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HomeMy WebLinkAboutPP_FY20-21_Budget_Rates_03-13-20MWMC Regional Wastewater Program Preliminary Budget and Rates for Fiscal Year 2020-21 1 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Matt Budget Schedule Review Budget and Capital Programs Overview Proposed FY 20-21 Operating Budget Katherine Springfield Proposed FY 20-21 Budget Dave Eugene Proposed FY 20-21 Budget Regional Operating Budget Comparison Katherine User Rates Rate Comparison Commission Comments and Direction Presentation Format Preliminary Budget and Rates FY 20-21 Matt 2 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 January 10 Budget Kick-Off February 14 Draft Capital Programs March 13 Preliminary FY 20-21 Budget and Rates Presentation and Discussion Action Requested: Commission comments and direction April 10 MWMC Public Hearing: Option to Adopt FY 20-21 Budget & User Rates MWMC Budget Schedule FY 20-21 Matt 3 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 MWMC Budget & CIP Ratification May 4 - Springfield City Council May 11 - Eugene City Council May 12 - Lane County Board of Commissioners June 12 Final Adoption of FY 20-21 Budget & CIP MWMC Budget Schedule FY 20-21 Matt 4 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Driven by MWMC Key Outcomes: High Environmental Standards Effective and Efficient Fiscal Management Successful Intergovernmental Partnership Maximize Reliability and Useful Life of Capital Assets and Infrastructure Public Awareness and Understanding Work Plan and Budget FY 20-21 Details on pages 5-8 of the Preliminary Budget Document Matt Discussed in detail at the January meeting Budget document additions: Page 7 – Outcome 4 “regional assets/infrastructure” – added Asset Management Plan target for annual update of the AM Plan, and begin Resiliency Plan implementation Page 8 – Outcome 5 “public awareness” – completed Community Survey in Fall 2019, will implement the 2020 Communications Plan in FY 20-21, and strategies and tactics to increase contact with a greater number of community members in our service area 5 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Capital Programs Budget Matt 6 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Capital Program FY 20-21 Capital Program Plan Planned Capital Budget: Almost $24M in FY 20-21 Continue study, design and construction of CIP Asset Management: Equipment Replacement, and Major Rehabilitation Coordinating capital projects with plant operations Details on page 45 of the Preliminary Budget Document – Exhibit 13 Matt February meeting included the 5-year Capital Plan program presentation $23,955,000 capital budget in FY 20-21 includes $7.4M in budget carryover, $13.5M in new funding, and about $3.1M in Asset Management Significant capital projects include: $8.57MM Renewable Natural Gas (RNG) Upgrade $7.75M Class A Disinfection Facilities $1.55M Aeration Basin Improvements – Phase 2 7 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 FY 2021 Capital Budget and 5-Year Plan Details on page 45 of the Preliminary Budget Document – Exhibit 13 Matt Proposed Capital Improvement budget is $23,955,000 in FY 20-21 Regional 5-year Capital PLAN includes almost $85.2M in capital improvements Capital Projects $74.7M Asset Management $10.5M 8 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Capital Budget Comparison Recent 5-Years Matt Adopted Capital Budget trend looking back 9 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Regional Operating Expenditure Budget 10 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Regional Operating Budget Recent 5-year Comparison Eugene and Springfield Combined Matt The proposed FY 20-21 operating budget PLAN includes an increase of 5.9% or about $1.1M when compared to the prior year Adopted Budget. When comparing the proposed FY 20-21 operating budget Plan to the prior year’s Amended Budget, the increase is 4.9% or about $922,500 When looking back at the Adopted Regional operating budget trend and comparing the proposed FY 20-21 budget to the FY 16-17 budget, the recent 4-years combined reflects an 11.7% increase, resulting in an average annual budget increase of 2.9% Actual expenses at year-end are less than budgeted amounts. 