water replenishment district draft budget workshop fiscal year 13-14 board of directors meeting may...

Water Replenishment District

Draft Budget Workshop

Fiscal Year 13-14

Board of Directors Meeting

May 10, 2013, 2:00 p.m.

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1. 12-13 Midyear Budget Review and 13-14 Draft Budget Presentation – February 20th Board of Directors Meeting 2:00 p.m.

2. 13-14 Draft Budget Presentation – March 6th Board of Directors Meeting 2:00 p.m.

3. Convene Water Code Public Hearing/13-14 Draft Budget Presentation – April 3rd Board of Directors Meeting 2:00 p.m.

4. Budget Workshop – April 17 at 2:00 p.m. – Continuation of Public Hearing on the Replenishment Assessment, Draft Budget Presentation and Replenishment Assessment Discussion.

Fiscal Year 13-14 Budget Schedule

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5. Budget Workshop – April 23 at 2:00 p.m. – Meeting at the City of Norwalk, Norwalk Arts and Sports Complex – Hargit Room.

6. Budget Workshop – April 25 at 9:00 a.m. – Audit and Budget Advisory Committee (ABAC) Meeting

7. Budget Workshop – April 30 at 2:00 p.m. – Special Meeting of the Technical Advisory Committee


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8. Budget Workshop – May 1 at 2:00 p.m. - Board of Directors Meeting – Continuation of Public Hearing on the Replenishment Assessment, Draft Budget Presentation and Replenishment Assessment Discussion, Close Public Hearing on the Replenishment Assessment.

9. Budget Workshop – May 10 at 2:00 p.m. - Board of Directors Meeting – Open the Proposition 218 Public Hearing, Draft Budget Presentation and Replenishment Assessment Discussion and possible adoption of Replenishment Assessment.


WRD service area = 420 square miles

720,000 acre feet used per year

43 cities

250,000 acre feet of groundwater from local water wells

WRD supplements naturalgroundwater recharge

Population is about 4 million (over 10% of California’s population)

How Much is an Acre Foot of Water?

An acre foot is about 326,000 gallons.

It is the amount of water used by two average families in a year.

Equals the amount needed to fill a football field one foot deep in water.

Groundwater provides of total water demand

In our region…

40%

Water Wells – over 400 active wells

West Basin Key Well 3S/14W-22L01

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1900s-1950sOVERDRAFT

• Plunging water levels

• Loss of groundwater supply

• Wells going dry

• Seawater intrusion

WRD formed in 1959 by a vote of the citizens to preserve and protect groundwater.

LA County built seawater barrier wells and operated spreading grounds.

Court established pumping limits for cities and water companies.

Solutions

Natural groundwater

wasn’t enough to

meet demand

How WRD Manages the Basins

Replenishment of groundwater

Groundwater clean up

Basin monitoring

Basin modeling

Spreading Grounds

Alamitos Barrier

Dominguez Gap Barrier

West Coast Barrier

San Gabriel spreading grounds

Rio Hondo spreading grounds

Facilities owned and operated by LA County Flood Control District

Forebay(unconfined aquifers)

Surface Recharge Spreading Basin

Bedrock

(Pico Formation)

Pressure Area (confined aquifers)

Clay (aquitard)

Clay (aquitard)

Clay (aquitard)

Aquifer

Aquifer

Aquifer

Ocean

Surface Recharge of Groundwater

Seawater Intrusion

Coastal Aquifer - No Pumping

Water Table

Ocean

Sea Level

FreshWater

BrackishWater

Equilibrium

Water Table

Ocean

Sea Level

BrackishWater

Coastal Aquifer - With Pumping

Seawater Intrusion

FreshWater

Water Table

Ocean

Brackish WaterFresh Water

Sea Level

FreshWater

BrackishWater

Coastal Aquifer - Intrusion Advancing

Seawater Intrusion

Water Table

Ocean


Sea Level

FreshWater

BrackishWater

Coastal Aquifer - Pumping and Injection

Seawater Intrusion

Water Table

Ocean


Sea Level

FreshWater

Stranded Brackish

Water (Saline Plume)

BrackishWater

Coastal Aquifer - Pumping and Injection

Seawater Intrusion

Groundwater MonitoringGroundwater Monitoring

Nearly 300 monitoring wells at over 50 locations (more wells planned)

ANNUAL GROUNDWATER QUALITY TESTING

Over 100 Chemicals Monitored

Two Annual Reports to Describe BasinsTwo Annual Reports to Describe Basins


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(fee

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basin management

Rising water levels & drought

protection

BUDGET AWARDS

Government Finance Officers Association (GFOA):

The Distinguished Budget Presentation Award – WRD received this prestigious award on its first application for the 2011-12 fiscal year and also for 2012-13.

