 1,210,730 1,212,084 1,272,688 1,336,323 Debt & Finance DF 4,557 5,319 3,000 3,000 3,000 Division Total $ 2,062,736 $ 2,346,921 $ 2,016,072 $ 3,028,538 $ 2,609,348 Non- el Expenditure Detail I FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Description Actual Actual Revised Proposed Proposed 431.1 CS Professional Services Contracts $ 10,068 $ 18,286 $ 10,650 $ 15,950 $ 16,250 431.21 CS Legal Contracts - City 16,740 9,502 10,000 10,000 10,000 431.23 CS Legal Contracts - Outside 5,363 - 5,000 5,000 5,000 432.2 CS Maintenance Contracts 7,590 7,866 8,550 9,550 9,550 435.1 CS Interagency Agreements 12,227 12,298 12,200 13,300 14,100 441.1 & 4,CS Utilities - Gas & Electricity 9,346 11,740 14,450 16,450 17,875 444 CS Permits 9,558 10,273 10,700 14,720 15,750 451 CS Insurance 73,812 61,439 94,000 94,000 94,000 452 CS Communications 14,086 7,888 15,700 12,200 12,700 454 CS Printing & Binding 115 1,287 200 1,500 400 455 CS Travel & Mileage 3,391 2,332 8,150 7,250 7,400 456.1 CS Training & Development 37,862 37,063 20,000 30,050 30,050 456.3 CS Professional Memberships - - 33,800 36,000 37,000 458.1 ICA Internal Cost Allocation 1,053,908 1,210,730 1,212,084 1,272,688 1,336,323 458.2 CS Other Interfund Transactions - 35,946 35,946 23,000 23,000 461.1 MS Office Supplies 1,562 1,456 2,500 2,500 2,500 461.2 MS Books and Subscriptions 423 151 1,250 1,250 1,250 468.1 MS Furniture & Fixtures (less than $5k) 5,002 9,734 10,000 10,000 10,000 468.5 MS Computer Software & Hardware 10,387 10,765 26,900 35,250 35,500 486 CS Claims Expense 1,158 3,598 10,000 10,000 10,000 493 DF Adjustments - 5,313 - - - 493.1 DF Bad Debt Expense 4,557 6 3,000 3,000 3,000 43 Customer Services Division Fund: 531 O rg : 53192691 U / U f af75T ItICr �11,— 36 3/4 _7 Cubic Feet The Customer Services Division is primarily responsible for the customer -related services in the District, including utility billing and water conservation. The utility billing section is responsible for the accurate and timely billing of over 11,740 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. Accurate and timely billing for potable and recycled water customers Customer service and cashiering for over 11,700 customers Delinquency processing and collections management Budget development and administration Water rate study development and implementation Accounts payable and receivable Water conservation program administration including public education and outreach Drought and water supply shortage response Completed annual budget development and financial reporting Completed the 2019 update to the District's Water Rate Study Completed the 2019 Public Health Goals Report Sponsored conservation program workshops, events, contests and newsletters FY 19/20 and FY 20/21 Kev Division Objectives -=MR Create a AMI Implementation Plan Complete Public Works Yard Landscape Improvements Project Conduct update to Water Rate Study Complete Utility Billing upgrade to the MUNIS 2019.1 Complete second year revise to the annual budget and CIP 44 Customer Services Division Fund: 531 Org: 53192691 Division Staffing FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 18/19 Classification (FTE) Actual Actual Revised Proposed Proposed General Manager 0.30 0.30 0.30 0.30 0.30 Finance Manager 1.00 1.00 1.00 1.00 1.00 Finance Analyst I / II / III 1.00 1.00 1.00 1.00 1.00 Water Conservation Specialist I / II 1.00 1.00 1.00 1.00 1.00 Finance Technician I / II / III 1.95 1.95 1.95 1.95 1.95 Division Total 6.26 6.26 6.26 6.26 6.26 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 18/19 Account Group Actual Actual Revised Proposed Proposed Salaries $ 415,793 $ 400,495 $ 440,822 $ 469,974 $ 482,568 Benefits 123,783 108,757 125,551 131,249 135,862 Materials & Supplies MS 45,919 44,917 67,500 59,000 59,000 Contracts & Services CS 152,132 165,356 203,880 191,365 188,020 Division Total $ 737,627 $ 719,626 $ 837,763 $ 861,688 $ 866,460 N nel Expenditure Det FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 18/19 Account Description Actual Actual Revised Proposed Proposed 431.1 CS Professional Service Contr $ 90,966 $ 95,863 $ 90,560 $ 104,700 $ 108,700 434 CS Information Technology Cc 18,520 27,354 26,420 20,865 13,870 459 CS Other Purchased Services 5,467 13,442 6,900 - - 461.1 MS Office Supplies 8,984 13,015 15,000 7,500 7,500 461.3 MS Postage 35,508 30,632 50,000 50,000 50,000 464.1 MS Repair & Maintenance Sup 1,427 1,270 2,500 1,500 1,500 491 CS Public Education / Outreac 15,781 11,438 40,000 24,450 24,450 491.1 CS Water Conservation 21,398 17,259 40,000 41,350 41,000 45 Water Purchases & Treatment Division Fund:• • .• Emir* 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). 