11 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Regional Operating Budget Summary Details on page 14 of the Preliminary Budget Document – Exhibit 3 Springfield and Eugene Combined Matt Combined FTE staffing includes an increase of 1.22 FTE or 1.3% Eugene staffing includes an increase of 1.0 FTE from 78.36 to 79.36 Springfield staffing increased by 0.22 FTE from 16.56 FTE to 16.78 FTE Personnel Budgets when combined reflects 2.2% increase Materials & Services Budget combined reflects a net increase of 10.9% Capital Outlay includes one-time expenses. Will be discussed in greater detail 12 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Springfield Budget Summary Katherine 13 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Budget Comparison Springfield Katherine Proposed FY 20-21 operating budget PLAN for Springfield includes a budget increase of 5.1% or $211,350, when compared to the prior year’s Adopted Budget, which included Or, an increase of 2.4% or about $104,800 when compared to the prior year’s Amended Budget, which includes the carryover dollars for Small Home SDC reimbursements When looking back at the Springfield operating budget trend, over the recent 4-years combined equals 15.6%, resulting in an average annual budget increase of 3.9% Actual expenses at year-end are less than budgeted amounts. 14 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Budget Summary Springfield Details on page 29 of the Preliminary Budget Document – Exhibit 8 Administration Katherine The FY19-20 adopted budget column is the budget the Commission approved for the current fiscal year. The FY19-20 amended budget is the current year’s budget as of Feb 2020 with a slight increase. The FY 20-21 proposed budget column includes the proposed Regional Administration operating budget for the upcoming fiscal year. The first row includes FTE staffing levels, with a net increase of 0.22 FTE to 16.78 FTE a 1.3% change for Springfield. A restructure of a vacant Managing Civil Engineer position that was 0.75 FTE Regional/0.25 Stormwater (returned to base level), plus the vacant DPW Director allocation was reduced from .08 to .05 = .02 resulted in a 0.22 FTE (resulted in the upgraded Enviro Services Supervisor position – Todd Miller) Personnel related costs reflect an increase of $26,675 or about 1.3%, includes changes in Springfield’s regular salaries and employee related benefits. Design & Construction Coordinator authorized position is funded at a lower level and held vacant for a period of time based on future construction activity. Materials & Services budget includes a budget increase of $184,673 or 8.9%. Resulting in a Total budget increase of about $211,350 or 5.1% when compared to the prior year’s Adopted Budget or $106,816 or 2.4% when compared to the Amended Budget . Amended budget includes the carryover funding for qualifying Small Homes SDC’s 15 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Significant Budget Changes Springfield Personnel Services – 1.3% or $26,675 increase Regular Salaries and Overtime: 0.7% increase Employee Benefits including PERS/OPSRP: 2.1% increase Health Insurance: 2.5% increase Materials & Services – 8.9% or $184,673 increase Billing & Collection Expenses: 11.0% increase Contractual Services: -21.9% net decrease WPCF/NPDES Permits Fees: 21.0% increase Internal and Indirect Charges: 21.3% increase Details on page 30 of the Preliminary Budget Document – Exhibit 9 Katherine PS Salaries & Overtime 0.7% or about $9,731 Employee Benefits 2.1% or $8,743 Health Insurance 2.5% or $8,201 Materials and Services Billing & Collection EXP (EWEB / SUB) an 11.0% increase of $71,000 to $716,000 Increase reflects growth in customer transactions & associated billing service contracts. Contractual Services – a 21.9% net decrease of $38,500, reflects completion of the updated Market Research – Community Survey conducted this FY. WPCF/NPDES Permit Fees – 21% increase in FY21 Internals Charges - a 61.4% increase of $83,264, from $135,710 to $218,974. Indirect Charges – a 4.8% increase of $15,696 = resulting in a combined 21.3% increase of $98,960 to $562,750. Springfield Administration – Operating Budget change of 5.1% or $211,348 when compared to prior year’s Adopted (2.4% or $104,816 when compared to Amended). 16 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Eugene Budget Summary Dave 17 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Budget Comparison Eugene Dave The proposed FY 20-21 operating budget PLAN for Eugene O&M includes a budget increase of 6.2% or about $894,750, when compared to the prior year’s Adopted Budget. Or a budget increase of 5.6% or about $817,650 when compared to the Amended Budget. When looking back at the Eugene operating budget trend and comparing the proposed FY 20-21 budget to the FY 16-17 budget, the recent 4-years combined reflects a 10.6% increase, resulting in an average annual budget increase of 2.7% Actual expenses at year-end are less than budgeted amounts. 