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City of Pleasanton Mid-Term Budget Update • FY 2022/23 14
<br />Enterprise FundsEnterprise Funds
<br />Water Fund
<br />Revenues are projected to decrease by $3.1 million in FY 2022/23 to reflect drought mitigation and water
<br />conservation efforts. This is partially alleviated by a decrease in transfers-out for CIP ($1.1 million) and
<br />partially through a decrease in Zone 7 water procurement ($2.5 million). There is an increase in all other
<br />expenses of approximately $500,000. This increase consists of:
<br /> • $110,000 increase for water conservation hotline
<br /> • $75,000 increase for State Department of Water Resource Regulations
<br /> • $190,000 increase to pump additional water from wells
<br /> • $54,000 increase in existing maintenance contracts due to CPI increases
<br /> • $71,000 aggregate increase in various lines including: IVR translation services, training,
<br /> memberships, and parts purchased
<br />The ending fund balance is expected to be $7.8 million, which represents 26 percent of the operating
<br />expenses. The City’s policy requires reserves equal to a minimum of 30 percent of operating expenses,
<br />a maximum of 40 percent of operating expenses and a target of 35 percent of operating expenses.
<br />Over the last two years, several factors have impacted the decline of the fund balance. In FY 2019/20,
<br />the CPI increase was not implemented due to the COVID-19 based emergency. The current rate study
<br />expired two years ago, and existing rates have not kept up with the needs of the operation. There have
<br />also been unexpected emergency expenses related to repairs in lieu of ongoing needed maintenance
<br />of infrastructure, which has been deferred due to limited resources. The new rate study will help
<br />address the misalignment of resources versus needs, and is expected to be adopted in FY 2022/23 with
<br />the associated revenue impact occurring as early as first quarter of FY 2023/24.
<br />Table 8 summarizes the Water Operations and Maintenance Fund for the two prior fiscal years ending
<br />June 30th and presents FY 2022/23 Mid-Term Budget.
<br />Table 8Table 8
<br />Water Operations and Maintenance (O&M)Water Operations and Maintenance (O&M)
<br />FY 2022/23
<br />Water/Recycled Water (O&M)
<br />FY 2020/21
<br />Actual
<br />FY 2021/22
<br />Mid-Year
<br />Original
<br />Budget
<br />Recommended
<br />Adjustments
<br />Mid-Term
<br />Budget
<br />Beginning Balance, July 1 $13,291,359 $13,345,529 $9,743,263 - $9,743,263
<br />Revenues 32,935,660 30,580,541 35,624,541 ($3,114,000)32,510,541
<br />Net Transfers (5,673,556)(5,109,334)(5,197,017) 1,100,000 (4,097,017)
<br />Expenses
<br />Zone 7 Purchased Water (16,854,193)(16,000,000)(19,400,000) 2,500,000 (16,900,000)
<br />All Other Expenses (10,353,741)(13,073,473)(12,896,023) (503,799)(13,399,822)
<br />Total Expenses (27,207,934)(29,073,473)(32,296,023) 1,996,201 (30,299,822)
<br />Net Income $54,170 ($3,602,266)($1,868,499) ($17,799)($1,886,298)
<br />Ending Balance, June 30 $13,345,529 $9,743,263 $7,874,764 -$7,856,965
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