Eldorado Area Water and Sanitation District

1 Hacienda Loop, Santa Fe, NM 87508, 505-466-2411

FINANCE

Proposed FY 2009 Budget Slides for Presentation on 6 May 2008, Regular Board Meeting

Eldorado Area Water and Sanitation District FY2009 Budget Overview

The District's annual budget is organized into four sections:

1.) Projected Revenues: income from water sales, system fees, taxes collected and interest earned on the District's cash accounts

2.) Projected Expenses: operating, maintenance, administrative expenses, debt service payments for the 2004 Series GO and the 2005 Series Revenue bonds, and District-funded capital expenditure (utility replacement items such as pumps and capital improvements, such as refurbishing wells)

3.) Grant-funded capital improvement projects (CIP) budget. Grants come primarily from the NM legislature. The District has recently received preliminary notification that it has been awarded a $75,000 grant from the New Mexico Water Trust Board for preliminary expenses for a well.

4.) Projected Reserves at fiscal year-end. The summary of the proposed budget on the back of this overview indicates that the District's total cash reserves will increase by approximately 2% by the end of FY2009 (June 30, 2009).

Highlights of the proposed budget include:

The proposed FY2009 budget was prepared without projecting the outcome of the PRC rate hearing in progress. Therefore, the FY09 budget is as close as possible to the adjusted FY08 budget.
Water revenue projected for FY2009 is essentially the same (100.1%) as projected for FY2008.
FY09 operating expenses are set at 100.1% of the adjusted budget for FY2008.
Budget for engineering & project management expense associated with District capital projects has been increased by 37%. This is the single largest increase in the FY2009 budget. The services covered by this budget category are necessary in order to implement the District's planned Capital Improvement projects.
Budget for legal expense has been increased by 2.4%. However, final costs for the defense of the District's rate increase proposal before the PRC will not be known until sometime in the fall of 2008. Final costs for defense of the District's permit request for well #17 will not be known until sometime in the winter of 2008. It is possible that a budget increase will be required sometime in FY2009 to cover legal expenses for the fiscal year.
FY09 planned CIP are:

Tank Improvements- install overflows per Sanitary Survey: $120,000

Install air conditioning units in 11 well houses to prevent hypochlorite pumps from seizing: $16,500

Long-term improvements to Wells #9 & 10: $50,000

Tank Improvements – Add booster pump & lines to #4: $100,000

Meter Replacement, Initial program: $100,000

Upgrade System Mapping (grant funded, non-CIP): $50,000
The District is required to submit a balanced budget to the N.M. Department of Finance. In order to balance the proposed FY2009 budget, approximately $277,400 of the District's expenses will be paid from the District's cash reserves. Operating expenses will be covered by a draw from cash reserves accumulated in the drought year of 2006. District–funded Capital expenditures will be covered by exhausting the cash set aside from the Revenue Bond sale for such expenditures. Withdrawals from District reserves are shown at the bottom of section 1 in the summary of the District's proposed budget for FY2009.
It is estimated that the District will begin the fiscal year with cash reserves of approximately $2,033,000. The reserves are divided into a number of internal accounts based on what the money may be used for. Approximately 14% of the reserves are generally available for operating expenses, and another 8% is available for emergencies. 10 % is reserved for Revenue Bond debt service. The rest of the cash in the reserves (approximately $1,245,000) may not be used for operating expenses. All but a small amount of this is for repaying the District's bond debt.
The District's proposed FY2009 budget will meet DFA requirements and will maintain the debt service and other cash reserves at fiscally prudent levels as set by District policy.

The table on the following page summarizes the District's proposed budget for FY2009.

Eldorado Area Water and Sanitation District			DRAFT Budget as of April 15, 2008			BUDGET BY SOURCES OF FUNDS
					Comment	Water sales	Property Taxes	District-funded capital	Grant-funded capital
PROJECTED REVENUES
	Water sales	1,821,450				1,821,450
	New system user service fees	112,250				112,250
	Total water sales & service fees		$1,933,700		No change from FY08
	Gross receipts collected	96,713			cost neutral	96,713
	Property tax revenue	811,050					811,050
	Total tax revenue		$907,763
	Interest income	82,200			$70,000 interest on reserves available to pay operating exp.	70,000	12,200
	Total interest income		$82,200
	Water Rights fees	190,000				190,000
	Amount from reserves to meet Expenses	277,401				157,791		119,610
	Other sources of funds		$467,401
	Total revenues			$3,391,064
PROJECTED EXPENSES						Operating expense	GO bond debt service	Capital expenditure	Grant-funded cap.
	Employee salaries, wages, benefits	180,411				180,411
	Travel expenses	3,100				3,100
	Contractual fees	1,238,150				1,238,150
	Supplies	9,000				9,000
	Other operating costs	202,330				202,330
	Scheduled maintenance	25,000			New addition to Operating Budget	25,000
	Capital projects	119,610						119,610
	Total operating expenses		$1,777,601
	Gross receipts paid	96,713			cost neutral	96,713
	Total taxes		$96,713
	Revenue Bond debt service	503,500				503,500
	GO Bond debt service	730,100					730,100
	GO Bond administrative expenses	10,988					10,988
	Total debt repayment		$1,244,588
	Reserves: Increase in Restricted Accts	272,162			Water Rights Restricted Acct. Increase	190,000	82,162
	Total contribution to reserves		$272,162
	Total expenditures			$3,391,064
			Total Revenue Less Total Expenditures:	$0
								Note: Disbursements for Grant Funded Projects are made as the work is completed. Grant funds are not shown above as revenue.
GRANT-FUNDED CAPITAL IMPROVEMENT PROJECTS (CIPs)
1	Tank improvements: install overflows	120,000							120,000
2	Air conditioning to 11 well houses for pumps	16,500							16,500
3	Long-term improvements to Wells #9 & 10	50,000							50,000
4	Tank improvements: Booster station at #4	100,000							100,000
5	Meter Replacement: Initial program	100,000			balance funded from District Capital Rsrve				30,390
6	Upgrade system mapping	50,000							50,000
	Total Capital Improvement Projects		$436,500
					Note: Engineering and project management expenses reported in Operating Expenses
PROJECTED RESERVES (FY09 year-end)
	GO Bond accumulated payment reserve	760,355			Estimated FY09 year-end balance, increase of $82,162 over FY08		760,355
	Cash on Hand & Operating Reserve	357,755				357,755
	Revenue bond accumulation payment	211,667			5 months accumulation	211,667
	Revenue bond escrow	508,500				508,500
	Water Rights reserve	248,000			To purchase future water rights; increase of $190,000 over FY08	248,000
	Restricted capital account	0						0
	Estimated Total reserves, 6/30/2009		$2,086,277

REQUEST FOR PROPOSALS TO PERFORM DISTRICT AUDIT

FY 2008 Budget

FY 2006 Audit Report