18 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Budget Summary Eugene Details on page 35 of the Preliminary Budget Document – Exhibit 10 Operations and Maintenance Dave This is an overview of the Eugene O&M budgets, adopted, amended and shows the percent increases from the original adopted budget. I will discuss the increases with the next slide. Capital Outlay includes one-time expenses. 19 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Significant Budget Changes Eugene Personnel Services – 2.4% or $234,098 increase Regular Salaries: 1.5% increase Staffing - Custodial Services: 1.0 FTE addition Employee Benefits including PERS/OPSRP: 3.1% increase Health Insurance: 1.9% increase Materials & Services – 11.8% or $558,645 increase Utilities: 27.1% increase Fleet Operating Charges: 31.9% increase Maintenance-Equip & Facilities: -9.5% net decrease Risk Insurance/Liability – EOC: 140.5% increase Capital Outlay – $122,000 increase Details on pages 37 of the Preliminary Budget Document – Exhibit 11 Dave Staffing …Notable changes in proposed O&M for personnel services include an overall 2.4% increase including an additional full time custodian, a 3.1% increase to cover employee benefits, and 1.9% increase for health insurance. The need for additional custodial services was driven by an increase in overall building space and overall higher labor demands to maintain capital improvements that were added in recent years. This need was also determined with a review of the industry standard which is 1 FTE per 16,700 square feet. We have been operating with one custodian maintaining 34,000 square feet and have added 18,000 additional square feet with the laboratory and maintenance building expansions. The determination that the need could best be met with an additional custodian position was made with consideration of contractual services. Contractual service is problematic and not the desired approach for multiple reasons. The City has a labor agreement with AFSCME which includes custodial work. AFSCME is a wall to wall union meaning their position would be that they own this work. The agreement does not allow us to use contractual services for the additional volume of work needed without a full competitive service delivery assessment for all custodial services performed. Materials & Services….Increases in Materials & Services includes a 27.1 % increase in utilities in anticipation of RNG system coming on line which will result in an increase in natural gas use for generation of power and heat. These costs will be offset by an increase in revenues of RNG production. The increase is fleet operating charges was determined by 3 year averaging for the experience estimate. These costs can fluctuate substantially from year to year so if we do not need it, it will not be spent. The decrease in maintenance for facilities and equipment was because the current budget included extra dollars for furnishings associated with the recent building projects which will not be repeated next year. The risk insurance and liability budget would have declined by 1% if not for the City of Eugene’s needs to fund construction of a new EOC. The funding of the EOC is being supported by a one time surcharge across all City operations, which amounts to $70,458. Capital Outlay…Capital outlay includes funding for 3 projects. Fall prevention system at pretreatment including platforms, safety railing, and harness connection points. Fencing of the Brown Lane property. And the third and final phase of the LIMS software upgrade. 20 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Eugene and Springfield Combined Regional Operating Budget Comparison Dave The proposed FY 20-21 operating budget PLAN includes an increase of 5.9% or about $1.1M when compared to the prior year Adopted Budget. When comparing the proposed FY 20-21 operating budget Plan to the prior year’s Amended Budget, the increase is 4.9% or about $922,500 When looking back at the Adopted Regional operating budget trend and comparing the proposed FY 20-21 budget to the FY 16-17 budget, the recent 4-years combined reflects an 11.7% increase, resulting in an average annual budget increase of 2.9% Actual expenses at year-end are less than budgeted amounts. 