HomeMy Public PortalAboutFiscal Year 2020 Popular Annual Financial ReportPOPULAR ANNUAL FINANCIAL REPORT
Fiscal Year Ending June 30, 2020
METROPOLITAN ST. LOUIS SEWER DISTRICT
ST. LOUIS, MISSOURI
MSD PROJECT CLEAR
MSD Project Clear (MSDPC) is two utilities in one—responsible for approximately
7,000 miles of public wastewater and stormwater sewer systems in the St. Louis
region. MSDPC is investing billions of dollars over a generation to improve water
quality and minimize wastewater and stormwater issues by monitoring regulatory
compliance, planning, designing, and building community rainscaping, system
improvements, and performing an ambitious program of maintenance and repair.
MSD MISSION
To protect the public’s health, safety, and water environment by
responsibly providing wastewater and stormwater management.
TABLE OF CONTENTS
Directors’ Letter .....................................................................................3
MSD is an Essential Service – Getting the Job Done .......4
What We Do ............................................................................................6
Small Grants Program .......................................................................7
Public Education and Community Outreach ......................8
Year in Review ......................................................................................10
Looking Ahead .......................................................................................11
Balance Sheet .......................................................................................12
MSD Assets and Long-Term Obligations ...............................13
Income Statement.............................................................................14
Revenues and Expenses ..................................................................15
Cash Flow Statement ........................................................................16
Cash Flow Activities Comparison ...............................................16
Performance Against Budget and Credit Rating .............17 ON THE COVER
Pictured on the cover is Kevin Boyd, Operations Supervisor, getting his temperature checked before
beginning work with MSD. MSD has implemented mandatory, daily temperature checks on all sites
to protect employees and the public from the spread of COVID-19.
2 | METROPOLITAN ST. LOUIS SEWER DISTRICT POPUL AR ANNUAL FINANCIAL REPORT FY2020 | 3
We appreciate your interest in the Metropolitan St. Louis Sewer District (MSD) and are proud to
present our Popular Annual Financial Report for the Fiscal Year ending June 30, 2020 (FY20).
The COVID-19 pandemic presented unforeseen challenges for all, including MSD. Like many
organizations, we made adjustments to protect the health and safety of employees, contractors,
and the larger community, which you will learn more about in this report. What has not
changed, however, is our mission to protect the public’s health, safety, and water environment
by responsibly providing wastewater and stormwater management.
In all that we do, MSD is committed to improving water quality, serving the daily needs of
residents, and implementing improvements that will alleviate wastewater and stormwater
concerns and benefit the region for decades to come. In FY20, for example, MSD appropriated
funds for 143 new or continuing wastewater and stormwater design and construction projects.
This annual report provides a non-technical overview of MSD’s work and a snapshot of our most
recent fiscal year – July 1, 2019 to June 30, 2020. Within this report, you will learn how we are
carefully investing the funds we receive to maintain and improve our region’s wastewater and
stormwater systems. In fact, we are proud to share that MSD as a whole is financially improving.
In addition, you will find financial information for the past fiscal year that summarizes the
more in-depth financial review provided in our Comprehensive Annual Financial Report. Please
note that while the summary information provided within this document uses principles and
guidelines consistent with Generally Accepted Accounting Principles (GAAP), it has been
simplified for general audiences, and it is not GAAP-compliant. Both reports are available
online at www.msdprojectclear.org/about/fiscal-investor-relations/annual-reports/.
To request a printed copy of this information, contact MSD at 314-768-6260 or send an
email to customersvc@stlmsd.com.
The purpose of this report is to be informative and useful. As always, we welcome any comments
or suggestions on how we might improve future reports to better serve your interests and needs.
Respectfully submitted,
Brian Hoelscher, P.E. Marion Gee
Executive Director & CEO Director of Finance
Government Finance Officers Association of
the United States and Canada (GFOA) has
given an Award for Outstanding Achievement
in Popular Annual Financial Reporting to the
Metropolitan St. Louis Sewer District for its
Popular Annual Financial Report for the fiscal
year that ended June 30, 2019. The Award for
Outstanding Achievement in Popular Annual
Financial Reporting is a prestigious national
award recognizing conformance with the
highest standards for preparation of state
and local government popular reports.
