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ENTERPRISE FUNDS The City currently has six Enterprise Funds as follows: • Storm Drain Fund • Callippe Preserve Golf Course Fund • Para Transit Fund • Water O &M Fund • Sewer O &M Fund • Cemetery Fund. Only the Operations & Maintenance (O &M) and Debt Service portions of these enterprises are reflected in the Operating Budget. Capital improvements and replacements for the Storm, Water and Sewer funds are accounted for in the Capital Improvement Program (CIP). The financial results of the CIP will be presented to the Council in January 2011. WATER AND SEWER OPERATING FUNDS Water O &M Fund The Water Operating Fund ended 2009 /10FY with a deficit which was less than originally projected in the Amended Budget as shown in Table 5. In July 2010 when staff discussed the proposed water rate increase with Council, staff knew that expenditures in the Water Operating Fund were exceeding revenues by a considerable amount. The adopted water rate increase effective September 1, 2010 was designed to maintain the Water Operating Fund in a balanced operating position with a minimum fund balance of $6.5 million. Table 5. Water Operations and Maintenance (O &M) and Debt Service Funds — Amended Budget vs. Actual % Actual vs Water O &M /Debt Service Funds Amended Budget Actual Variance Budget Beginning Fund Balance $ 8,356,586 $ 8,356,586 $ - Plus Revenues $ 17,614,186 $ 15,493,084 $ (2,121,102; -12.0% Less Net Transfers $ (664,075; $ (842,794; $ (178,719` 26.9% Less Expenditures $ 19,506,359 $ 16,325,151 $ (3,181,208; -16.3% Ending Fund Balance $ 5,800,338 $ 6,681,725 $ 881,387 15.2% The Water Operating Fund highlights include: ➢ Ending Fund Balance of $6.68 million; approximately $881,000 more than anticipated in the Amended Budget. ➢ Expenditures (including a transfer to the Water Replacement Fund of $.9 million) exceeded revenues by $1.67 million. ➢ Water revenues of $15.5 million were $2.1 million less than forecasted and was due mainly to continued conservation by the water customers and the implementation of the rate increase in September 2010 rather than in January 2010 as was originally anticipated in the Amended Budget. ➢ Expenditures were less than budget mainly in the area of purchased water from Zone 7 due to customers consuming less water than anticipated. Page 4 of 10