California Society of Municipal Finance Officers (CSMFO):

The Meritorious Award – WRD has received this award 7 times from 2004-05 through 2010-11

Excellence in Budgeting Award – WRD received this prestigious award on its first application for the 2011-12 fiscal year and also for 2012-13.

We will be submitting our 2013-14 budget for consideration.

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19 Financial Awards

COMPREHENSIVE ANNUAL FINANCIAL REPORT

Government Finance Officers Association (GFOA)

The Certificate of Achievement for Excellence in Financial Reporting – This has been received by WRD for the last 8 years from 2003-04 through 2010-11. The Comprehensive Annual Financial Report for fiscal year 2011-12 is currently being review by the GFOA.

There are a total of only ten public water agencies who have been awarded all three of these awards in the State

of California.

Only three cities in our service area have attained all three financial awards.

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19 Financial Awards

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2013 -14 Draft Budget

On May 6, 2011, the Board of Directors adopted the 2011-12 budget along with the District’s 5-year forecast.

This analysis projected a Replenishment Assessment of $318 per acre-foot for fiscal year 2013 -14

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5 Year Replenishment Assessment / Reserve Forecast

244.00

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Adopted by the Board of Directors with stakeholder input during the District’s 2011-12 annual budget

workshops

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Draft Budget Assumptions*:

1. Estimated pumping of 243,000 acre-feet for 2013-14

2. Net decrease in Project, Program and Administrative costs of ($1,918,000)

3. Includes litigation costs of $2.5M

* The 2013-14 draft budget assumes full payment of the Replenishment Assessment

2013 -14 Budget Assumptions

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COMPARISON12-13 Adopted vs.

13-14 Draft Budget Upper Limit ($298) Scenario 12-13 13-14

(in millions of dollars) Adopted Draft Budget Budget Difference

Water Costs $29.39 $41.38 $12.00

Projects, Programs, Admin 17.19 15.28 (1.92)

Other Supportive Costs 3.15 3.77 0.62

Capital Improvement/Other 6.49 8.48 1.99

Replenishment of Reserves 8.66 5.75 (2.91)

Less: Other Sources (5.25) (2.21) 3.04 Cost to Provide Service $59.63 $72.45 $12.82

Cost of Service - $298DRAFT WRD FISCAL YEAR 13-14

[A] [B] [C] [B]-[A] Description 2012/13 2013/14 12/13 Budget Adopted Proposed compared to Budget Budget 13/14 Budget Operating Expenditures Water Supply Purchases $ 29,385,000 $ 41,380,000 $ 11,995,000 Water Conservation $ 1,033,000 $ 787,000 $ (246,000) Water Supply Production - Vander Lans $ 2,486,000 $ 2,480,000 $ (6,000) Goldsworthy Desalter $ 1,237,000 $ 1,208,000 $ (29,000) Montebello Forebay Recycled Water $ 630,000 $ 601,000 $ (29,000) Groundwater Resource Planning $ 1,430,000 $ 907,000 $ (523,000) Water Quality Improvement Program $ 290,000 $ 352,000 $ 62,000 Geographic Information Systems (GIS) $ 316,000 $ 242,000 $ (74,000) Groundwater Monitoring $ 1,044,000 $ 1,042,000 $ (2,000) Safe Drinking Water Program $ 116,000 $ 115,000 $ (1,000) Dominguez Gap Barrier Recycled Water $ 252,000 $ 242,000 $ (10,000) Replenishment Operations $ 868,000 $ 571,000 $ (297,000) Hydrogeology Program $ 1,021,000 $ 794,000 $ (227,000) Groundwater Reliability Improvement Prog $ 506,000 $ 310,000 $ (196,000) Water Education $ 1,153,000 $ 796,000 $ (357,000) Board of Directors $ 366,000 $ 364,000 $ (2,000) General Manager $ 374,000 $ 373,000 $ (1,000) Administration $ 3,328,000 $ 3,316,000 $ (12,000) GASB 45 (Required Retirement Funding) $ 745,000 $ 777,000 $ 32,000 Total Project, Program & Administrative Costs $ 46,580,000 $ 56,657,000 $ 10,077,000