21 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 User Rates Katherine Regional wastewater user rates 22 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Proposed Rate Change 5-Year Comparison Proposed 2.0% Rate Change - effective July 1, 2020 Residential increase $0.54 monthly for 5,000 gallons of wastewater treated Katherine Assumes 5,000 gallons of wastewater treated $0.54 monthly increase from $27.02 to $27.56 $6.48 annual increase Increase is $0.0177 (less than $0.02 cents daily) or about $0.12 per week -------------------------------------------------------------------------------------------- In the current FY 19-20 Mobile Waste Hauler - Septage fees were increased by 4%, from $127.00 per 1,000 gallons to $132.00, an increase of $5 per kgal Mobile Waste Hauler - Septage fees were evaluated by Eugene staff (John Huberd) based on cost of services, and a fee comparison to other sites for FY 20-21. Resulting in the Septage fees remaining level. 23 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Based on 5,000 gallons or 6.684 units Rate Comparison Adopted Rates Katherine Residential Monthly – When assuming 5,000 gallons or 6.684 units with currently adopted rates as of January 15, looking back. $52.01 AVG ($51.97 Median) $50.93 SPRINGFIELD increase 2.0% or $1.00 $39.25 EUGENE increase 2.2% or $1.00 When applying the current rates and assuming 5,000 gallons Rate Changes compared to prior year, range from: 0% for Coburg, Wilsonville and Corvallis, up to a 7.40% or $4.66 increase in McMinnville Average rate change reflects a 3.3% increase Median rate change reflects a 2.9% increase Maximum rate change 7.4% increase 24 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Financial Work Plan Multi-Year Work Plan 2016 Payoff of 2006 Revenue Bond 2016 Advance Refunding of 2008 Bonds 2017 System Development Charges Update 2018-19 Accelerated Payoff of two SRF Loans 2019 MWMC Financial Plan Update 2019-20 Accelerated Payoff of third SRF Loan Review MWMC Property Leases Contract language and insurance standards Cost of Services Review Base charge and volume charges Katherine Property Leases Farm Leases Sprint Cellular Lease on MWMC owned tower 1996 agreement will be up for renewal in May 2021 (25-year agreement) AT&T ground lease at the plant, AT&T owned tower (30-year agreement on site), renewal June 2024 Cost of Services Review Review base and volume charges, compared to other agencies 25 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Prior Year Forecast Point 1: Allows for significant capital transfers to fund capital improvements and to maintain capital reserves Point 2: Supports pay-as-you-go investments in capital infrastructure Point 3: Results in a greater impact to customer bills Katherine Prior Year Rate Forecast– as presented to the Commission a year ago Explain rows 3% projected rate change in FY 20-21 $0.81 monthly increase from $27.02 to $27.83 monthly for a Typical Residential account with 5,000 gallons of wastewater treated an increase of $9.72 annually When applied to Eugene’s average usage, is currently 3,600 gallons = $23.95 (3.88) less Springfield’s average residential usage 4,300 gallons = $25.89 (1.94) less Regional average 4,000 gallons = $25.06 (2.77) less Higher/lower customers usage varies One component of the EWEB/SUB Utility Bill 26 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Proposed Rates Point 1: Lower rate change at 2%, than prior year projection of 3% Point 2: Lowest responsible rate in FY 20-21, and projections overall Point 3: Results in a lower impact to our customers Point 4: FY 21-22 projection is reduced from 3.5 to 3.0% Katherine Proposed Rate Plan - includes a 2% rate change in FY 20-21, followed by a 3% in FY 21-22, and 3.5% in FY 22-23 projected in the forecast The FY 20-21 Preliminary Budget Doc is based on a 2% rate change to be effective July 1 $0.54 monthly increase from the current $27.02 to $27.56 monthly for Residential with 5,000 gallons of wastewater treated. The proposed $6.48 annual increase, reflects an annual variance to the prior year forecast at $3.24 less annually than previously forecasted With the 2% rate increase the monthly cost for 5,000 gallons is $27.56, resulting in a total annual costs of about $331/year or $0.91 cents per day ($6.37/week) Eugene 3,600 gallons = $23.71 mo. / ($3.85 less mo.) / $285 annual bill or $0.78 cents per day Springfield 4,300 gallons = $25.64 mo. / ($1.92 less mo.) / $308 annual bill or $0.84 cents per day Regional AVG 4,000 gallons = $24.81 mo. / ($3.02 less mo.) / $294 annual bill or $0.81 cents per day Higher/lower customers usage varies One component of the EWEB/SUB Utility Bill 27 