In order to receive an Award for Outstanding
Achievement in Popular Annual Financial
Reporting, a government unit must publish a
Popular Annual Financial Report, the contents
of which conform to program standards of
creativity, presentation, understandability,
and reader appeal.
An Award for Outstanding Achievement in
Popular Annual Financial Reporting is valid for
a period of one year only. Metropolitan St. Louis
Sewer District has received a Popular Award
for the last eight consecutive years (fiscal years
ended 2012–2019). We believe our current report
continues to conform to the Popular Annual
Financial Reporting requirements, and we are
submitting it to GFOA to determine its eligibility
for another Award.
“
”
DIRECTORS’ LETTER
Award for
Presented to
Metropolitan St. Louis Sewer District
For its Annual
June 30, 2019
Executive Director/CEO
Financial Report
for the Fiscal Year Ended
Financial Reporting
Popular Annual
Achievement in
Outstanding
Text38:Missouri
Text53:
Government Finance Officers Association
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MSD IS AN ESSENTIAL SERVICE –
GETTING THE JOB DONE
It’s a big job managing the fourth largest sewer system in
the United States. Everyone who lives, works, or pays a visit to
the St. Louis region relies on the Metropolitan St. Louis Sewer
District (MSD) to keep our waterways clean and safe. Serving
over 1.3 million people, MSD brings decades of experience and
dedication to protecting the place we’re proud to call home —
a dedication that hasn’t wavered in spite of the challenges our world is facing as of late.
While the COVID-19 pandemic has radically changed the business landscape, the community’s
dependence on wastewater and stormwater services remains.
“This pandemic has disrupted our lives, our work, and our community in countless ways. It has
also brought out some of the best in us, including your continued dedication to serving our
customers,” wrote CEO and Executive Director Brian Hoelscher in a memo to MSD employees.
“I am optimistic that together we will overcome this challenge.”
As many organizations have done, MSD has adjusted its business practices to protect the health
and safety of employees, contractors, and the larger community. MSD is prepared to continue
providing customers with reliable stormwater and wastewater services, regardless of what
comes next.
As a critical infrastructure provider, much of MSD’s
work takes place within the community. In other words,
promoting a safe work environment for employees has
an impact on the community at large. As such, MSD
has taken additional measures to protect maintenance
crews, construction inspectors, and other field employees,
including:
• Providing additional vehicles to limit the number of
employees riding together
• Sanitizing vehicles between shifts
• Restricting employees from entering customers’ homes
and contractor facilities
To date, MSD’s more than 1,000 employees have done their
part to stay healthy and promote a safe workplace.
In addition to immediate and severe health concerns,
the COVID-19 pandemic has had a significant economic
impact on businesses, organizations, and individuals
alike. Wastewater utilities across the country have seen an
increase in payment delinquencies, a reduction in billable
water volumes, and decreased monthly revenues. Despite
this, MSD is doing its part to assist its customers, many of
whom are feeling the strain of the financial crisis. Late fees
were suspended for some accounts from 3/23/2020 through
6/30/2020. The District also encourages customers who may
have difficulty paying their wastewater bills to apply for the
customer assistance program; those who qualify can have
their sewer bills reduced by 50%.
As a public utility, MSD has an obligation, especially now,
to be a good steward of its customers’ money. To ensure
MSD can navigate the financial challenges of the pandemic,
the District has limited the use of overtime and delayed
all expenditures that are not critical to its operations. MSD
knows that the economy will eventually return to normal,
but as always, it will remain vigilant in seeking cost-effective
solutions to serve the community. See pages 12-17 of this
publication for a detailed overview of MSD’s finances in FY20.
The St. Louis region depends on MSD to provide a
vital service and construct necessary infrastructure
improvements crucial to the health of the St. Louis
community and water environment. MSD is confident that
the lessons learned through this hardship will make the
District more resilient than ever and remains committed to
serving its customers, adapting its business practices, and
growing stronger as an essential service.