Other Special Programs & Supportive Costs

Litigation $ 2,553,000 $ 2,498,000 $ (55,000) Proportionality Study, Public Notices & Hearings $ - $ 520,000 $ 520,000 Election Expense $ 600,000 $ 750,000 $ 150,000 Total Other Special Programs & Supportive Costs $ 3,153,000 $ 3,768,000 $ 615,000 Capital Improvement Costs Capital Improvement Program (CIP) RA Share $ - $ 50,000 $ 50,000 Debt Financing/Other Income and Expense $ 6,488,000 $ 8,426,000 $ 1,938,000 Total Capital Improvement Program Expenses 6,488,000 8,476,000 1,988,000 Replenishment of Reserve $ 8,655,000 $ 5,750,000 $ (2,905,000) Total Revenue Requirements $ 64,876,000 $ 74,651,000 Operating Income Vander Lans Income/MWD Subsidy/OCWD $ 896,000 $ 964,000 $ 68,000 Goldsworthy Desalter Income/MWD Subsidy $ 1,350,000 $ 1,245,000 $ (105,000) Use of Water Purchase Carryover Fund 3,000,000 - Subtotal 5,246,000 2,209,000 $ (3,037,000) Cost to Provide Service $ 59,630,000 $ 72,442,000 $ (12,812,000)

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The only difference in the following three scenarios is the amount of water purchased

to replenish the basin.

These costs have a 100% direct pass-through impact to WRD’s replenishment

assessment.

2013 -14 Budget Assumptions

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$298 $283 $268Scenario 1 Scenario 2 Scenario 326,100 af 21,000 af 16,000 af

Water Costs $41.38 $37.72 $34.13

Projects, Programs, Admin 15.28 15.28 15.28



Replenishment of Reserves 5.75 5.75 5.75

Less: Other Revenue (2.21) (2.21) (2.21)

Cost to Provide Service 72.45 68.79 65.20

22.2% 16.0% 9.9%

13-14 Draft Budget Scenarios (in millions)

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Scenario 1 – 26,100 acre-feet of Replenishment Water Upper Limit

If the Board of Directors chooses to increase replenishment water purchases from the current 2,180 acre-feet to the long term average of 21,000 acre-feet plus 5,100 acre-feet of make up water, the assessment would increase from $244.00 to $298.00 in fiscal year 2013-14; an increase of $54.00 or 22.2%


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Scenario 2 – 21,000 acre-feet of Replenishment Water

If the Board of Directors chooses to increase replenishment water purchases from the current 2,180 acre-feet to the long term average of 21,000 acre-feet, the assessment would increase from $244.00 to $283.00 in fiscal year 2013-14; an increase of $39.00 or 16.0%


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Scenario 3 – 16,000 acre-feet of Replenishment Water

If the Board of Directors chooses to increase replenishment water purchases from the current 2,180 acre-feet to 16,000 acre-feet, the assessment would increase from $244.00 to $268.00 in fiscal year 2013-14; an increase of $24.00 or 9.9%


Quantity (AF) Total Cost

Spreading - Tier 1 Untreated Imported 26,100 $ 19,125,900

Spreading – Recycled 50,000 $ 2,000,000

Alamitos Barrier – Imported 2,500 $ 2,529,685

Alamitos Barrier – Recycled 1,600 $ 100,000

Dominguez Barrier – Imported 3,250 $ 3,720,633

Dominguez Barrier – Recycled 3,250 $ 2,790,125

West Coast Barrier – Imported 0 $ 283,341

West Coast Barrier – Recycled 15,000 $ 10,830,000

In-Lieu MWD Member 0 $ 0

In-Lieu WBMWD Customer 0 $ 0 TOTAL 96,600 $ 41,379,684

13-14 Quantity and Cost of Replenishment Water

Scenario 1 – Spreading Water – 26,100 $19,125,900



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Water Costs $41.38 $37.72 $34.13







22.2% 16.0% 9.9%


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13-14 Projects, Programs & AdministrationWater Conservation

Professional Services – Legal fees

Other Expenses – Conservationpartnerships and outreach, ECO gardener program, distributionmaterials

Other General & Administrative Costs – Staff labor costs

Change from prior year – Grants and sponsorship costs re-allocated to other non-operating expenses and offset against non-replenishment assessment revenue.

[1] [2] [3]

2012/13 2013/14 13/14 Budget

Adopted Proposed compared to EXPENSE CATEGORY Budget Budget 12/13 Budget

Professional Services 3,000 3,000 0

R&M / Materials / Equipment 0 0 0

Other Expenses 653,000 524,000 (129,000)

Other General & Administrative 377,000 260,000 (117,000)

Total $ 1,033,000 $ 787,000 (246,000)

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13-14 Projects, Programs & AdministrationLeo J. Vander Lans Advanced

Water Treatment Facility

Professional Services – Primarilythe District’s operating contractwith the Long Beach Water Department.

