HomeMy Public PortalAboutFY19 Bgt Fin Comm Wrkshop - Website11Finance Committee MeetingFY19 Strategic Business and Operating Planand Preliminary Budget ReviewApril 3, 2018
22Finance Committee MeetingFY19 Strategic Business Operating Plan and Preliminary Budget ReviewI. Strategic Business and Operating Plan (SBOP)II. FY19 Preliminary BudgetIII. Preliminary Budget Compared to Rate Commission ReportIV. Next Steps and Questions
33Strategic Business and Operating PlanPrepared in accordance with Section 5.110 of the Charter of the Metropolitan St. Louis Sewer DistrictFY19 – FY23
44VISION STATEMENTQuality Service Always Strategic Business and Operating PlanMISSION STATEMENTTo protect the public’s health, safety, and water environment by responsibly providing wastewater and stormwater management.
55Integrity– Acting ethically at all times, treating everyone with honesty, fairness and respect. Teamwork– Working together to accomplish our mission with open communication, trust respect and diversity.Innovation– Embracing continuous improvement and new solutions to achieve excellence. Employees– Developing successful, responsible and safety conscious employees and acknowledging their contributions.Customers– Building strong relationships by keeping our commitments, providing excellent service and being transparent in everything we do. Strategic Business and Operating PlanVALUES
6A. Deliver consistent, high quality customer service;B. Comply with all legal and regulatory requirements and schedules;C. Minimize customer rate increases; andD. Be accountable to the St. Louis community. GOALSStrategic Business and Operating Plan
7STRATEGIES1. Educate and partner with stakeholders to build support; 2. Manage the District’s costs and revenues to optimize financial impacts;3. Integrate and improve the District’s business processes;4. Promote appropriate standards through proactive regulatory and legislative involvement;5. Address customer and regulatory needs through a comprehensive infrastructure management program;6. Create a learning and business oriented culture based on competency and accountability.Strategic Business and Operating Plan
88FY19Preliminary Budget
99FY19 Preliminary Balanced Budget FY19 Total Revenue($$s in millions)Wastewater User Charges $403.3Stormwater User Charges 0.0Revenue Bonds 190.0Stormwater Taxes 33.3Investment and Other Income 11.9Use of Fund Balances 91.3Total District Revenue $729.8FY19 Total Expense($$s in millions)Operating Budget $210.4CIRP 397.3Debt Service 122.1Total District Expenses $729.8
1010FY19 Preliminary BudgetI. The General Fund budget includes:A. $2.7 million increase for Salaries & FICA –excluding incremental budgets (includes 3.07% avg. wage increase.) Includes elimination of 3 positions.B. $2.2 million in incremental budgets tied to the SBOP, including 13 additional positions of which the majority is primarily related to provide for and support the growing CIRP.C. 5.0% or $9.5 million overall increase from FY18II. Includes a Total CIRP budget of $397.3 million. III. Assumes the issuance of $190 million of additional bonds.IV. The budget was developed to align with the July 2015 Rate Commission Report.Key Points
1111FY19 Preliminary Budget - Revenue($$s in millions)
1212FY19 Budgeted Revenue by Major Category ($$s in millions)FY18 - $648.3FY19 - $729.8$81.5 M or 13% Increase$81.5 M or 13% Increase
1313Schedule ofResidential User RatesWastewaterFY18 FY19% ChangeEffective Date 7/1/17 7/1/1849.31$ 54.63$ 11%Average Monthly Residential Bill (7 Ccf)
1414FY19 Preliminary Total Budget Expenses($$s in millions)Total = $729.8Total Operating Budget is $210.4, 29% of totalTotal CIRP Budget is $397.3, 54% of total
