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The net increase in expenditures includes additional $760,000 for increased Zone 7
<br /> water purchases due to City-owned underground wells, which previously accounted for
<br /> approximately 25 percent of city's water supply but currently not in operation, $270,000
<br /> increase in miscellaneous supplies, equipment, and contracts for ongoing repairs and
<br /> maintenance, $265,000 for a valve truck purchase, $200,000 for increased recycled
<br /> water purchases, $153,000 increase for consultant service fees, generator rental costs,
<br /> mailings, supplies and postage for drought notices.
<br /> The result of these adjustments is a decrease in net income of$2.1 million and an
<br /> estimated ending fund balance of$6.3 million which equals 20 percent of the total
<br /> operating expenses and is below the recommended minimum of 30 percent. The City's
<br /> reserve policy requires reserves to stay between 30 and 40 percent with a target of 35
<br /> percent. Please note this fund balance includes an unrealized loss of $988,000.
<br /> Excluding this unrealized loss, the revised ending fund balance is $7.3 million, which is
<br /> equivalent to 23 percent of the operating expenses.
<br /> The City is in the process of conducting a comprehensive fee study, and a water supply
<br /> study is also underway. The results of the water supply study and potential cost
<br /> increase together with anticipated capital needs will be incorporated into the fee study.
<br /> The goal is to both maintain the high level of water service and to continue to invest to
<br /> maintain the infrastructure. Once the fee study has been finalized, the updated rates will
<br /> be presented to the City Council for consideration.
<br /> Table 5. Water Operations and Maintenance Fund Overview
<br /> FY 2022123
<br /> WaterlRecycled Water(O&M) Adjusted Budget Adjustments Mid-Year Budget
<br /> Beginning Balance, July 1 $9,929,751 $9,929,751
<br /> Revenues 32,510,541 (2,500,000) 30,010,541
<br /> Net Transfers (3,733,262) 2,000,000 (1,733,262)
<br /> Expenses
<br /> Zone 7 Purchased Water (16,900,000) (760,000) (17,660,000)
<br /> All other expenses (13,399,822) (888,088) (14,287,911)
<br /> Total Expenses (30,299,822) (1,648,088) (31,947,911)
<br /> Net Income ($1,522,543) ($2,148,088) ($3,670,632)
<br /> Ending Balance, June 30 $8,407,208 1 1 $6,259,119
<br /> NOTE The projected ending balance includes an unrealized loss of$988,259.
<br /> Sewer Operations and Maintenance Fund —As shown in Table 6 below,
<br /> recommended changes to the Sewer Operations and Maintenance Fund include
<br /> increasing revenues by $240,000 due to increased actual usage to date and increased
<br /> net expenditures of$1.5 million that are described in more detail below. The result of
<br /> this adjustment is a decrease in net income of $700,000 and an estimated ending fund
<br /> balance of$5.4 million which equals 29 percent of operating expenses. The City's policy
<br /> requires reserves equal to a minimum of 30 percent, a maximum of 40 percent and a
<br /> target of 35 percent. Please note this fund balance includes an unrealized loss of
<br /> $656,000. Excluding this unrealized loss, the revised ending fund balance is $6.1
<br /> million, which is equivalent to 32 percent of the operating expenses.
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