Repairs Maintenance, Materials,Equipment – Capital costs for replacement of ultra-violet lamp, reverse osmosis membranes and microfiltration membrane replacement costs (amortized over a 5 year period)

Other Expenses – Residual surcharge fee

Other General & Administrative – Staff labor costs

[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget

Adopted Proposed compared to

EXPENSE CATEGORY Budget Budget 12/13 Budget

Professional Services 1,636,000

1,591,000 (45,000)

R&M / Materials / Equipment 514,000

525,000 11,000

Other Expenses 11,000 9,000 (2,000)

Other General & Administrative 326,000

355,000 29,000

Total $ 2,486,000 $

2,480,000 (6,000)

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13-14 Projects, Programs & AdministrationGoldsworthy Desalter

Professional Services – Primarilythe District’s operating contract with the City of Torrance

Repairs Maintenance, Materials,Equipment – Cost for chemicals, and other capital replacementcosts (amortized over a 5 year period) and general repairs

Other Expenses – Electricity costs

Other General & Administrative Costs – Residual surcharge fees and staff labor costs

[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget



Professional Services 295,000 267,000 (28,000)

R&M / Materials / Equipment 437,000 370,000 (67,000)

Other Expenses 307,000 316,000 9,000

Other General & Administrative 198,000 255,000 57,000

Total $ 1,237,000 $ 1,208,000 (29,000)

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13-14 Projects, Programs & AdministrationMontebello Forebay Recycled Water

Professional Services – Recycled Water Research SAT and labanalysis costs for regulatorycompliance

Repairs Maintenance, Materials,Equipment – Costs for general maintenance

Other Expenses – Primarily related to WateReuse Association and Research Foundation costs


[1] [2] [3]

2012/13 2013/14 13/14 Budget



Professional Services 300,000 325,000 25,000

R&M / Materials / Equipment 20,000 32,000 12,000

Other Expenses 52,000 48,000 (4,000)


Total $ 630,000 $ 601,000 (29,000)

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[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget



Professional Services 1,086,000 481,000 (605,000)


Other Expenses 63,000 12,000 (51,000)


Total $ 1,430,000 $ 907,000 (523,000)

13-14 Projects, Programs & AdministrationGroundwater Resource Planning

Professional Services – Legal andlegislative consulting fees


Change from prior year – Completion of the Groundwater Basins Master Plan

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13-14 Projects, Programs & AdministrationWater Quality Improvement Program

Professional Services – Cost/benefit/risk analysis, legal fees

Other Expenses – Majority related to Water Research Foundation fees

General & Administrative Costs – Staff labor costs

Change from prior year – Increase of $62,000 is primarily due to an increase in legal fees and a reallocation of staff labor costs

[1] [2] [3]

2012/13 2013/14 13/14 Budget




R&M / Materials / Equipment 0 11,000 11,000

Other Expenses 82,000 74,000 (8,000)


Total $ 290,000 $ 352,000 62,000

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13-14 Projects, Programs & AdministrationGeographic Information Systems (GIS)

Professional Services – DatabaseSystem Consultant and GIS system maintenance and enhancements

Other Expenses – Softwarelicenses

General & AdministrativeCosts – Staff labor costs

Change from prior year – The decrease of $74,000 is primarily due to (a) a decrease in database systems consultant costs and (b) an increase in staff labor costs due to a reallocation of staff time to GIS

[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget



Professional Services 200,000 20,000

(180,000)


Other Expenses 28,000 26,000

(2,000)


Total $ 316,000 $ 242,000

(74,000)

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13-14 Projects, Programs & AdministrationRegional Groundwater Monitoring Program

Professional Services – Testingand laboratory fees

Repairs Maintenance, Materials,Equipment – Costs for datalogger and miscellaneous equipment costs

Other Expenses – State WaterResources Control Board fees, field operations facility lease fees


Change from prior year – This program’s staff labor costs have decreased due to reallocation of staff time to other projects or programs

[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget





Other Expenses 99,000 146,000 47,000


Total $ 1,044,000 $ 1,042,000 (2,000)

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[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget




R&M / Materials / Equipment 2,000 2,000 0

Other Expenses 10,000 9,000 (1,000)

Other General & Administrative 0 0 0

Total $ 116,000 $ 115,000 (1,000)

13-14 Projects, Programs & AdministrationSafe Drinking Water Program

Professional Services – Planningand design fees

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[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget

Adopted Proposed compared to EXPENSE CATEGORY Budget Budget 12/13 Budget


R&M / Materials / Equipment 11,000 11,000 0

Other Expenses 22,000 15,000 (7,000)


Total $ 252,000 $ 242,000 (10,000)

13-14 Projects, Programs & AdministrationDominguez Gap Barrier Recycled Water

Professional Services – Compliance monitoring costs

Repairs Maintenance, Materials,Equipment – Costs for datalogger and miscellaneous equipment expenses

Other Expenses – Discharge permits


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13-14 Projects, Programs & AdministrationReplenishment Operations

Professional Services – Consultant fees

Repairs Maintenance, Materials,Equipment – Storm water andreplenishment water monitoringequipment

Other Expenses – Variousassociation fees (i.e., NGWA,GRAC, SGVPA, etc.)