The health of MSD’s employees is paramount. As such, MSD continues to listen to health
experts and follow Centers for Disease Control and Prevention (CDC) guidelines. The District
has shifted to an increasingly virtual business environment, instructing employees to work from
home when possible to reduce potential exposure and conducting meetings virtually or via
conference calls. Much of MSD’s essential work, however, cannot be done remotely.
To promote a healthy workplace for employees who continue to report to their worksites,
MSD has implemented several new policies, including:
• Closing all facilities to contractors and
visitors, unless necessary
• Implementing employee temperature
checks prior to entering the facility
• Increasing the frequency and intensity
of cleaning and sanitizing common
workstations
• Placing NanoSeptic® surfaces on high-touch
areas of the buildings to help protect
against viruses
• Adjusting employee schedules by staggering
start and end times, utilizing shared shifts,
and implementing alternate-day schedules
• Providing masks for all employees
How MSD is keeping
employees and customers
safe during the COVID-19
pandemic.
Workplace Changes
Economic Impact
6 | METROPOLITAN ST. LOUIS SEWER DISTRICT POPUL AR ANNUAL FINANCIAL REPORT FY2020 | 7
Coldwater
WWTP
Grand Glaize
WWTP
Fenton
WWTP
MissouriRiver
WWTP
Lemay
WWTP
LowerMeramec
WWTP
I-270
I-270
I-270
I-44
I-44
I-64
I-64
I-255
I-55
I-170
I-70
I-70
Bissell Point
WWTP
MSD Wastewater Treatment
Plants (WWTP)
Service Area
SOURCES: Northeast Ohio Regional Sewer District, Baltimore City Department of Public
Works, KCWater, City of San Diego, Metro Government of Nashville & Davidson County,
Tennessee, and San Antonio Water System (Rates based on 10 CCF)
The Metropolitan St. Louis Sewer District owns, operates,
and maintains a sewer system that consists of wastewater,
stormwater, and combined collection sewers — carrying
both wastewater and stormwater — pumping stations, and
wastewater treatment facilities that have been incorporated
into one entity over the last 60-plus years.
MSD provides a variety of additional services, including
monitoring of industrial waste, issuance of pretreatment
discharge permits, plan review and approvals, issuance of
connection permits, public education, and customer service. It is
one of the largest and most complex systems in the United States.
MSD is two separate utilities within one organizational structure:
WHAT WE DO
MSD’s Dual Function
Residential Wastewater User Charge
Cleveland
Baltimore
St. Louis
Kansas City
San Diego
Nashville
San Antonio
$108.10
$92.55
St. Louis and Other Municipalities
454 sq. miles of
St. Louis County
(87%)
66 sq. miles of
St. Louis City
(100%)
1.3 MILLION SERVED
520 SQUARE MILE
SERVICE AREA
427,000 accounts
Wastewater — collect “used”
water disposed of in sinks,
toilets, and floor drains by
households and businesses,
and then treat it to regulatory
standards before returning it to
the region’s waterways.
Stormwater — operate and
maintain the public storm
sewer system and help
coordinate regional efforts to
address pollution carried in or
caused by stormwater runoff.
In order to help reduce the amount of
stormwater runoff in St. Louis, MSD Project
Clear partners with the Missouri Botanical
Garden to administer the Rainscaping Small
Grants Program for landowners. Rainscaping
is any combination of plantings, water features,
catch basins, permeable pavement, and other
features that help manage stormwater as
close as possible to where it falls. When used
effectively, rainscaping can reclaim stormwater,
helping it absorb into the soil to reduce sewer
overflows and minimize basement backups.
Landowners can apply to MSD’s Rainscaping
Small Grants Program and receive up to $4,000
to install rainscaping features.
MSD is implementing several changes to the
Small Grants Program since in-person meetings
are no longer possible. Beginning in FY21:
• Potential applicants are no longer required
to attend a Landowner Orientation meeting.
Instead, prior to submitting an application,
applicants will be required to view a
series of instructional videos and answer
questions before advancing to the next
video. MSD is in the process of adding these
new videos to the website.
• The Small Grants Program will move to
a flexible time frame. Generally, initial
applications will become available in the
fall, with awards announced the following
year prior to the spring planting season.
Application requirements and more information
on the small grants program can be found at
www.msdprojectclear.org/rainscaping.