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 (untreated) water at the R.E. Badger Water Filtration Plant Ensure the safety and reliability of the District's water supply FY 17/18 and FY 18/19 Div co Optimized the filling of District reservoirs to maximize efficiency at R.E. Badger Water Filtration Plant Produced the District's annual Water Quality Report Completed amendments to the Lake Hodges agreement between SDWD, SFID and City of San Diego Complete Water Rights Agreement with the Santa Fe Irrigation District Completed Potable Reuse Implementation Study 1 i Fl/��:.11 L� ■ i'I4�1/� ■ ►(a�I �J UI E,'i [•] I l•J �l[4,14� Complete sales/storage Agreement with CWA and the City of San Diego Comply with SB7X-7 (reduce water use 20% by 2020) Complete Annual Consumer Confidence (Water Quality) Reports With partner agencies, develop financial model for a Potable Reuse Program and pursue grant funding Complete Urban Water Management Plan (UWMP) Cf: Water Purchases & Treatment Division Fund: 531 Org: 53192692 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Classification (FTE) Actual Actual Revised Proposed Proposed No personnel are directly assigned to this Division Division Total 0.00 0.00 0.00 0.00 0.00 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Group Actual Actual Revised Proposed Proposed Salaries $ $ $ $ $ Benefits - Water Purchases WP 5,525,793 4,640,950 6,208,317 5,855,117 6,956,710 Water Treatment WT 1,570,463 2,266,216 2,500,801 2,950,670 2,850,000 Division Total $ 7,096,256 $ 6,907,166 $ 8,709,118 $ 8,805,787 $ 9,806,710 Non -Personnel Expenditure Detail FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Description Actual Actual Revised Proposed Proposed 435.2 WT Treatment Costs WT $ 1,570,463 $ 2,266,216 $ 2,500,801 $ 2,950,670 $ 2,850,000 436.1 WP Imported Treated Water WP 511,806 219,640 401,247 432,999 453,169 436.2 WP Imported Untreated Water WP 3,231,609 2,546,887 3,714,681 3,365,550 4,399,333 436.3 WP Local Untreated Water WP 88,048 69,874 75,000 75,000 75,000 436.4 WP MWD Readiness to Serve WP 96,005 62,781 62,667 31,447 32,705 436.5 WP CWA Infrastructure Access WP 509,460 506,137 544,772 605,166 674,718 436.6 WP CWA Emergency Storage Fee WP 583,344 670,812 760,253 665,460 611,425 436.7 WP MWD Capacity Reservation WP 93,137 88,947 92,205 86,919 85,398 436.8 WP CWA Customer Service Fee WP 217,989 248,425 278,093 241,040 221,544 436.81 WP CWA Supply Reliability Charge 194,395 227,447 279,399 351,536 403,418 47 Recycled Water Division Fund: 531 O rg : 53192693 Division FunctiorMg The Recycled Water Division promotes the use of recycled water in the District. The District sells recycled water to customers which is 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. 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 Completed Phase II of Encinitas Ranch HOA recycled water conversion Maintained 100% compliance with all recycled water and cross connection testing Continue phasing in of San Diego Botanic Garden recycled water conversion Maintain 100% compliance with all recycled water and cross connection testing Convert City trail "Lot 15" South Mesa, Encinitas Ranch to recycled water With partner agencies, develop financial model for a Potable Reuse Program and pursue grant funding 48 Recycled Water Division Fund: 531 O rg : 53192693 Classification (FTE) FY 16/17 Actual FY 17/18 Actual FY 18/19 Revised FY 19/20 Proposed FY 20/21 Proposed General Manager 0.10 0.10 0.10 0.10 0.10 Senior Engineer 0.10 0.10 0.10 0.10 0.10 Superintendent 0.05 0.05 0.05 0.05 0.05 Engineer 1 0.10 0.10 0.10 0.10 0.10 Utility & Maintenance Specialist I / 11 0.50 0.50 0.50 0.50 0.50 Utility & Maintenance Specialist I / 11 0.10 0.10 0.10 0.10 0.10 Finance Technician I / 11 / 111 0.05 0.05 0.05 0.05 0.05 Division Total 1.00 1.00 1.00 1.00 1.00 xpenditure Summary FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Group Actual Actual Revised Proposed Proposed Salaries $ 95,009 $ 94,477 $ 93,480 $ 96,845 $ 97,402 Benefits 26,019 25,367 26,025 26,733 27,491 Recycled Water Purchases RW 556,629 615,545 640,500 695,200 738,000 Contracts & Services CS 7,137 5,969 12,800 12,000 12,000 Division Total $ 684,794 $ 741,368 $ 772,806 $ 830,778 $ 874,893 wollm• • • FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Description Actual Actual Revised Proposed Proposed 432.1 CS Technical Service Contract $ 7,137 $ 5,969 $ 12,800 $ 12,000 $ 12,000 436.9 RW Recycled Water $ 556,629 $ 615,545 $ 640,500 $ 695,200 $ 738,000 49 Field Operations Division Fund: 531 O rg : 53192694 The Field Operations Division operates and maintains the District's water distribution system, including over 175 miles of pipeline and over 11,740 service connections. The District also maintains 19 pressure reducing stations, a 2.5 MG reservoir and a 7.5 MG reservoir, an emergency pump station, and other appurtenances. District personnel provide ongoing 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 -outs, and emergency repairs. 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 17/18 and FY 18/19 'DivismEwIllownplishmentsAW Completed a District Standard Operating Procedures (SOP) Manual Completed Department of Homeland Security (DHS) SCADA Systems Audit Implemented water quality sample station replacement program Completed GPS of all backflow devices within District service area Completed lead and copper sampling Updated SDWD's Standard Operating Procedures Manual FY 1 and FY 20/21• Objectives Develop a SOP for pipeline testing Complete a Maintenance to Systems cross -training program 6 Field Operations Division Fund: 531 Org: 53192694 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Classification (FTE) Actual Actual Revised Proposed Proposed General Manager 0.30 0.30 0.30 0.30 0.30 Superintendent 0.95 0.95 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 4.50 4.50 4.50 4.50 4.50 Utility & Maintenance Technician I / 11 / III / IV 6.00 6.00 6.00 6.00 6.00 Program Coordinator 