Change from prior year – District postponed several joint projects with the Los Angeles County Department of Public Works in an effort to minimize impact to the replenishment assessment

[1] [2] [3] [2]-[1]

2012/13 2013/14 13/14 Budget Adopted Proposed compared to




Other Expenses 45,000 43,000 (2,000)


Total $ 868,000 $ 571,000 (297,000)

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13-14 Projects, Programs & AdministrationHydrogeology Program

Professional Services – USGS Modeling and GeoChemistry andStratigraphy consultant fees

Repairs Maintenance, Materials,Equipment – Modeling software

Other Expenses – Variousassociation fees (i.e., CaliforniaGroundwater Coalition, Alliance for Water Efficiency, etc.), and costs associated with the Engineering Survey and Report


Change from prior year – The District has a decrease in costs associated with the Salt/Nutrient Management Plan as well as laboratory costs for well testing

[1] [2] [3]

[2]-[1]

2012/13 2013/14 13/14 Budget




R&M / Materials / Equipment 32,000 17,000 (15,000) Other Expenses 61,000 65,000 4,000 Other General & Administrative 275,000 187,000 (88,000)

Total $ 1,021,000 $ 794,000 (326,000)

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13-14 Projects, Programs & AdministrationGroundwater Reliability Improvement Program

Professional Services – Legislative consulting fees for State and Federal funding purposes

Other Expenses – Primarilymiscellaneous expenses

Change from prior year – The District will be funding the majority of the costs from the 2011 Certificate of Participation.

[1] [2] [3]

2012/13 2013/14 13/14 Budget





Other Expenses 6,000 10,000 4,000

Other General & Administrative 0 0 0

Total $ 506,000 $ 310,000 (196,000)

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13-14 Projects, Programs & AdministrationWater Education

Professional Services – Consultingsupport costs and seasonal temporary employee costs

Repairs Maintenance, Materials,Equipment – Computer support expenses

Other Expenses – Educational expenses (i.e., Think Watershed, groundwater tours, Eco Gardener classes, newsletters, printing, seminar and conferences.)


Change from prior year – The decrease in other expenses due to reduced sponsorship of educational programs. The District reallocated staff labor to other programs

[1] [2] [3]

2012/13 2013/14 13/14 Budget




Other Expenses 552,000 399,000 (153,000)


Total $ 1,153,000 $ 796,000 (357,000)

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13-14 Projects, Programs & AdministrationBoard of Directors

Other Expenses – Costs includeallowances and expenses for Board of Directors

Fiscal Year 2009/10 the Board of Directors decreased their travel budget by 10%.

Fiscal Year 2012/13 the Board of Directors decreased their travel budget by 10%.

The Board has also foregone the annual CPI adjustment for fiscal years 2012/13 and 2013/14.

General & Administrative Costs – Director’s compensation

[1] [2] [3] [2]-[1]



Professional Services 0 0 0


Other Expenses 96,000 94,000 (2,000)

Other General & Administrative 270,000 270,000 0

Total $ 366,000 $ 364,000 (2,000)

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[1] [2] [3] [2]-[1]



Professional Services 0 0 0


Other Expenses 22,000 27,000 5,000


Total $ 374,000 $ 373,000 0

13-14 Projects, Programs & AdministrationGeneral Manager

Other Expenses – General costs include communication, transportation and travel


Professional Services – Costs Include non-litigation expenses forDistrict Counsel, independentfinancial audit, Federally requiredgrant audit (Single Audit), GASB45 required actuarial study.

Repairs Maintenance, Materials,Equipment – Building maintenanceexpenses, technology expenses

Other Expenses – Utility expenses, annual membership fees (i.e., AGWA, AWWA, Water Education Foundation, ACWA, LAFCO, CA Special District Association, etc.), printing costs, property/liability/general insurance costs, software licenses, State and Federal legislative workshop costs.


Change from prior year – The District has re-allocated some professional services costs to Groundwater Resource Planning and GRIP. The District has also re-allocated some staff costs from litigation support to administration.