SMALL GRANTS
PROGRAM UPDATES
In FY20, MSD issued 135 small grants
totaling $495,000 that facilitated
stormwater system improvements in the
following locations:
55 - Mississippi River Combined Sewer
Overflows (CSO) @ $4,000 = $220,000
35 - River des Peres CSO @ $4,000 = $140,000
45 - Remaining MSD Service Area (Water
Quality Grants) @ $3,000 = $135,000
$66.64
$66.64
$49.36
$75.07
$73.45
8 | METROPOLITAN ST. LOUIS SEWER DISTRICT POPUL AR ANNUAL FINANCIAL REPORT FY2020 | 9
PUBLIC EDUCATION AND
COMMUNITY OUTREACH
Some events like the Greater St. Louis Hispanic Festival
and the Builders of St. Louis Home & Garden Show were
held earlier in the fiscal year, allowing MSD to engage
with the public in-person. At the Home and Garden Show
held in early March at America’s Center, for example, MSD
distributed educational materials and reusable bags to
over 3,000 show attendees.
For the last three months of FY20, however, community outreach looked much different. MSD
turned its focus to a digital strategy to educate residents about wastewater and stormwater
issues, as well as MSD programs and services.
New Website Launch
In March, MSD launched a new customer-focused website, www.msdprojectclear.org,
updating the version launched five years ago. The website features a clean and fresh look with
more interactive elements. It combines the two previous sites stlmsd.com and projectclearstl.org.
In FY20 from March 7 – June 30, the new website had a total of 230,915 page views with 88,243
unique users.*
*During the technology switch to Office 365 (from March 7 – April 22), no data was collected.
Social Media Changes
Along with the rebranding of the website,
MSD consolidated all of its social media
channels under the MSD Project Clear brand:
• MSDProjectClear
• @MSDProjectClear
• @msdprojectclear
• msdprojectclear
Staying engaged with customers is an
important objective for MSD, and a quick peek
at the website and social media numbers
shows that MSD is maintaining consistent
communication with the communities it
serves. The top-performing Facebook post in
FY20 garnered 4,200+ engagements. Overall,
Facebook impressions saw an increase of
90.5% with 691,376 impressions, and there
were 31,304 engagements on Facebook in
FY20, an increase of 110% from FY19.
Instagram impressions were up 517% in FY20
with 86,357 impressions, and engagement
grew 79% with a total of 1,713 engagements.
On Twitter, MSD earned 192,136 impressions,
an increase of 190% in FY20. Additionally,
there were 4,351 engagements for an increase
of 123%.
Follow us for news and updates, fun facts about
MSD, educational videos, and so much more.
Second highest-performing post on MSD Project Clear’s Facebook page in FY20.
Highest-performing post on MSD Project Clear’s Facebook page in FY20.
10 | METROPOLITAN ST. LOUIS SEWER DISTRICT POPUL AR ANNUAL FINANCIAL REPORT FY2020 | 11
YEAR IN REVIEW
Capital Improvement
MSD made 143 appropriations for new or
continuing wastewater and stormwater design
and construction projects in FY20, totaling
$271.4 million.
Diversity
MSD is committed to cultivating a diverse
workforce and developing programs to assist
under-utilized minority and women-owned
firms. MSD continues to implement programs
and create capacity-building opportunities to
help fulfill this commitment.
In FY20, minority-owned firms performed
$31,435,398 on capital construction projects,
representing 14.03% of the District’s capital
program spending for the fiscal year.
Women-owned firms performed $22,075,816
in capital construction work, representing
9.86% of the District’s capital construction
program spending. Minority-owned design
firms (professional services) accounted for
$6,245,859, or 35.82%, of payments made to
design firms, and women-owned design firms
were paid $1,759,861, or 10.10%, of payments
made to design firms in FY20.*
During that same timeframe, minority
workforce participation on capital
construction projects was 196,065 hours, or
26.78%, and women participation was 52,513
hours, or 7.18%, of total hours worked on
capital construction projects by contractors.
Minorities and women comprised 17.71% and
37.38%, respectively, of the staff of design
firms with workplace participation goals.*
To learn more about MSD’s diversity-related
initiatives, visit www.msdprojectclear.org/
diversityreport.