1.00 1.00 1.00 1.00 1.00 Program Assistant I / 11 1.00 1.00 1.00 1.00 1.00 Division Total Expenditure Summary 14.75 i 14.75 14.75 14.75 14.75 Account Group FY 16/17 Actual FY 17/18 Actual FY 18/19 Revised FY 19/20 Proposed FY 20/21 Proposed Salaries $ 1,056,690 $ 1,053,185 $ 1,161,148 $ 1,208,823 $ 1,224,918 Benefits 339,065 334,522 369,780 373,837 383,341 Materials & Supplies MS 234,983 307,884 320,420 359,920 359,920 Contracts & Services CS 226,651 149,487 223,340 292,890 237,090 Capital Outlay CO 7,322 - - 20,000 - Division Total $ 1,864,711 $ 1,845,078 $ 2,074,688 $ 2,255,470 $ 2,205,269 Account Description FY 16/17 Actual FY 17/18 Actual FY 18/19 Revised FY 19/20 Proposed FY 20/21 Proposed 432.1 CS Technical Services Contracts $ 2,436 $ 2,223 $ 6,800 $ 6,800 $ 6,800 432.2 CS Maintenance Contracts $ 22,531 $ 16,067 $ 38,240 $ 38,240 $ 38,240 435.1 CS Interagency Agreements $ 35,946 $ - $ 38,240 $ - $ - 437.1 CS Construction & Building Contracts $ 93,640 $ 77,702 $ 125,000 $ 125,000 $ 125,000 444 CS Permits $ 67,945 $ 49,862 $ 47,550 $ 59,600 $ 61,800 445 CS Rentals $ 1,800 $ 2,478 $ 3,750 $ 3,250 $ 3,250 452 CS Communications $ 2,353 $ 1,155 $ 2,000 $ 60,000 $ 2,000 459 CS Other Purchased Services $ - $ - $ - $ - $ - 462 MS Field Supplies $ 6,210 $ 7,105 $ 10,000 $ 10,000 $ 10,000 463 MS Safety & Emergency Supplies $ 5,021 $ 6,584 $ 7,000 $ 7,000 $ 7,000 464.1 MS Repair & Maintenance Supplies $ 33,946 $ 18,557 $ 22,500 $ 25,000 $ 25,000 464.2 MS Small Tools & Instruments $ 8,601 $ 8,693 $ 12,500 $ 14,500 $ 14,500 465 MS Uniforms - Non-PERSable $ 5,223 $ 6,272 $ 10,620 $ 10,620 $ 10,620 466 MS Fuel $ 25,144 $ 29,238 $ 40,000 $ 45,000 $ 45,000 467 MS Inventory Expense $ - $ 35 $ - $ - $ - 467.1 MS Inventory Expense - Mains $ 11,519 $ 23,030 $ 28,000 $ 28,000 $ 28,000 467.2 MS Inventory Expense - Valves $ 12,572 $ 10,767 $ 14,000 $ 14,000 $ 14,000 467.3 MS Inventory Expense - Services $ 33,674 $ 43,893 $ 35,000 $ 65,000 $ 65,000 467.4 MS Inventory Expense - Laterals $ 14,141 $ 20,382 $ 20,000 $ 20,000 $ 20,000 467.5 MS Inventory Expense - New Meter Installs $ 78,848 $ 122,105 $ 100,000 $ 100,000 $ 100,000 468.4 MS Equipment<$5k $ - $ 11,043 $ 20,000 $ 20,000 $ 20,000 469 MS Other Supplies $ 83 $ 178 $ 800 $ 800 $ 800 476 CO Machinery & Equipment $ 7,322 $ - $ - $ 20,000 $ - 51 Engineering & Planning Division Fund: 531 O rg : 53192695 2 112' CONTROL VALVE i ul 2' METER W/ STRAINER -- _ _ 1 _ HEATER �- - J� r - - HEATER I DEHUM. I (FUTURE) l II (FUTURE) I (FUTURE)I FCA 8' GATE VALVE I \ _ / 1 W METER GATE VALVE - li ul STRAINER ` 8'CONTROL :==!I VAI VF 4 Division Function 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 Programs 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 Collaboratively oversee Joint Facilities Projects Completed Cardiff Valve Replacement project Completed North Coast Highway 101 10" Water Main Replacement project Implemented a pipeline assessment program Relocated 30" transmission main at 1-5 and Manchester Avenue Established fire service for Caltrans construction office at Via Poco Completed emergency repair of 30" transmission main in El Mirlo 1 • 1 • • • CompleteTransmission Main Anode Bed Replacement project Complete Transmission Main Air Release and Blow -off Valve Replacement project Continue pipeline assessment program Complete 12" valve replacement on Santa Fe Drive Complete design of Requeza/Bonita valve replacement project Update Asset Valuation Study 6'Y Engineering & Planning Division Fund: 531 Org: 53192695 Classification (FTE) FY 16/17 Actual FY 17/18 Actual FY 18/19 Revised FY 19/20 Proposed FY 20/21 Proposed General Manager 0.30 0.30 0.30 0.30 0.30 Senior Engineer 0.90 0.90 0.90 0.90 0.90 Engineer 1 0.90 0.90 0.90 0.90 0.90 Utility & Maintenance Specialist I / 11 0.90 0.90 0.90 0.90 0.90 Division Total 3.00 3.00 3.00 3.00 3.00 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Group Actual Actual Revised Proposed Proposed Salaries $ 313,374 $ 341,849 $ 365,604 $ 372,468 $ 381,569 Benefits 82,710 86,922 97,301 101,675 106,336 Materials & Supplies MS 40,231 3,435 7,600 11,000 7,600 Contracts & Services CS 9,080 14,223 50,000 50,000 50,000 Division Total $ 445,395 $ 446,429 $ 520,505 $ 535,143 $ 545,505 Non -Personnel Expenditure Detail FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 Account Description Actual Actual Revised Proposed Proposed 431.1 CS Professional Service Contracts $ 9,080 $ 14,223 $ 50,000 $ 50,000 $ 50,000 455 CS Travel & Mileage - - - - - 462 MS Field Supplies 2,976 888 1,600 5,000 1,600 464.1 MS Repair & Maintenance Supplies 901 - 2,000 2,000 2,000 466 MS Fuel 2,264 2,547 4,000 4,000 4,000 53 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. - 2015 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, field observations and 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. 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Implementation of a modern utility billing system will ensure integration with the new City of Encinitas financial and planning systems and will provide the District and its customers with greater functionality and 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. Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Consultant Services $14,670 $0 $0 $0 $14,670 Project Total $14,670 $0 $0 $0 $14,670 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 56 Potable Reuse Implementation Plan oject Informati� Project # CW16F Start Date July 2017 Location SEJPA / Joint Facilities Completion Date December 2017 Project Description In March 2016, the results of a Potable Reuse Feasibility Study were presented to the District Board. The conclusion of the study was that a potable water reuse project is viable and potentially cost-effective. The Potable Reuse Implementation Plan will build off of the Feasibility Study in order to progress with the development of a potable reuse project. The scope of work will include planning a regulatory strategy, studying various governance structures, and identifying funding strategies. The District's Water Sustainability Plan includes exploring the feasibility of potable water reuse in hopes of diversifying its water supply portfolio. Potable water reuse has the potential to provide the District with a drought -proof local water supply at or below the cost of imported water. Current FY 19/20 FY 20/21 Future Total 7-Year Category Balance * Funding Funding Funding Plan Funding SDWD Consultant Study $9,488 $0 $0 $0 $9,488 Project Total $9,488 $0 $0 $0 $9,488 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 57 Public Works Yard Landscaping Improvements oject InformaticA Project # CW16G Start Date July 2017 Location District Office Completion Date March 2018 roject Description This project will remove ornamental turf (grass) and hardscape (concrete) from the front public entrance of the shared City/District 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 mod By removing ornamental turf and hardscape and replacing it with drought tolerant and sustainable landscaping, the City and the District aim to save water, reduce irrigation costs, improve storm water capture, and provide examples to the public on water conservation related landscaping techniques. The District has leveraged partnership opportunities on this project, including rebates and incentives for turf removal and irrigation upgrades, as well as Proposition 84 Storm Water grant funding, both of which may reduce the overall cost of the project. Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Infrastructure Project $95,023 $100,000 $0 $0 $195,023 Project Total $95,023 $100,000 $0 $0 $195,023 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 58 Water Rate Study Update :1 SAN DIEGUITO WATER DISTRICT Water Rate Study FINAL Report / December 8. 2015 mn�ioject Information Project # CW17F Start Date Location District Office Completion Date San Dieguito Water District July 2017 March 2019 The Water Rate Study project provided 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 2017 Water Rate Study updated the previous study, performed in 2015. The water rate study was completed in March, 2019 and rates went into effect May 1, 2019. 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 and associated costs, water rates and service charges need to be evaluated and updated regularly in order to ensure relevance and accuracy, and to ensure the financial stability of the District. District staff strives to conduct a Water Rate Study every two years. Funding Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Consultant Study $6,489 $0 $0 $300,000 $306,489 Project Total $6,489 $0 $0 $300,000 $306,489 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 59 Joint Facilities Master Plan Projects Project # CW19A (formerly CW18A) Start Date On -Going Location Joint Facilities Locations Completion Date On -Going • - I - • • The Joint Facilities Master Plan Project funds 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: - Completion of the San Dieguito Pump Station replacement - Seismic improvements at the Plant clearwell and washwater tank - Mechanical dewatering and washwater filtration improvements - Safety improvements at San Dieguito Reservoir - San Dieguito Dam concrete refurbishment A-oject Justification' The R.E. Badger Water Filtration Plant is 47 years old and many of its components have reached the end of their useful lives. 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. Fun Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding Joint Facilities Projects $4,898,587 $1,750,000 $1,750,000 $12,000,000 $20,398,587 Project Total $4,898,587 $1,750,000 $1,750,000 $12,000,000 $20,398,587 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 60 Joint Facilities Capital Acquisitions oject information AN Project # CW1913 (formerly CW1813) Start Date Location Joint Facilities Locations Completion Date roject Description On -Going On -Going 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 SCADA and security upgrades, software and hardware upgrades, smaller 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. This project accounts for minorjoint facilities projects that are not planned as part of the largerjoint 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. Funding Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding Joint Facilities Capital Acquisitions $387,503 $0 $150,000 $750,000 $1,287,503 Project Total $387,503 $0 $150,000 $750,000 $1,287,503 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 61 Water Infrastructure Improvements oject Informati� Project # CW19C (formerly CW18C) Start Date On -Going Location Various locations