1515FY19 Budget – Operating Expense ComponentsWastewaterGeneral Fund 166,662,345 Improvement Fund 50,519 Wastewater Emergency Fund‐ Water Backup Fund 4,425,300 General Insurance Fund 6,089,400 Construction Funds 6,949,481 Total Wastewater 184,177,045 StormwaterOMCI Funds 26,235,464 Total Operating Expenses 210,412,509
1616($$s in millions)FY19 Budgeted Operating Expense by Major Category FY18 - $200.1FY19 - $210.4$10.3 M or 5% Increase
1717CHANGEFY19 FY18 $ % Civil Service Commission 10,000$ 10,000$ -$ 0.0%Rate Commission 595,508 594,304 1,204 0.2%Secretary-Treasurer (includes Board of Trustees)3,318,517 1,899,735 1,418,782 74.7%Executive Director 3,596,589 3,403,911 192,678 5.7%General Counsel 3,153,946 2,601,943 552,003 21.2%Human Resources 8,286,447 8,799,956 (513,509) -5.8%Finance 20,977,478 20,300,675 676,803 3.3%Information Systems 14,927,653 13,963,301 964,352 6.9%Engineering 26,834,817 26,063,223 771,594 3.0%Operations 115,483,973 112,280,592 3,203,381 2.9%Total Departments 197,184,927$ 189,917,640$ 7,267,289$ 3.8%Incrementals 2,212,785 0 2,212,785Total General Fund Operating Budget 199,397,712$ 189,917,640$ 9,480,074$ 5.0%Energy Loan Debt Service 36,000 35,900 100Total General 199,433,712$ 189,953,540$ 9,480,174$ 5.0%FY19 General Fund BudgetBy Department
1818FY19 Incremental Budget SummaryDepartment PurposeFTE ChangeBudgetInformation SystemsReplace end of life assets ($471K); Implement updated enterprise disaster recovery strategy ($257K); Add 1 I.T. Specialist II Network Engineer ($80K)1 $807,436Engineering Add 6 FTE's, Staffing Requirements Required to Meet Consent Decree- 1 Civil Engineer, 2 Resident Inspector, 3 Const. Inspector Seniors.6 $516,034Executive Director Increase support related to Project Clear. 1 FTE in Public Information to replace contractual services ($91K), and 4 FTE's in Diversity for compliance inspections on larger CIRP ($231K).5 $322,064Finance Planning and preliminary design work on billing system for stormwater capital rate($299K); Space planning and cubicle moves to accommodate growth in Diversity and Engineering ($100K).0 $398,600Human Resources Implement Oracle Position Control 0 $100,000Operations Add 1 Bricklayer for increased workload related to Prop S funding. 1 $68,631Total General Fund Incremental13 $2,212,765*Stormwater Incremental Budgets = $298,600
1919FY19 District Funded Positions9698789819819369569639761,021TotalFTE Change Position Title+1 Public Information Specialist+1 Diversity Office Associate+1 Diversity Construction Supervisor+2 MWBE Compliance Inspector+1 I.T. Specialist II – Network Engineer+1 Bricklayer+1 Civil Engineer Senior+2 Resident Inspector+3 Construction Inspector Senior-1 Accountant II-2Mail Associate Messenger+10 Net Change
2020Wastewater Service Charges - Billed volumes are declining much faster than anticipated in the Rate Report, especially for residential accounts.Taxes– Property taxes are higher than anticipated.Other– Approximately $14 million of the difference is related to lower than expected bad debt provision. Most of the rest is higher than anticipated Connection Fees.Operating Expenses and Routine Capital – Personnel Services for the District are anticipated to be $11.8 million lower than the rate model in the first two years of this rate cycle due mostly to vacancies. Supplies are projected to show a savings of $14.1 million from rate model levels. Utilities are projected to finish $1.9 million less than the rate model, and Contractual Services are projected to be $40.6 million under rate model predictions.Debt Service Expense– Borrowing over the 4-year period is projected to be $121.5 million less than anticipated. Lower CIRP expenditures and avoidance of required reserves both contribute to the lower borrowing level, while lower than anticipated interest rates further keep this expense down.Wastewater CIRP– Most of the projected savings can be attributed to favorable