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Home My Public Portal AboutFY24 Finance Committee Budget Presentation- AprilFY24 Strategic Business & Operating Plan and Preliminary Budget Review Finance Committee Presentation April 4, 2023 Finance Committee Meeting I. Strategic Business and Operating Plan (SBOP) II.FY24 Preliminary Budget III.Next Steps and Questions FY24 Strategic Business Operating Plan and Preliminary Budget Review 2 FY24 – FY28 Strategic Business and Operating Plan Prepared in accordance with Section 5.110 of the Charter of the Metropolitan St. Louis Sewer District Strategic Business and Operating Plan A. Deliver consistent, high-quality customer service; B. Comply with all legal and regulatory requirements and schedules; C. Minimize customer rate increases; and D. Be accountable to the St. Louis community. GOALS 4 1. Inform, educate and partner to build stakeholder understanding; 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 STRATEGIES 5 FY24 Preliminary Budget FY24 Preliminary Balanced Budget FY24 Total Revenue ($$s in millions) Wastewater User Charges $470.1 Revenue Bonds 278.0 Stormwater Taxes 36.2 OMIC Taxes 10.2 Investment and Other Income 14.6 Fund Balance 138.7 Total District Revenue $947.8 FY24 Total Expense ($$s in millions) Operating Budget $246.8 CIRP 561.5 Debt Service 139.4 Total District Expenses $947.8 7Note: Fund Balance ‐ A positive number represents the use of fund balance as a revenue source while a negative number reflects an increase in fund balance. FY24 Preliminary Budget I. The General Fund budget includes: A. 1% or $1.5 million increase in Personnel Services primarily related to increase of 2% or $1.5 M for Salaries . B. $2.7 million in incremental budgets tied to the SBOP. C. 4% or $0.7 thousand increase in Utilities D. 11% or $6.2 million increase in Contracted Services (excluding incremental budgets from FY24) II. 5% or $11.4 million overall increase operating budget (including incremental budgets from FY24). III. Includes a Total CIRP budget of $561.5 million including $538.2 million Wastewater CIRP, 23.3 million Stormwater CIRP IV. Assumes the issuance of $278.0 million of additional bonds, V. The budget was developed to align with the March 2019 Rate Commission Report. Key Points 8 Total = $947.8 FY24 Preliminary Budget Revenue ($’s in millions) 9 $470.1 $278.0 $36.2 $10.2 $14.6 $138.7 49.6% 29.3% 3.8% 1.1%1.5%14.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 $500.0 Wastewater User Charges Revenue Bonds Taxes - Stormwater Taxes - OMCI Investment Income & Other Fund Balances Total Dollars Percent Schedule of Residential User Rates 10 Wastewater Successful Vote FY23 FY24 % Change Effective Date 7/1/22 7/1/23 Rate: Base Charge 28.26 29.29 3.6% Volume Charge per ccf 5.35 5.55 3.7% Typical Monthly Residential Bill (6 Ccf) 60.36$ 62.59$ 3.7% FY24 Preliminary Total Budget Expenses ($’s in millions) 11 Wastewater CIRP, $538.2, 57% Stormwater CIRP, $23.3, 2% Debt Service, $139.4, 15% Wastewater Operating, $217.6, 23% Stormwater Operating, $29.2, 3% Total CIRPBudget = 561.5, 59% Total Operating Budget = 246.9, 26% Total Budget = $947.8 FY24 General Fund Budget By Department Comparison 12 CHANGE FY24 FY23 $ % Board of Trustees 10,350 10,350 - 0.0% Civil Service Commission 12,000 11,500 500 4.3% Rate Commission - 702,000 (702,000) n/a Secretary Treasurer 4,417,359 2,392,924 2,024,435 84.6% Executive Director 8,033,065 6,869,175 1,163,890 16.9% Human Resources 9,382,327 9,153,602 228,725 2.5% Finance 24,985,147 25,516,681 (531,534) -2.1% Information Technology 18,137,441 17,185,663 951,778 5.5% General Counsel 3,502,613 3,495,479 7,134 0.2% Operations 130,870,435 125,156,776 5,713,659 4.6% Engineering 29,054,887 29,243,024 (188,137) -0.6% Total Departments 228,405,624 219,737,174 8,668,450 3.9% Incrementals 2,740,864 - 2,740,864 Total General Fund Operating Budget 231,146,488 219,737,174 11,409,314 5.2% 13 Wastewater Service Charges - Due to COVID-19 billed volumes are declining much faster than anticipated in the Rate Report, especially for commercial accounts. Other –Interest on investments decreased about $8M due to unrealized losses. The district will hold investments until maturity. Grant proceed increased $11M . The remaining difference is from Miscellaneous Revenue and Connection Fee revenue. Operating Expenses and Routine Capital – Personnel Services for the District are anticipated to be $55.8 million lower than the rate model due mostly to vacancies. Supplies are projected to be $5.8 million over rate model levels. Utilities are projected to finish $9.7 million less than the rate model, and Contractual Services are projected to be $25.0 million over rate model predictions. Capital Outlay is running $.5 thousand over the rate model. Debt Service Expense – Lower than anticipated rates and