Completion Date On -Going roject Description The Water Infrastructure Improvements project annually funds various repairs or upgrades to District facilities. Projects scheduled to be funded during the next two-year budget cycle include: - Various valve replacements - Encinitas Ranch Reservoir Rehabilitation - Oceanic Drive water main extension - Orpheus PRV relief valve - North Coast Highway 101 streetscape related relocations Prod The 2010 Water Master Plan identified a number of projects to be completed over a ten year period, several of which being identified as high priority. Additionally, new projects are included as deemed necessary by staff during ongoing maintenance and inspection of District infrastructure. Most projects are motivated by extending the life of critical facilities, as well as enhancing fire -flow capacity, boosting system redundancy, and improving water quality. Fun ing I Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Infrastructure Project $822,892 $400,000 $600,000 $3,000,000 $4,822,892 Project Total $822,892 $400,000 $600,000 $3,000,000 $4,822,892 Anticipated Future Annual Operating Expense: $ - * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 62 Transmission Line Improvements (formerly Transmission Line Maintenance) n oject Informati Project # CW19D (formerly CW18D) Start Date On -Going Location Various Locations Completion Date On -Going This project facilitates the repair and replacement of valves and appurtenances on the District's 30-inch and 36-inch transmission mains. Upcoming phases include the replacement of additional valves, replacement of corroded and inoperable blow -offs and automatic air releases along the transmission main, and cathodic protection of a 16" transmission main on Encinitas Blvd. 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. Funding ..w Current Category Balance * FY 19/20 Funding FY 20/21 Funding Future Funding Total 7-Year Plan Funding SDWD Infrastructure Project $832,814 $275,000 $400,000 $1,000,000 $2,507,814 Project Total $832,814 $275,000 $400,000 $1,000,000 $2,507,814 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 63 Meter Replacement and Automation Program Project # CW19E (formerly CW18E) Start Date On -Going Location Various Locations Completion Date On -Going roject 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 hardware and software upgrades, as well as the evaluation and implementation of new water meter technology. 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 ongoing replacement of water meters ensures accurate meter readings and also enables the District to implement advanced meter technology as it becomes available and practically feasible. Funding qq Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Infrastructure Project $1,126,667 $100,000 $100,000 $500,000 $1,826,667 Project Total $1,126,667 $100,000 $100,000 $500,000 $1,826,667 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 64 SCADA Automation Upgrade Program oject InformaticA Project # CW19F (formerly CW18F) Start Date On -Going Location Various Locations Completion Date On -Going 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 planning to install new controls in additional District pressure reducing stations to allow for real-time pressure and flow monitoring. The installation and upgrading of SCADA 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 pressure reducing stations at District reservoirs. Future upgrades will further increase functionality of the SCADA system from the central office location. Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Infrastructure Project $97,506 $30,000 $30,000 $150,000 $307,506 Project Total $97,506 $30,000 $30,000 $150,000 $307,506 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 65 N. Coast Highway 101 Water Main Replacement PC Based Correlator Receiver OSensor O ED RF Transmitter 4— 1 1 4— oject Informati Project # CW19G Start Date Sept 2018 Location Various Locations Completion Date June 2019 Project Description In December 2016, the District replaced 170LF of 10-inch steel water main following a water main break north of Encintas Boulevard in the NCTD right-of-way. With the removal of the pipeline, it was determined that the remaining pipeline on Coast Highway 101 had reached the end of its useful life and needed to be replaced. A water main break located 750 linear feet (LF) north of Encinitas Boulevard in the North County Transit District (NCTD) right-of- way occurred in March 2016. The water main was isolated and turned off. In December of 2016, 170 LF of the 10-inch steel water main in the NCTD right-of-way was replaced. With the removal of the pipeline, the District's corrosion engineer determined the remainder of the pipeline in Coast Highway 101 had reached the end of its useful life and recommended it be replaced Funding Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Infrastructure Project $91,537 $0 $0 $0 $91,537 Project Total $91,537 $0 $0 $0 $91,537 Anticipated Future Annual Operating Expense: $ - * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 66 Non -Destructive Pipeline Assessment PC Based Correlator 2 Receiver OSensor O 0 M r RF Transmitter p Project # CW19H Start Date July 2016 Location Various Locations Completion Date June 2019 The District's 2010 Water System