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13-14 Projects, Programs & AdministrationAdministration

[1] [2] [3] [2]-[1]





Other Expenses 639,000 586,000 (53,000)

Other General & Administrative 1,479,000 2,014,000 535,000

Total $ 3,328,000 $ 3,316,000 (12,000)

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Despite the increase in demands and regulations, the District has cut projects, programs and

administrative costs in both fiscal years 2012-13 and 2013-14 by $1.4 million and $1.9 million respectively,

for a total decrease of over $3.3 million

13-14 Projects, Programs & Administration

Summary By Department 2011/12 2012/13 2013/14

General Management General Manager 1.00 1.00 1.00 Hydrogeology Department Chief Hydrogeologist 1.00 1.00 1.00

Senior Engineer 1.00 1.00 1.00

Senior Hydrogeologist 1.00 1.00 1.00

Hydrogeologist 2.00 2.00 2.00

Water Quality Specialist 1.00 1.00 1.00

Associate Hydrogeologist 1.00 1.00 1.00

Assistant Hydrogeologist 1.00 1.00 1.00 Engineering Department Chief Engineer 1.00 1.00 1.00

Senior Engineer 3.00 3.00 3.00

Resource Planner 1.00 1.00 1.00

Associate Engineer 1.00 1.00 1.00

Online Technology and Data Specialist 1.00 1.00 1.00

Senior Analyst - - 2.00 Finance Department Chief Financial Officer 1.00 1.00 1.00

Manager of Finance & Administration 1.00 1.00 1.00

Senior Accountant 1.00 3.00 3.00

Accountant 2.00 1.00 1.00

Accounting Technician 1.00 - - External Affairs Department Manager of External Affairs 1.00 1.00 1.00

Senior Government Affairs Representative 1.00 2.00 1.00

Senior Public Affairs Representative 1.00 1.00 1.00

Public Affairs Representative 2.00 1.00 1.00

Associate Government Affairs Representative 1.00 1.00 1.00

Administrative Specialist 1.00 1.00 1.00 Administration and Human Resources Deputy Secretary 1.00 1.00 1.00

Administrative Support Specialist 2.00 2.00 2.00

Network Administrator 1.00 1.00 1.00

Total 34 34 34

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13-14 Draft Budget Scenarios (in millions)$298 $283 $268

Scenario 1 Scenario 2 Scenario 326,100 af 21,000 af 16,000 af

Water Costs $41.38 $37.72 $34.13







22.2% 16.0% 9.9%

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Litigation – $2,498,000 budgeted for fiscal year 2013-14

1. Case BS 120643 – City of Cerritos, et al. v. WRD

2. Case BS 128136 – 09 Central and West Basin Storage Motion filed in Central & West Basin Judgment cases (Downey, Cerritos, Signal Hill & CBWMD)

3. Case C786656 – Proposition 218 challenge to Replenishment Assessment

4. Case B226743 appeal to C786656 – WRD et al v. City of Cerritos et al Court of Appeals

5. Case BS 129817 – Central Basin Municipal Water District v. WRD

13-14 Other Supportive CostsLitigation

61

6. Case C786656 – WRD/Central and West Basin Water Replenishment Districts v. Charles Adams

7. Case BS 132202 – Central Basin Municipal Water District v. WRD

8. Case BS464772/773 – WRD v. the Cities (Cities of Downey, Cerritos and Signal Hill; RA Validation Action and RA Motion for Declaratory Relief)

9. Case LACV11-7531VBF(RZx) – Central Basin Municipal Water District v. WRD

10. Case BS 134295 – WRD v. Central Basin Municipal Water District

11. Case BS 134239 – Tesoro

12. Case VC060546 – WRD v. City of Downey


62

13. Case VC060498 – WRD v. City of Cerritos

14. Case VC060496 – WRD v. City of Signal Hill

15. Case VC060499 – WRD v. City of Bellflower

16. Case VC060592 – WRD v. City of Pico Rivera

17. Case 2:11-cv-07531-VBF-RZ – CBMWD v. WRD

18. Case B 235039 – CBMWD v. WRD, et al

19. Case BS 139228 – City of Pico Rivera v. WRD

20. Case BS 139830 – Tesoro v. WRD (Tesoro II)

21. Case BC 493914 – WRD v. Tesoro


63

Cost of Service Report and Public Notices $520,000 – Expenses associated with the Proposition 218 process, including the cost of service report and public notice costs.