refunding debt with different timing on payments contribute to this variance. Wastewater CIRP – Most of the projected savings can be attributed to favorable bids and project delay on a few large projects. Bond Proceeds – Bond proceeds are up because proceeds where moved up FY's. This is due to timing of the CIRP projects. Current Projection * Rate Model Actual/Forecast/ Stormwater Budget Rate Model Plus SW Budget Difference Wastewater Service Charges 1,803,610,506$ 1,908,824,870$ 1,908,824,870$ (105,214,364)$ Taxes 181,979,442 ‐ 181,979,442 181,979,442 ‐ Other 32,994,088 32,822,584 (1,219,623) 31,602,961 1,391,127 Total Revenue 2,018,584,036$ 1,941,647,454$ 180,759,819$ 2,122,407,273$ (103,823,237)$ Expense: Total Operating Expense and Routine Capital 894,274,151$ 807,329,339$ 121,170,409$ 928,499,748$ 34,225,597$ Debt Service Expense 516,796,562 608,224,456 608,224,456 91,427,894 Total Wastewater CIRP 1,572,986,514 1,608,540,391 1,608,540,391 35,553,877 Stormwater and Other CIRP 84,037,783 ‐ 84,037,783 84,037,783 ‐ Total Expense 3,068,095,011$ 3,024,094,186$ 205,208,192$ 3,229,302,378$ 161,207,367$ Net Income / (Loss) (1,049,510,975)$ (1,082,446,733)$ (24,448,373)$ (1,106,895,105)$ 57,384,131$ Bond Proceeds (Net of COI) 1,088,724,940 937,279,802 ‐ 937,279,802 (151,445,138) Change in Fund Balance 39,213,966$ (145,166,931)$ (24,448,373)$ (169,615,303)$ (94,061,008)$ * Current Projection to Rate Report Fiscal Years 21 ‐ 24 Current Projection = FY21‐FY22 Actual + FY23 Forecast + FY24 Proposed Budget. Rate Model Plus SW Budget Rate Model Plus SW Budget Rate Model Plus SW Budget Current Projection * Current Projection * Current Projection * $‐ $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Total Revenue Total Expense Bond Proceeds (Net of COI) Millions 4.9% Unfavorable 5.0% Favorable 16.2% Unfavorable FY24 SBOP and Preliminary Budget Review Q & A CIRP FY24 CIRP – Program Summary FY24 CIRP – New Projects 96% Wastewater 104 Projects $516.6 M 4% Stormwater 33 Projects $22.9 M Total Budget $539.5 M Total Number of New Projects 137 FY24 CIRP – New Wastewater Total Number of Project Appropriations 104 Total Budget $ 516.6 M (63% is CD related) 49% County 62 Appropriations $ 253.4 M 3% Districtwide 25 Appropriations $16.5 M 46% Treatment Plants 10 Appropriations $ 236.7 M 2% City 7 Appropriations $10.0 M FY24 CIRP – Funding Sources Total Number of Project Appropriations 142 Total Budget $539.5 M 93% Sanitary Replacement Fund: 94 Appropriations $ 499.3 M 2% Stormwater Funds: 8 Appropriations $9.2 M 3% General Fund: 14 Appropriations $ 16.8 M 2% OMCI Funds: 26 Appropriations $ 14.2 M FY24 CIRP – OMCI Funding Total OMCI Revenue Generated $ 10.1 M Total Grant Funding Available $ 4.7 M OMCI Tax Rate ($) Total Revenue ($) Grant Available ($) Coldwater Creek 0.078 2,143,362 1,071,681 Deer Creek 0.066 4,108,452 2,054,226 Gravois Creek 0.061 1,574,254 787,127 Maline Creek 0.081 680,844 --- Seminary Branch of RDP 0.054 262,794 131,397 Sugar Creek 0.044 308,576 154,288 University City Branch of RDP 0.069 997,562 498,781 FY24 CIRP – Engineering & Construction 89% Construction 77 Appropriations $ 478.3 M 11% Engineering 65 Appropriations $ 61.2 M Total Number of Project Appropriations 142 Total Budget $539.5 M FY24 CIRP – Continued Projects Wastewater Coordination with Others / Construction Phasing 1 Easement Acquisition / Condemnation 1 Projects in Design / Major Scope Changes 0 Stormwater Coordination with Others 1 Easement Acquisition / Condemnation 1 Projects in Design / Major Scope Changes 0 Total: 4 FY24 CIRP – Contingency Projects Type of Project Number Budget Wastewater 16 52,282,000 Stormwater 3 12,980,000 Phased Funding 9 392,717,000 Project Totals: 28 457,979,000 FY24 CIRP – New Project Types Type of Project Number of Appropriation Budget % of Budget Asset Management Renewal 15 27,833,000 5 Cityshed 3 19,500,000 4 CSO 14 57,596,000 11 SSO 40 161,519,000 30 Treatment Plant 12 233,704,500 43 Districtwide 25 16,457,000 3 Stormwater 33 22,937,500 4 TOTALS: 142 539,547,000 100 FY24 Capital Improvement and Replacement Program Questions and Answers FY24 Next Steps FY24 Budget Meeting Schedule FY24 SBOP and Preliminary Budget Finance Committee Meeting Review (including CIRP) April 6, 2023 ; 8:00 a.m. • Publication of Public Hearing Notice April 28, 2023 (The notice will be published in the St. Louis Post-Dispatch, St. Louis American, St. Louis Business Journal, and on the MSD Internet Site) •FY24 Budget Follow-up Discussion Finance Committee Meeting May 02, 2023; Time: 7:45 a.m. • Budget Introduction Board of Trustee Meeting May 11, 2023; 5:00 p.m. • Public Hearing After Board of Trustee Meeting (Finding of Fact Committee) May 11, 2023; 6:00 p.m. • Budget Adoption Board of Trustee Meeting June 08, 2023; 5:00 p.m. * All meetings held at 2350 Market Street, Room 109. 27