Master Plan included an advanced asset management program to optimize the replacement of District pipelines. The methodology called for the non-destructive testing of critical pipelines. The testing involves measuring how quickly an acoustic signal is transmitted along a section of pipeline. Changes to the signal can be related to changes in pipeline wall stiffness. The better or quicker the signal, the more structurally sound the pipeline is. Project Justification I The asset management methodology combines the estimated useful life of a pipeline with the consequences of failure of the pipeline to determine how critical the pipeline is to the system. By completing non-destructive testing of the critical pipelines, District staff is able to identify pipelines that are still structurally sound, thereby deferring the scheduled replacement and extending the pipeline's life. This ultimately reduces capital replacement costs. Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Consultant Study $200,000 $0 $0 $0 $200,000 Project Total $200,000 $0 $0 $0 $200,000 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 67 Water Master Plan Update Project # CW191 Start Date Location District Office Completion Date July 2018 June 2020 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. The plan also contains an asset management component which evaluates the current condition and remaining useful life of existing infrastructure. 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 is an essential tool that is utilized to guide the development of the District's long-term Capital Improvement Program. Funding Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Consultant Study $150,000 $0 $0 $0 $150,000 Project Total $150,000 $0 $0 $0 $150,000 Anticipated Future Annual Operating Expense: * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 68 Urban Water Management Plan 2015 Urban Water Management Plan (UWMP) FINAL Prepared for: San Dieguito Water District 160 Calle Magdalena Encinitas, CA 92024 oject Informatigg Project # TBD Start Date July 2020 Location District Office Completion Date December 2021 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. Also included is a Water Sustainability Plan for the District. The 2020 UWMP, due by December 31, 2021, will be an update of the 2015 plan. Project Justification ' The California State Water Code requires water agencies to 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 2015 and submitted it in 2016. The next update will occur in 2021. Current FY 19/20 FY 20/21 Total 7-Year Category Balance * Funding Funding Future Funding Plan Funding SDWD Consultant Study $0 $0 $75,000 $0 $75,000 Project Total $0 $0 $75,000 $0 $75,000 Anticipated Future Annual Operating Expense: $ - * Current Balance as of March 31, 2019 (FY 2018/19 3rd Quarter end) 69 Potable Reuse Plan -Next Steps oject Informati� Project # TBD Start Date July 2019 Location SEJPA / Joint Facilities Completion Date December 2020 In 2016, the results of a Potable Reuse Feasibility Study were presented to the District Board. The study concluded that a potable water reuse project is viable and potentially cost-effective. The Potable Reuse Plan - Next Steps will build off of the Feasibility Study in order to progress with the development of a potable reuse project. The scope of work will include planning a regulatory strategy, studying various governance structures, and identifying funding strategies. Project Justification _,, The District's Water Sustainability Plan includes exploring the feasibility of potable water reuse in hopes of diversifying its water supply portfolio. Potable water reuse has the potential to provide the District with a drought -proof local water supply at or below the cost of imported water. Current FY 19/20 FY 20/21 Future Total 7-Year Category Balance * Funding Funding Funding Plan Funding SDWD Consultant Study $9,488 $75,000 $0 $0 $84,488 Project Total $9,488 $75,000 $0 $0 $84,488 Anticipated Future Annual Operating Expense: * Current Balance of Implementation Plan (CW16F) as of March 31, 2019 (FY 2018/19 3rd Quarter end) 70 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 (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% Total ❑ebt Service to 4.5%. The District accounts for its share of the si,wu,000 bonds as a Note Payable to the Authority. 51,400,000 S1.200.000 2014 Water Revenue Refunding Bonds 51,000,000 8600,000 8600,000 On September 30, 2014, the District issued 5mo,000 $5,870,000 of revenue refunding bonds, Series 5200.E 2014. The Series 2014 bonds redeemed all of the s- $boo& District's outstanding 2004 Water Revenue �1Oy�`1`b ��o1g119�vo1Cl\ 0 9yDl��0��`-1�yO��\131 ��,ti[��o�6`-�h�yO�hti6 Refunding Bonds, which were themselves a refunding of the District's original 1993 Water ■Principal ■Interest 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 Coverage Ratio 4W% — 3w% 2001M — 100% 0% F��p1 f{2�1 � qti _Debt Coverage Ratio —Requirement 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 $3,200 annually for trustees fees and continuing disclosure compliance related to these debt issuances. Long Term Debt FY 2019/20 & FY 2020/21 Debt Service Schedul e Fiscal Year 2019/20 Principal Interest Total 2007 R.E. Badger Water Refunding Bonds $ 490,000 $ 133,619 $ 623,619 2014 Water Revenue