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Optional Scenario A Point 1: 2.5% in FY 20-21, slightly above the proposed 2% Point 2: Allows for an slightly increased transfers from user fees to capital reserves reserves Point 3: Projections include incremental increases annually Katherine Scenario– includes a 2.5% rate change in FY 20-21, with a 3% projected in FY 21-22, followed by incremental increases projected annually in the forecast $0.68 monthly increase from the current $27.02 to $27.70 monthly for Residential with 5,000 gallons of wastewater treated $8.16 annual increase, resulting in a total annual bill of $332 or When applied to Eugene 3,600 gallons = $23.83 monthly / annual bill $286 / $0.78 cents per day Springfield 4,300 gallons = $26.59 mo. / annual bill $319 / $0.87 cents per day Regional AVG 4,000 gallons = $24.93 mo. / annual bill $299/ or $0.82 cents per day Higher/lower customers usage varies One component of the EWEB/SUB Utility Bill 28 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Point 1: 3% in FY 20-21 is greater than the Proposed 2% and greater than Scenario A at 2.5% Point 2: Greater impact to our customers Point 3: Highest rate scenario in FY 20-21 and projections overall Optional Scenario B Katherine 3% rate change in FY 20-21, followed by a projected 4% annually in the following two years, with increases stepping up $0.81 monthly increase from $27.02 to $27.83 monthly for a Residential customer with 5,000 gallons of wastewater treated $9.72 increase annually, resulting in a total annual bill of $334 or $0.92 cents per day. When applied to Eugene’s average residential usage 3,600 gallons = $23.95 / monthly ($3.88 less) / (annual bill $287) or $0.79 cents per day Springfield’s average 4,300 gallons = $25.89 / monthly ($1.94 less) / (annual bill $311) or $0.85 cents per day Regional AVG 4,000 gallons = $25.06 / monthly ($2.77 less) / (annual bill $300) or $0.82 cents per day Higher/lower customers usage varies One component of the EWEB/SUB Utility Bill 29 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Residential Trend Data Katherine Residential Average With proposed 2.0% rate increase EUG AVG 3,600 gallons increase $0.46 from $23.25 to $23.71 SPR AVG 4,300 gallons – increase of $0.51 from $25.13 to $25.64 Regional SFR AVG gallons remains close to 4,000 gallons at $24.81 30 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Proposed Rates Point 1: Lower rate change at 2%, than prior year projection of 3% Point 2: Lowest responsible rate in FY 20-21, and projections overall Point 3: Results in a lower impact to our customers Point 4: FY 21-22 projection is reduced from 3.5 to 3.0% Katherine Proposed Rate Plan - includes a 2% rate change in FY 20-21, followed by a 3% in FY 21-22, and 3.5% in FY 22-23 projected in the forecast The FY 20-21 Preliminary Budget Doc is based on a 2% rate change to be effective July 1 $0.54 monthly increase from the current $27.02 to $27.56 monthly for Residential with 5,000 gallons of wastewater treated. The proposed $6.48 annual increase, reflects an annual variance to the prior year forecast at $3.24 less annually than previously forecasted With the 2% rate increase the monthly cost for 5,000 gallons is $27.56, resulting in a total annual costs of about $331/year or $0.91 cents per day ($6.37/week) Eugene 3,600 gallons = $23.71 mo. / ($3.85 less mo.) / $285 annual bill or $0.78 cents per day Springfield 4,300 gallons = $25.64 mo. / ($1.92 less mo.) / $308 annual bill or $0.84 cents per day Regional AVG 4,000 gallons = $24.81 mo. / ($3.02 less mo.) / $294 annual bill or $0.81 cents per day 31 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Discussion / Questions Action Requested: Comments and direction for finalization of the Regional Wastewater Program Budget and Capital Program for FY 2020-21 Katherine 32 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 33 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 MWMC Preliminary Budget & Rates FY 20-21 3/13/2020 34 Discussion / Questions Action Requested: Comments and direction for finalization of the Regional Wastewater Program Budget and Capital Program for FY 2020-21 Katherine 35 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21 Financial Plan Strategy Continued use of SDC revenues for debt service Positioning financially for future permit renewal Working towards pay-as-you-go capital investments Maintaining responsible rate changes: Moderate and incremental rate changes Avoiding future rate spikes 36 3/13/2020 MWMC Preliminary Budget & Rates FY 20-21