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replacements for the Water, Sewer and Storm Drain funds are accounted for in the
<br /> Capital Improvement Program (CIP). The financial results of the CIP are being
<br /> presented to the Council in a separate report in November 2014.
<br /> WATER AND SEWER OPERATING FUNDS
<br /> Water Operations and Maintenance (O&M) Fund
<br /> The Water Operating Fund ended 2013/14FY with a positive operating balance of
<br /> $884,227 as shown in Table 6. Staff had projected a slight operating deficit at Midyear
<br /> of $83,754 due to the projected impacts of mandatory water conservation. The majority
<br /> of the variance is due to a reduction in water revenues ($1.119 million) being offset by a
<br /> considerably larger reduction in water purchases from Zone 7 and other operating
<br /> expenditures ($2.169 million). As a result of this, the ending fund balance has
<br /> increased to approximately $7.3 million. The adopted water rate increase effective
<br /> September 1, 2010 was designed to maintain the Water Operating Fund in a balanced
<br /> operating position with a minimum fund balance of $6.5 million. Staff is pleased to see
<br /> that operations are continuing to improve and that the minimum fund balance has been
<br /> exceeded. This positive financial impact in 2013/14FY was accomplished by
<br /> strategically managing the amount of purchased water (Zone 7 water) versus the
<br /> amount of water pumped from City wells. Staff will continue to manage this issue;
<br /> however, it may become more difficult to do if the drought continues in 2014/15FY.
<br /> Therefore, staff is projecting a slight loss in revenues as a result of the drought in
<br /> 2014/15FY. These additional monies from 2013/14FY operations will help to weather
<br /> any loss that may occur in 2014/15FY. Staff will continue to monitor the revenues and
<br /> expenditures of the Water operations. The next water rate review will need to be
<br /> adopted by the City Council no later than September 2015 as a result of Proposition 218
<br /> requiring all fees and charges with a CPI adjustment to be reviewed every five years.
<br /> Finally, the recommended year-end budget adjustments ($50,970) are for an increase in
<br /> the Repair and Replacement Reserves and the worker's compensation reserves for the
<br /> water operations.
<br /> Table 6. Water O&M and D ebt Service Funds —Amended Budget vs. Actual
<br /> Year-End
<br /> Recommended Year-End
<br /> Amended Budget Recommended
<br /> Water OBMIDebt Service Funds Budget Actual $Variance Adjustments Actual
<br /> Beginning Fund Balance $6,435,984 $6,435,984 $0 $6,435,984
<br /> Plus Revenues 21,637,488 20,518,090 (1,119,398) 20,518,090
<br /> Less Net Transfers (1,830,712) (1,861,527) (30,815) (1,861,527)
<br /> Less Expenditures (19,890,530) (17,721,366) 2,169,164 ($50,970) (17,772,336)
<br /> Ending Fund Balance $6,352,230 $7,371,181 $1,018,951 ($50,970) $7,320,211
<br /> Change in Fund Balance ($83,754) $935,197 $1,018,951 ($50,970) $884,227
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