Election Expense $750,000 – Mandatory pass-through costs payable to the Los Angeles County Registrar of Voters

13-14 Other Supportive Costs

64


Water Costs $41.38 $37.72 $34.13







22.2% 16.0% 9.9%


65

Capital Improvement Program (CIP) RA Share - $50,000

Annual Debt Service

2004 Revenue Certificates of Participation $1,526,000



13-14 Capital Improvement Costs/Other

66

Annually, the District receives approximately $400,000 in Property Tax Revenue. This is independent of the annual Replenishment Assessment and is used primarily as an offset for specifically designated expenses:

Grant and Sponsorship Program $119,500Chamber Memberships and Dues $45,000Water Education Expenses $43,000Administrative Expenses $31,000

13-14 Capital Improvement Costs/Other

2012/13

Item Description Division Budget ARC Walk for Independence Sponsorship 1,2,3,4,5 $ 2,500 South Bay Latino Chamber of Commerce Annual Conference 1,2,3,4,5 $ 2,500 Tree People Membership 1,2,3,4,5 $ 1,000 CORO Water Luncheon Sponsorship 1,2,3,4,5 $ 2,500 Cabrillo Marine Aquarium Sponsorship 1,2,3,4,5 $ 1,000 Sanitation Districts Annual Earth Day Event Sponsorship 1,2,3,4,5 $ 10,000 Friends of the Los Angeles River Sponsorship 1,2,3,4,5 $ 1,500 Heal The Bay Annual Conference 1,2,3,4,5 $ 2,500 Public Officials for Water and Environment (POWER) Annual Conference 1,2,3,4,5 $ 1,500 South Bay Cities Council of Governments (SBCCOG) Annual General Assembly 1,2,3,4,5 $ 2,500 International Trade Education Program, Inc. Sponsorship 1,2,3,4,5 $ 1,500 California Foundation Environment and the Economy Sponsorship 1,2,3,4,5 $ 2,500 Los Angeles County Education Foundation Sponsorship 1,2,3,4,5 $ 5,000 Miscellaneous $ 3,000

SUBTOTAL $ 39,500

Board Sponsorships and Grants – $15,000 per Director

Regional Sponsorships - $39,500 (see below)

13-14 Projects, Programs & AdministrationWater Conservation

68

Cash Reserves

69

California Water Code §60290 – “The district may establish an annual reserve fund in an amount not to exceed ten million dollars ($10,000,000) commencing with the 2000-01 fiscal year. The maximum allowable reserve fund may be adjusted annually commencing with the 2001-02 fiscal year to reflect the percentage increases or decreases in the blended cost of water from district supply sources”

Cash Reserves

70$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

Unrestricted6741000 OPEB $2,954,000

Cal Trans Trust $5,673,000

Debt Service $14,908,000

Restricted Capital Projects $58,121,000

Water Purchase Reserve $13,717,000

WRD Funds as of March 31, 2013March 31, 2013 Cash and Investments

Unrestricted Restricted

71

California Water Code §60291 – “The limitation on the reserve established in §60290 does not apply to the unexpended balance of any appropriated funds in a capital improvement project construction account established to pay the cost of a project or projects under construction”

Cash Reserves

72

California Water Code §60328.1 – “The district shall apply the estimated fiscal year end balance in excess of the amount permitted in §60290 to a replenishment assessment rate reduction or to the purchase of water in the succeeding fiscal year”

In fiscal year 10-11, WRD utilized $8.27 million to lessen the impact of moving from seasonal spreading water to more expensive Tier 1 Water

In fiscal year 11-12, WRD continued the use of the Water Purchase Carryover Fund by using $10.0 million to help stabilize the RA as part of the five-year scenario developed with stakeholder input during the budget process

Cash Reserves

73

In fiscal year 12-13, WRD continued the use of the Water Purchase Carryover Fund by using an additional $3.0 million to help stabilize the RA as part of the five-year scenario developed with stakeholder input during the budget process last year

In total $21.27 million of the Water Purchase Carryover Fund has been utilized for rate stabilization. This funding is no longer

available for make up water purchases.

Cash Reserves

74

California Water Code §60328.1 – “The district shall apply the estimated fiscal year end balance in excess of the amount permitted in §60290 to a replenishment assessment rate reduction or to the purchase of water in the succeeding fiscal year”

In 2011 from June to August, WRD purchased 19,287 acre-feet of “fire sale” water at $499 per acre-foot (regularly $638 per acre-foot). This resulted in a cash outlay of $9.6 million from the Water Purchase Carryover Fund. Additionally, the District purchased an additional 18,028 acre-feet at a melded rate of $613 per acre foot. As a result 37,315 acre-feet were purchased in 10 months for a total of $20.6 million.

WRD collects funds over a 12-month period of time. If not for the Water Purchase Carryover Fund, WRD could not have had the cash flow to purchase such a large amount of “fire sale” water.

Cash Reserves

75

California State Auditor, Bureau of State AuditsIn its May 2002 report (page 18) the California State Auditor wrote, “The district projects that it will have a reserve fund balance of slightly more than $6 million at June 30, 2002, a level that may pose a threat to the district’s ability to maintain the current quantity of groundwater in the basins.”

This reserve level was considered to be the minimum by the State Auditor a decade ago and does not take into account the significant increase in the cost of water over the last 10 years.