*Numbers are as of September 2020. Please note, as project
documentation is finalized, precise numbers may fluctuate.
Peak Performance Award
In 2020, MSD was awarded top environmental
honors from the National Association of
Clean Water Agencies (NACWA), which
recognized six MSD treatment plants with
Peak Performance Awards for excellence in
compliance with National Pollutant Discharge
Elimination System (NPDES) permit limits in
the 2019 calendar year.
Four MSD treatment plants — Grand Glaize,
Lower Meramec, Fenton, and Missouri River
— received the Platinum Peak Performance
Award, which honors treatment plants that
have completed at least five consecutive years
of 100 percent NPDES permit compliance.
The Bissell Point Wastewater Treatment Plant
received the Gold Peak Performance Award,
honoring plants that have achieved 100
percent compliance with the NPDES permit
in the previous calendar year. The Coldwater
Creek and Lemay treatment plants received
the Silver Peak Performance Award for having
no more than five NPDES permit violations in
the 2019 calendar year.
LOOKING AHEADWastewater Capital Rate Update
In September 2019, the Rate Commission chair
briefed the MSD Board of Trustees on the fiscal years
2021–2024 Rate Recommendation Report, including a
wastewater rate proposal seeking to fund a four-year,
$1.58 billion capital improvement program to meet
regulatory and system improvement needs.
The Board of Trustees accepted the Rate Commission’s
recommendations, which would have resulted in
voters deciding on bonding options in April 2020. The
pandemic has delayed the vote until at least April 2021.
The fiscal year 2021 increase of 1.5% (with or without bond
authorization) would have been effective July 1, 2020;
however, MSD postponed the increase until October
1, 2020. The chart to the right indicates FY21 — FY24
increases with and without bond authorization.
MSD Project Clear
In FY21, MSD has plans for 137 new, ongoing, or
continued wastewater project appropriations totaling
$366.7 million. These projects are funded primarily from
the Sanitary Replacement fund and represent $23.9
million in continued projects from the previous fiscal
year, and $342.8 million in new and ongoing projects.
In addition to operating the existing stormwater system,
MSD Project Clear plans 32 stormwater design and
construction projects in FY21, including continued
projects from FY20, totaling $25.0 million.
Disparity Study
In 2019, MSD commissioned Mason Tillman and
Associates to produce the next five-year period
(2013-2017) analysis of its prime and subcontractor
performance. The initial Disparity Study completed in
2012 became the catalyst for the expansive offering of
initiatives now in place, including more inclusive contractor
goals, worksite inspectors, on-the-job training, internships,
community partnerships, and other programs.
The update will analyze MSD’s current diversity
programs, practices, and results; measure inclusion and
availability; and determine what advancements MSD
has accomplished on projects in terms of workforce.
MSD anticipates releasing and implementing the results
by the end of FY21 (June 30, 2021).
Wastewater Capital
Rate Increase with
Bond Authorization
(Projects are funded with cash and debt)
Wastewater Capital Rate
Increase without Bond
Authorization
(Projects are funded with cash)
FY21 FY22 FY23 FY24
1.5%3.4%3.5%3.7%
FY21 FY22 FY23 FY24
1.5%15.4%17.1%13.0%
12 | METROPOLITAN ST. LOUIS SEWER DISTRICT POPUL AR ANNUAL FINANCIAL REPORT FY2020 | 13
FY20 FY 19 FY 18
ASSETS
Current, restricted, and other assets $787,043 $821,030 $882,667
Capital assets (net of accumulated depreciation) 3,847,889 3,631,716 3,446,232
Total Assets 4,634,932 4,452,746 4,328,899
DEFERRED OUTFLOWS OF RESOURCES
Bonds and notes payable-deferred loss on refunding 5,889 11,343 12,099
Pension-related outflows 15,673 34,238 17,333
OPEB-related outflows 2,843 1,246 1,278
Total Deferred Outflows of Resources 24,405 46,827 30,710
LIABILITIES
Current liabilities 153,611 149,991 140,082
Non-current liabilities 1,722,223 1,723,830 1,722,146
Total Liabilities 1,875,834 1,873,821 1,862,228
DEFERRED INFLOWS OF RESOURCES
Bonds and notes payable-deferred
gain on refunding 1,393 — —
Pension-related inflows 7,150 4,341 6,065
OPEB-related inflows 4,331 887 —
Total Deferred Inflows of Resources 12,874 5,228 6,065
NET POSITION
Net investment in capital assets 2,184,736 2,063,519 1,968,740
Restricted 97,034 127,414 129,579
Unrestricted 488,859 429,591 392,997
Total Net Position $ 2,770,629 $ 2,620,524 $ 2,491,316
Definitions
Current, restricted, and other assets: all assets other than capital assets that are owned or due to the District.