Refunding Bonds 645,000 126,500 771,500 Debt Administration Fees - - 3,200 Total $ 1,135,000 $ 260,119 $ 1,398,319 Fiscal Year 2020/21 Principal Interest Total 2007 R.E. Badger Water Refunding Bonds $ 525,000 $ 111,466 $ 636,466 2014 Water Revenue Refunding Bonds 665,000 100,300 765,300 Debt Administration Fees - - 3,200 Total $ 1,190,000 $ 211,766 $ 1,404,966 Fiscal Year Principal Interest Total Prior Years (FY 2006/07 - FY 2016/2017) $ 3,430,000 $ 2,404,976 $ 5,834,976 FY 2017/18 455,000 171,619 626,619 FY 2018/19 475,000 152,919 627,919 FY 2019/20 490,000 133,619 623,619 FY 2020/21 525,000 111,466 636,466 FY 2021 /22 545,000 89,397 634,397 FY 2022/23 570,000 66,044 636,044 FY 2023/24 595,000 40,916 635,916 FY 2024/25 620,000 13,950 633,950 Total $ 7,705,000 $ 3,184,906 $ 10,889,906 Fiscal Year Principal Interest Total Prior Years (FY 2014/15 - FY 2016/17) $ 1,155,000 $ 493,536 $ 1,648,536 FY 2017/18 605,000 167,225 772,225 FY 2018/19 625,000 148,775 773,775 FY 2019/20 645,000 126,500 771,500 FY 2020/21 665,000 100,300 765,300 FY 2021/22 695,000 73,100 768,100 FY 2022/23 725,000 44,700 769,700 FY 2023/24 755,000 15,100 770,100 Total $ 5,870,000 $ 1,169,236 $ 7,039,236 M Fleet Replacement 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 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 appropriates 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 Vehicles/Equipment by Year contribution that the District makes to its S Fleet Replacement Fund. The method levels out annual contributions to the fund 3 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 O vehicles beyond 7 years of use. In many le -e 4 16" atia -6p e ryoti, �� _erg cases, due to continuous maintenance and upkeep, District vehicles typically last Mn:, °t W-hid- 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. The District's current fleet of 28 units 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. District Vehicles Quantity Description 7 Light -Duty Truck 5 Heavy -Duty Truck 2 Dump Truck 2 Sport Utility Vehicle 1 Water Tender 1 Vacuum Truck District Equipment Quantity Description 4 Backhoe / Loader 2 Flat Bed Trailer 1 Forklift 1 Large Water Pump 1 Vacuum Trailer 1 Mobile Emergency Generator 73 During the previous two-year budget cycle, the District replaced a 14-year old 3-yard dump truck in FY 2017/18 and there were no replacements in FY 2018/19. The 3-yard dump truck was replaced with a 2009 Vacuum truck purchased used from the City's Wastewater Division at considerably less cost. In FY 2019/20, the District is proposing to purchase a backhoe to replace a 19-year old backhoe/loader that has reached the end of its useful life. The District will realize savings by sharing 50 percent of the estimated $120,000 purchase cost with the City's Street Maintenance Division which also utilizes the equipment. The District is projecting a $697,559 balance in the Fleet Replacement Fund at the beginning of FY 2019/20. The ending fund balance represents approximately 35% of the current replacement value of the District's entire vehicle and equipment fleet. 74 Fleet Replacement Fund New Vehicle Information Replaced Vehicle Information Vehicle # Vehicle Description Vehicle # Vehicle Description Age Purchase Cost Fiscal Year 2016/17 Actual FM-332 3-Yard Dump Truck FM-216 2003 3-Yard Dump Truck 14 $ 80,000 Total $ 80,000 Fiscal Year 2017/18 Actual TBD 2009 Vacuum Truck (Used) N/A New Addition to Fleet N/A $ 60,000 Total $ 60,000 Fiscal Year 2018/19 Approved No replacements $ - Total $ - Fiscal Year 2019/20 Proposed TBD Backhoe/Loader FM-153 2000 Backhoe 19 $ 60,000 Total 50/50 cost share with Street Maintenance Division $ 60,000 Fiscal Year 2020/21 Proposed TBD $ - Total $ - rR 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 Fund Balance and Reserves Capital Replacement Reserve. Each reserve serves a specific $12,aoo,oaa purpose and has its own target $10,000,000 funding levels, set in accordance $8,000,000 with the District's water rate studies. All three reserves are $6,Oa0,00a "unrestricted," meaning that while $4,Oa0,000 the reserves are designed to serve $2 000,000 a specific purpose, they are not legally limited in their use. The $0 District performs long-term FY2014115 FY2015/16 FY2016117 FY2017118 FYZD18119 FY2019/20 FY2020/21 financial projections to ensure (actual) (actual) {actual] (actual) {estimated] {projected] (projected) these reserves are funded to a 0Capital Replacement ■Operating proper level. ■ Rate Stabilization ■ Fleet Replacement Reserves ■ Debt Service ■Additional Revenue Requirement Operating Reserve The District's Operating Reserve is kept to meet the ongoing operating expenses of the District in the event of an emergency or unforeseen event. This reserve is set at 90 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 a sudden rise 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 1 to 2 times the District's future 5-year average of annual capital expenditures. Other Balances The District also maintains an annual balance in its Fleet Replacement Fund based upon scheduled contributions to and purchases from the fund. See the "Fleet Replacement" section for more information on this Fund and its balance. 