Fiscal Year 2009-2010 Final Budget

I am pleased to present to the Board the Ojai Valley Sanitary District’s Final Budget for Fiscal
Year 2009-2010.

This Final Budget has been prepared with the following information:

• No increase in wages
• No increase in benefits
• 7.0% increase in health insurance costs
• 10% reduction in electric utility costs
• Beginning payoff of the Retirement Health Insurance Trust – GASB 45
• Use of the Rate Stabilization Reserve

Use of the Rate Stabilization Reserve Overall, the basic rate will remain unchanged from last year. The Contingency & Stabilization Fund is used to make up the shortfall between available income and expenses. Operating Expenses increased slightly ($18,400), while Total Expenses increased by 9% because of the increases in Reserve Fund Contributions due to the indices adjustment and major updating to the Equipment and Vehicle Funds. These two funds were completed revised this year based upon updated inventories and assessments of all items. Also, recognition of all 1% Property Tax income begins this year with the intention to use all but $135,000 of it to pay off the OPEB Trust. This payoff action results in a significant reduction in annual expenses for the annual contribution. This Budget has been prepared in accordance with the adopted 2009 Strategic and Operations Plans. The Contingency & Stabilization Reserve continues to be preserved to provide a cushion of funds for any unexpected development because the budget is both lean and includes no other contingency. This year the fund is being utilized in order to maintain the current rate without an increase.

View Budget > Download PDF >

The operating budget is the routine operation and maintenance of District facilities and services at their existing service level and does not directly include funds for upgrades, increased capacity, or betterments. The operating budget is broken down in several different ways in the following material.

Historically the District has used its funds for four major activities: Treatment Plant, Collection System, District Management and transfers to specific reserves. A transfer is not really an activity, but rather the source of funding for special projects. Transfers will be explored in more depth below. The budget is broken down into these four activities as shown in the following chart.

The following table compares the FY 2009-10 budget to the current year budget. It appears that all three operational areas have decreased in their percentage of the whole this year. In actuality, all three operational areas have maintained approximately the same percentage ratio as the current year; the increase in the transfer total has skewed the percentages.

Treatment plant, Collection System and District Management budgets are a reflection of the ongoing activities of the District. It is interesting to note how the same expense type varies from one activity to another. For example, routine professional services are higher in District management because of the high cost of lawyers, auditors, etc. than it is in field operations for engineers to support day-to-day operations. The following chart shows how the budget is allocated to different expense types.

The following table details the breakdown of these expenses to each activity.

The Salaries & Benefits category appears to be maintaining a proportional consistency with prior years. This category continues to stay within the 40% to 50% range which appears appropriate for the size of the District.

Transfer from the General Fund to reserves is the primary mechanism used to fund capital projects and the various special reserves. A new reserve was established this year to facilitate the payoff of the OPEB Debt. Staff revaluated the needs of the existing reserves which resulted in an increase in the annual contribution in order to adequately fund each reserve. For this year’s budget the following chart shows the destination or intended use of the transfers.

The following table shows the transfers in tabular form.

The uses of the various reserve funds are presented in greater detail in Sections 2 and 3 of the budget.

The District work force consists of 19 full-time positions.

As can be seen in the chart below, the majority of funding for the budget is from the sewer service charge. In order to maintain the current service charge rate, funds from the Contingency & Stabilization Reserve are being used to offset an increase.

The following table shows the funding in tabular form.

The sewer service charge rate is $47.84 effective July 1, 2009.

The add on increments to pay for special costs which are not part of the basic service are shown above and described in greater detail in Section 3 -- Debt Service.

The transfers into the reserves total $1,491,524 plus interest of $330,928 will total $1,822,452. Expenses for the proposed projects and/or purchases will total $5,571,627 if all the estimates are correct. Detail of the proposed projects and/or purchases can be found in Section 2 – Reserves. Projects and/or purchases will be approved by the Board on a case by case basis.

The transfers into the debt service accounts total $1,911,204 plus interest of $56,772 will total $1,967,976. After expenses to pay principal, interest and trustee charges on the various debts, the outstanding debt owed will be reduced by $1,386,834.

The Fiscal Year 2009-10 Preliminary Budget continues the District’s history of responsible fiscal management. Available resources are focused on maintaining services and programs essential to District facilities and improving the quality of service to the customers of the District with minimal rate increases.

John K. Correa
General Manager