Capital assets (net of accumulated depreciation): the total value of all capital assets including all sanitary infrastructure,
general plant and equipment, and land.
Deferred outflows of resources: the use of resources that will be applied to future periods.
Current liabilities: money owed by the District and due within 12 months.
Non-current liabilities: money owed by the District that is due more than 12 months in the future.
Deferred inflows of resources: the purchase of resources that will be applied to future periods.
Net investment in capital assets: the value or net worth of all capital assets after related liabilities are deducted.
Restricted: the value or net worth of all assets designated for specific purposes after related liabilities are deducted.
Unrestricted: the value or net worth of all remaining assets after remaining liabilities are deducted.
What it tells you
A Statement of Net Position, also known as a Balance Sheet, is a financial statement that summarizes what
MSD owns and owes at a given point in time. It also shows our net worth at that specific point in time.
Our FY20 Balance Sheet shows that:
• Overall, the District as a whole is financially improving as evidenced by the increase in the Total Net Position.
• MSD’s assets and deferred outflows exceed liabilities and deferred inflows by $2.8 billion.
• Overwhelmingly, MSD’s assets are in the form of capital assets. The $3.8 billion in net capital assets is split
into the five categories shown on page 13.
• Of the $1.9 billion in liabilities, $1.7 billion are in the form of bonds and notes payable.
BALANCE SHEET
Condensed Statements of Net Position (dollars in thousands)
The financial information included is derived from the Comprehensive Annual Financial Report and presented in
conformity with Generally Accepted Accounting Principles.
Financials Financials
MSD ASSETS
Condensed Statements of Capital Assets Net of Depreciation (dollars in millions)
What We Own
(in millions)
MSD LONG-TERM OBLIGATIONS
Bonds and Notes Payable (Revenue Bonds and Direct Loan Balances Only)
What We Owe
54%
26%
17%Collection and Pumping Plant $2,095
Construction in Progress 1,013
Treatment, Disposal Plant, and Equipment 639
Land 78
General Plant and Equipment 23
TOTAL FY20 ASSETS $3,848
<1%
<2%
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2019 202020112012201320142015201620172018
14 | METROPOLITAN ST. LOUIS SEWER DISTRICT POPUL AR ANNUAL FINANCIAL REPORT FY2020 | 15
FY20 FY19 FY18 FY17 FY16OPERATING REVENUES
Sewer service charges $430,398 $399,929 $364,165 $330,873 $306,119
Recovery (Provision) for doubtful (5,612) (4,349) (2,990) (2,513) (4,107)
sewer service charge accounts
Licenses, permits, and other fees 3,012 3,063 3,777 4,036 3,620
Other 10,193 2,478 3,359 1,095 14,226
Total Operating Revenues 437,991 401,121 368,311 333,491 319,858
NON-OPERATING REVENUES
Property taxes levied by the District 35,439 34,108 33,749 32,458 25,671
Investment income 16,259 16,699 7,406 2,903 4,636
Rent and other income 302 301 254 106 103
Total Non-Operating Revenues 52,000 51,108 41,409 35,467 30,410
Total Revenues 489,991 452,229 409,720 368,958 350,268
OPERATING EXPENSES
Pumping and treatment 62,030 63,197 60,735 60,203 59,100
Collection system maintenance 47,652 45,617 44,786 43,928 42,853
Engineering 11,628 11,447 11,218 11,290 10,998
General and administrative 65,947 67,462 59,012 58,535 55,315
Water backup claims 4,653 5,600 1,557 5,035 7,631
Depreciation 87,633 83,640 81,326 81,194 83,984
Asset management 17,195 13,755 15,131 14,893 13,215
Total Operating Expenses 296,738 290,718 273,765 275,078 273,096
NON-OPERATING EXPENSES
Net loss on disposal and
sale of capital assets 962 971 1,834 673 325