bids on a few large projects.Stormwater and Other CIRP– Project costs projected in the rate proposal were lower than actual bids.Bond Proceeds- Lower CIRP expenditures and avoidance of required reserves both contribute to the lower borrowing level. Current Projection * Rate Model DifferenceRevenue:Wastewater Service Charges 1,539,473,139$ 1,580,322,154$ (40,849,015)$ Taxes 131,891,221 119,191,666 12,699,555 Other 45,781,826 17,361,112 28,420,714 Total Revenue 1,717,146,186$ 1,716,874,932$ 271,254$ Expense:Operating Expense and Routine Capital 807,179,888$ 848,030,866$ (40,850,978)$ Debt Service Expense 450,105,096 477,221,633 (27,116,537) Total Wastewater CIRP 1,411,316,810 1,462,971,194 (51,654,384) Stormwater and Other CIRP 77,666,962 70,883,514 6,783,448 Total Expense 2,746,268,757$ 2,859,107,207$ (112,838,451)$ Net Income / (Loss) (1,029,122,571)$ (1,142,232,275)$ 113,109,705$ Bond Proceeds (Net of COI) 976,968,359 1,098,525,098 (121,556,739) Change in Fund Balance (52,154,211)$ (43,707,177)$ (8,447,034)$ * Current Projection = FY17 Actual + FY18 Forecast + FY19 Proposed Budget + FY20 ProjectedCurrent Projection to Rate ReportFiscal Years 17 ‐ 20Rate ModelRate ModelRate ModelCurrent Projection *Current Projection *Current Projection * $‐ $1,000 $2,000 $3,000Total RevenueTotal ExpenseBond Proceeds(Net of COI)Millions0.0%Favorable3.9%Favorable11.1%Favorable
2121
2222Type of Project Number BudgetWastewater Construction 65 273,673,000Wastewater Engineering 83 65,892,000Stormwater Construction 31 17,368,000Stormwater Engineering 9 5,180,000New Project Appropriations Subtotal: 188 362,113,000Continued Wastewater 9 33,850,000Continued Stormwater 1 1,300,000Continued Project Appropriations Subtotal: 10 35,150,000PROJECT APPROPRIATION TOTALS: 198 397,263,000FY 2019 CIRP Program Summary
2323FY 2019 CIRP New Wastewater & Stormwater ProjectsTotal Budget $362.1 MTotal Number of New Projects 188Wastewater$339.6 M148 ProjectsStormwater $22.5 M40 Projects6%94%
2424FY 2019 CIRP New Wastewater Project FundingTotal Number of ProjectAppropriations 148Total Budget $339.6 M8% City/County29 Projects$28.5 M77% County93 Projects$260.8 M4% Treatment Plants8 Projects$12.3 M11% City18 Projects$38.0 M
2525FY 2019 CIRPFunding SourcesTotal Number of ProjectAppropriations 188Total Budget $362.1 MSanitary Replacement Fund:130 Projects$321.6 M89%General Fund:16 Projects$14.9 M4%7%OMCI/Special Funds:42 Projects$25.6 M
2626FY 2019 CIRP Engineering & Construction - NewTotal Number of ProjectAppropriations 188Total Budget $362.1 MConstruction96 Projects$291.0 M80%Engineering92 Projects$71.1 M20%
2727WastewaterCoordination with Others / Construction Phasing 7Easement Acquisition / Condemnation 2Projects in Design / Major Scope Changes 0StormwaterCoordination with Others 0Easement Acquisition / Condemnation 0Projects in Design / Major Scope Changes 1Total: 10FY 2019 CIRP Continued Projects
2828Type of ProjectNumberBudgetWastewater 23 121,845,000Stormwater 21 9,562,000Phased Funding 9 125,200,000Project Totals: 53 256,607,000FY 2019 CIRP Contingency Projects
2929Type of Project Number % BudgetAsset Management Renewal 16 11 39,190,000Cityshed 9 4 15,317,000CSO 12 8 29,935,000SSO 79 64 231,916,000Treatment Plant 8 4 12,252,000Districtwide 24 3 10,955,000Stormwater 40 6 22,548,000TOTALS: 188 100 362,113,000FY 2019 CIRP New Project Allocations
3030FY 2019 CIRP Program HighlightsAsset Management Renewal – Renewal of existing District infrastructure (assets) such as sewer lines, manholes, and pump stations. Renewal is required because of deterioration due to ageing infrastructure, and can take the form of partial repairs, rehabilitation, or full replacement depending on the condition of the asset.• Rehabilitation and/or replacement of four pump stations within the collection system.