Cash Reserves

76

Water Purchase Carryover

77

13-14 Draft BudgetWater Purchase Carryover (in af)

[1] [2] [1]+[2]=[3] [4] [3]-[4]

Actual

Year Budgeted Carryover Subtotal Purchased Difference

2003-04 35,600 - 35,600 27,520 8,080

2004-05 29,895 8,080 37,975 25,145 12,830

2005-06 27,600 12,830 40,430 33,229 7,201

2006-07 21,000 7,201 28,201 40,214 (12,013)

2007-08 21,000 (12,013) 8,987 - 8,987

2008-09 21,000 8,987 29,987 - 29,987

2009-10 21,000 29,987 50,987 26,286 24,701

2010-11 21,000 24,701 45,701 37,315 8,386

2011-12 21,000 8,386 29,386 - 29,386

2012-13 21,000 29,386 50,386 - 50,386

78

13-14 Draft BudgetWater Purchase Carryover

Total Imported Spreading Water Carryover FY 13-14 (af) 50,386Melded Rate per acre-foot1 $ 718Total Amount for Spreading Water owed the Basin 2013-14 $36,117,148

1 Melded RateMWD Untreated Tier 1 – Spreading ($/af) $593MWD RTS ($/af) $31CBMWD Administrative Surcharge ($/af) $94Total $ 718

79$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

Unrestricted6741000 OPEB $2,954,000

Cal Trans Trust $5,673,000

Debt Service $14,908,000

Restricted Capital Projects $58,121,000

Water Purchase Reserve $13,717,000

WRD Funds as of March 31, 2013March 31, 2013 Cash and Investments

Unrestricted Restricted

80

13-14 Draft BudgetWater Purchase Carryover

Amount of Water Purchase Carryover funds available $13,717,000

Amount of payment by Tesoro per court order $948,000

$14,665,000

Total amount for water owed the Basin as of 2013-14 <$36,117,148>

Amount of shortfall to purchase make-up water <$21,452,148>

Total amount of non-payment by litigant parties <$18,857,000>

$- $

5 $5

$7

$

7

$11

$

11

$11

$

11

$1

4

$1

4

$1

4

$1

4

$3

7

$3

7

$3

8

$4

0

$4

2

$4

4 $6

2

$8

6

$9

0

$-

$100

$200

$300

$400

$500

$600

$700 19

90-9

1

1992

-93

1994

-95

1996

-97

1998

-99

2000

-01

2002

-03

2004

-05

2006

-07

2008

-09

2010

-11

CBMWD Surcharge

MWD Water Rate

WRD has Experienced Significant Water Cost Increases

81

Transition from Seasonal Spreading Water to Tier 1 Water in 2010-11

(per TAC recommendation)

*

*Central Basin Municipal Water District surcharge calculation does not include $388,800 annual service charge

CBMWD Historic Administrative Surchargeon Replenishment Water

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

$-

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

1991/92CBMWD begins charging

$5/acre-foot administrative surcharge on spreading

water

1992 to PresentCBMWD administrative

surcharge increases from $5/af to $90/af

82

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

83

2003MWD eliminates Meter Charges

CBMWD keeps meter-based charge and

renames it Water Service Charge

Between 2008 to 2012CBMWD Water Service

Charge to WRD increases from $74,400/year to

$372,600/year – an increase of 400%

CBMWD Water Service Charge

8484

ImportedWater Rate

$967/AF

WRD RA$244/AF

$967/AF

IMPORTED WATER GROUNDWATER

CURRENT cost difference between groundwater and imported water is approximately $723/AF

Value of Groundwater(CBMWD as of 1/1/13)

$244/AF

8585

ImportedWater Rate

$967/AF

WRD RA$244/AF

$1,042/AF

IMPORTED WATER GROUNDWATER

FUTURE cost difference between groundwater and imported water is approximately $774/AF

Value of Groundwater(Proposed CBMWD as of 1/1/14)

$268/AF

$75 Increase

$24 Increase

87

WRD Efforts to Reduce Water Costs

• Develop lower cost sources of imported spreading water working with pumpers that are also MWD member agencies

• New agreement with L.A. County Sanitation Districts to purchase and utilize lower cost recycled water to offset demand for more expensive imported water

• Developing other replenishment programs such as pressure-area in-lieu replenishment (Long Beach Program)

88

• Ad Hoc Budget Committee recommends the Board of Directors approve Scenario 3; a 9.9% increase over the current year with a corresponding replenishment assessment of $268 per acre-foot

• The District’s Technical Advisory Committee (TAC) also recommends the Board of Directors approve Scenario 3

Recommendations

This presentation can be found at www.wrd.org

water replenishment district draft budget workshop fiscal year 13-14 board of directors meeting may...

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