Non-recurring projects and studies 12,458 15,628 9,296 7,459 11,000
Interest expense 36,119 33,082 36,695 31,251 28,943
Total Non-Operating Expenses 49,539 49,681 47,825 39,383 40,268
Total Expenses 346,277 340,399 321,590 314,461 313,364
INCOME BEFORE CAPITAL 143,714 111,830 88,130 54,497 36,904 GRANTS AND CONTRIBUTION
Capital grants and contributions 6,391 17,378 26,077 9,614 12,037
CHANGE IN NET POSITION 150,105 129,208 114,207 64,111 48,941
Net position – beginning of year 2,620,524 2,491,316 2,391,168 2,327,057 2,278,116
Effect of adoption of GASB 75 — — (14,059) — —
NET POSITION – END OF YEAR $ 2,770,629 $2,620,524 $2,491,316 $2,391,168 $2,327,057
INCOME STATEMENT
Condensed Statements of Revenues, Expenses, and Changes in Net Position (dollars in thousands)
Financials
Definitions
Operating revenues and expenses: all income and expenses received from the District’s daily normal business.
Non-operating revenues and expenses: all income and expenses not related to the District’s daily normal business.
What it tells you
A Statement of Revenues, Expenses, and Changes in Net Position, also known as an Income Statement,
tells you where MSD gets its funds and how they are spent. It also shows how much money MSD made
or lost over a specific period of time.
Our FY20 Income Statement shows that:
• Sewer service charge revenue increased as a result of the scheduled rate increase that occurred in FY20.
• Operating expenses increased due to higher depreciation and asset management related to increased
sewer inspection costs.
FY20 EXPENSES
Year ended June 30, 2020 (dollars in thousands)
Where The Money Goes
Financials
FY20 REVENUE
Year ended June 30, 2020 (dollars in thousands)
Where The Money Comes From
Sewer Service Charges, Net $424,786
Other (in Detail)
Property taxes levied by the District (7.3%) 35,439
Investment income (3.6%) 16,259
Other operating revenues (.5%) 10,193
Capital grants and contributions (3.7%) 6,391
Licenses, permits, and other fees (.7%) 3,012
Rent and other income (.1%) 302
TOTAL REVENUE $496,382
Employment Costs $115,576
Depreciation 87,633
Contracted Services 52,776
Interest Expense 36,119
Other (in Detail)
Utilities (5%) 15,771
Non-recurring projects and studies (4.6%) 12,458
Materials and supplies (3.7%) 12,045
Other operating expenses (.9%) 5,656
Insurance (1.1%) 4,158
Chemical supplies (1.1%) 3,123
Net loss on disposal and sale of capital assets (.3%) 962
TOTAL EXPENSES $346,277
14%
33%
25%
86%
17%
15%
10%
16 | METROPOLITAN ST. LOUIS SEWER DISTRICT POPUL AR ANNUAL FINANCIAL REPORT FY2020 | 17
Operating Activities
Non-Capital
Financing Activities Capital Activities Investing Activities-350,000
-300,000
-250,000
-200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
200,000
250,000
FY20 FY19 FY18
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$18
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$16
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CASH FLOW STATEMENT
Condensed Statements of Cash Flows (dollars in thousands)
CASH FLOW ACTIVITIES COMPARISON
(dollars in thousands)
Financials
FY20 FY 19 FY 18
Cash flows from operating activities $217,829 $185,226 $160,989
Cash flows from non-capital financing activities 34,983 33,850 33,181
Cash flows from capital and related financing activities (306,220) (310,046) (72,534)
Cash flows from investing activities 93,779 113,338 (135,363)
Net increase (decrease) in cash and cash equivalents 40,371 22,368 (13,727)
Cash and cash equivalents at beginning of year 56,754 34,386 48,113
CASH AND CASH EQUIVALENTS – END OF YEAR $97,125 $56,754 $34,386
Definitions
Cash flows from operating activities: all cash received or spent related to MSD’s daily normal business activities.