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 rcy 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 two 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 2022/23, and illustrates how these projections will impact the District's fund balance and reserve levels. Generally, Non -Operating revenues, Debt Service expenditures, Capital Improvement appropriations, and Fleet Replacement expenditures are relatively well known through the life of the five-year cash -flow, and actual projected amounts are included. While operating revenues are projected for the two-year budget based upon currently available information, beyond two years conservative estimates of 2% revenue growth is built in annually. Furthermore, while operating expenditures are projected for the two-year budget based upon currently available information, beyond two years, conservative estimates of 5% expenditure increases is built in annually. It should be noted that planning documents such as the Fund Budget Summaries and the Cash Flow documents 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 as shown above. These "additional revenue requirements" are not otherwise reflected in the District's proposed two-year revenue projections, which projects revenues under the District's recently approved water rates. The District aims to perform an update to its Water Rate Study every two years to ensure that revenues are sufficient to meet the operating and capital needs of the District, as well as meeting reserve requirements. Taking information from the approved two-year budget and final audited financial results, District staff and its consultant will in the next study again develop short and long-term financial plans and model potential revenue adjustments required from water rates and service charges to potentially satisfy the "additional revenue requirement." Scenarios will be vetted through the public Water Rate Subcommittee and the full Board of Directors, who will have options available to them in how to meet these requirements. rrA v 0') O M O V 'ITO O 1 N Cl)Lo (O O ' V 'a ('M m LO O O w r� (0 V O O O G O O O a (o _ v O O I- c 0 +� N ci N (o Cl) ui O O uS o (n (n O (n V O V M O O ((i ^ (o (D c N N LO d) N N Cl)(0 V O M N ID N W O In r .O 00 M Cl) 00 O M Cl) 00 V M L } a LL N N (11 N (D O c r- O O o (D m o o 'a N O V O N O N M d) M O O In V O O O Cl) O o) (o d) O V N (0 O D) ++ N Ci N O O O O N N In O O LO O In M w O 7 00 (o Cl) (0 (D 00 00 d) (,I OD I- N ' N r V V (0 V In O In N .O O N N d) M Cl) 00 V M L } d LL N N N V N O N In (D O ' LO O In O ' O 'a f� I- O M O f-- Cl) I- (D V O - d) O (D n O N 00 O O V V O LO ++ N Ci O 00 r LO O r- V N In O O O n of � N r- 00 O Ln r In V V N (o O C) V 0') N V 0') LO In d) '0 O - (0 00 ( O 'IT (1)L } d LL N N N O (D O (o M d) N O O N (zD � 'ITO ' M -a LO 'IT V O N O O N n I--r V O LO O (D O (o M M (D O O (o m - d) (D O LO N Ci O n O rn O (D O m (o r- OD u) O O O d) O (') (D uS O L N 00 n � 0o rn i (D 00 (11 d) Cl) 00 M M I- r (o M V (D O V M L LL N N LO O w d) 00 I- O ' f- N O m r O O V 'a O N d) O (D O O (o (D d) (D O d) (D (D O (o (o ^ LO (D 00 O d) O LO In O d) ui (o (O O (o Ln V O Ln w 06 n (O (`') Ln N O '> r 00 N r O N f-- Cl) N O (1) N d) V M O LO Cl) r- O M (1) N LO d) O M N (D } 00 00 'I -7 (0 0') O O V N M LL EA d3 d3 6% Hj 6% EA 6% LO (D O (o I- M O O O O (D N 00 O 0 I- co (D 'IT I- (0 V O O 'IT 1 (O N 00 N In V (3 w N r O_ V 00 LD (D O O (0 r- In O (o N 0M V O (o I- M M � In (o O r- (o M d) N O d) d) O (D (o (D (D 00 I- M d) 00 (o N - V O 0') 0') O M O Lo N (0 0') (C LO Q} LL O 00 00 � - V N f� M N 'IT EA d3 4% (A FFD (g 4% 6% (o LO O LO O LO In O LO O (0 0 I- O � (0 r (o LO O w r M O O V LO (D N I 00 O (D N _ (a O O 00 I- V w (o r d) O (1) (0 In In V N 7 7 I- N w N 0 (D d) W N O (0 N (p I M (D O O O r w (D N (o (D 00 V ++ r (o - N V V 00 O ^ N (o O 00 LO Q} LL O (D (o M f� O N LO EA d3 4% 6% Hj 6% 4% 6% U N Cl) C 03 U N + 03 m O a 04 0 W + + i N ^ + Y + N 0) 7 Cl) U) O n O 7 `. i N 0) 0) W N N N y d 0) d' O 16 O z co "a m N m 0) � C � 0) Q O U C 0) a) N 03 .=- U C O) > O) W E Q LL O) s W U Q 0) U 0)0) U) X w N N C U 03 0) U) U O .0. D_ N f0 C (� y '0 -o .0. U D_ Q t } .�% 0) D- O O z p F D- 0) 3 03 0) O 0 U U LL p F U 'o Q C w D- 03 03 0) 0) O w U o> Nm LL N (1)In (D r OD O O N (1) (0 GlossaNj 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. 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. Continuing 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. 80 Infiltration - The seepage of rain and/or groundwater into underground pipes and utility holes via cracks in the system. 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 Hodges - A lake in North San Diego County to 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 detailed line -item accounts are maintained and recorded for financial reporting and control purposes. Local Water — Water from Lake Hodges utilized by the District. 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. 81 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. 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 XIIIB, 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 Diego 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 Charges - 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). 82 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. 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. Working 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. 83