3131FY 2019 CIRP Program HighlightsCityshed – Projects designed and constructed to mitigate the effects of wet weather surcharging and overland flooding of the combined sewer system. Primarily in the City of St. Louis. Types of projects include property buyouts, basin and relief sewer construction.• Construct the Jennings Station Road / North Baden Basin project.
3232FY 2019 CIRP Program HighlightsCSO – Projects in the combined sewer area that are intended to reduce or control Combined Sewer Overflow (CSO), a discharge from the combined sewer system at a point prior to the headworks of a wastewater treatment facility. The majority of MSD’s CSOs are along the River Des Peres and the Mississippi River.• Continue construction of the Maline Creek CSO Storage Facility project.
3333FY 2019 CIRP Program HighlightsSSO – Projects to reduce and eliminate Sanitary Sewer Overflow (SSO) in the separate sanitary sewer system. An SSO is any release of wastewater from the separate sewer collection system prior to a treatment facility. • Construct 53,000 feet of sanitary sewer, and 13,000 feet of storm sewer to facilitate the removal of private I/I.• Work will result in the removal of up to 11 constructed SSOs.
3434FY 2019 CIRP Program HighlightsTreatment Plant – Projects planned at one of the 7 existing wastewater treatment facilities within the District. Projects are required to renew ageing infrastructure, improve safety or efficiency, or to improve treatment processes due to changing regulations or permit requirements.• Construction of a redundant sludge acceptance system at the Bissell Wastewater Treatment Plant.
3535FY 2019 CIRP Program HighlightsDistrictwide – Projects are general projects that are required to deliver support activities for the CIRP and meet Consent Decree requirements. These projects are not site specific, and typically occur throughout the District.• CCTV inspection and physical inspection of 700,000 feet of sewers.
3636FY 2019 CIRP Program HighlightsStormwater – Projects that address localized structure and yard flooding and erosion issues driven by storm events throughout the District. Projects also provide for repairs and rehabilitation of the existing stormwater infrastructure within the District. Stormwater projects are a business line funded separately from wastewater projects.• Construct improvements to reduce flooding at 28 structures, 18 streets, and 58 yard locations, and address erosion at 30 properties.
3737FY19 SBOP and Preliminary Budget ReviewQ & A
3838FY19Next Steps
3939FY19 SBOP and Preliminary Budget Finance Committee MeetingReview (including CIRP) April 3, 2018; 8:00 a.m.• Publication of Public Hearing Notice April 19, 2018(The notice will be published in the St. Louis Post-Dispatch, St. Louis American, St. Louis Business Journal, and on the MSD Internet Site)•FY19 Budget Follow-up Discussion Finance Committee Meeting May 1, 2018; Time: TBD• Budget Introduction Board of Trustee Meeting May 10, 2018; 5:00 p.m.• Public Hearing After Board of Trustee Meeting(Finding of Fact Committee)May 10, 2018; 6:00 p.m.• Budget Adoption Board of Trustee MeetingJune 14, 2018; 5:00 p.m.* All meetings held at 2350 Market Street, Room 109FY19 Budget Meeting Schedule *