Cash flows from non-capital financing activities: all cash received or spent related to taxes.
Cash flows from capital and related financing activities: cash received or spent related to construction of MSD’s infrastructure.
Cash flows from investing activities: cash received or spent related to investing MSD’s cash reserves.
What it tells you
A Cash Flow Statement summarizes both the cash and the net cash coming in and going out of MSD
during a given period.
Our FY20 Cash Flow Statement compared to the prior year shows that:
• Cash flows from operating activities increased due to increased receipts from customers.
• Cash flows from non-capital financing activities increased due to more tax revenue collected.
• Cash flows from capital and related financing activities increased as a result of more bond proceeds
and premiums received during FY20.
• Cash flows from investing activities decreased due to more cash spent on purchase of investments
during FY20.
Variance Explanation
CIRP came in under budget for FY20, primarily due to postponed work. Postponements can occur for various
reasons, including easement acquisition delays, scope revisions, and delays in choosing contractors. These delays
contributed $75 million to the variance. In addition, cancelled projects or completed projects coming in under budget
resulted in savings of $7 million. The remaining savings are attributed to projects under budget either from good bids
or reduced scope.
Debt Service expenses were unfavorable for the District in FY20.The District took advantage of lower market rates
to refinance a portion of the Series 2012A bonds previously issued at rates ranging from 2.5% to 5.3%, with Series
2019C bonds having interest rates ranging from 1.8% to 3.3%. Debt service payments over the next 25 years will be
$98.7 million lower than if the refinancing had not taken place. However, the financial statements for FY20 reflect a
one-time increase in debt service expenses due to a required upfront payment of interest accumulated prior to the
refinancing.
Operating expenses came in under budget for FY20. The largest of the variances was $6.4 million in personnel
services primarily due to vacancies. Supply expenses were favorable by $1.9 million, with machinery & equipment
parts and construction & building supplies making up over half of that savings, along with approximately $558
thousand in savings from chemical and instrumentation supplies. Utilities contributed to the District’s favorable
expense variance by finishing under budget by $1.5 million, and contractual services expenses were favorable by
$2.6 million primarily due to machinery & equipment services. Capital outlay offset a portion of these savings, with
expenses exceeding the budget by $1.8 million primarily for processing equipment at the treatment plants and pump
stations. It was cost effective for the District to replace older equipment versus expending additional dollars
to maintain existing equipment.
What it tells you
A credit rating provides an assessment of an organization’s credit worthiness, based on its history of
borrowing and repayment of funds, as well as its assets and liabilities. A poor credit rating makes it more
difficult to find financing and often results in higher interest rates.
As the chart below illustrates, MSD has premium credit, with consistent ratings at the top of each credit
rating agency’s scale. On a scale of Aaa to C, MSD earned an Aa1 rating from Moody’s. Similarly, on a scale
of AAA to D, MSD earned AAA and AA+ ratings from Standard & Poor’s and Fitch, respectively. MSD has
demonstrated to creditors and credit rating agencies its ability to manage large annual capital plans. The
District’s solid financial management, including close monitoring of its financial performance, strong debt
coverage, and liquidity also contribute to these ratings, which have remained constant the past three years.
What it tells you
In MSD’s case, it shows that MSD has been a good steward of the funds allocated to the District.
FY20 FY19 FY18
Moody’s Aa1 Aa1 Aa1
Standard & Poor’s (S&P) AAA AAA AAA
Fitch AA+ AA+ AA+
Expense
Category
Budget
Expenses
Unspent
Budget
Capital Improvement
and Replacement
Program (CIRP)
$350.1M
245.0M
105.1M
Debt Service
$118.7M
140.8M
(22.1)M
Operating
$215.9M
205.3M
10.6M
TOTAL
$684.7M
591.1M
93.6M
CREDIT RATING
Financials
PERFORMANCE AGAINST BUDGET
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Metropolitan St. Louis Sewer District
Metropolitan St. Louis Sewer District
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