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Water Operations and Maintenance (O & M) and Debt ServiceFunds The Water Operating Fund highlights include: - Ending Fund Balance (un-audited and before carryovers) of $11 million. - $226,410 surplus of revenues and transfers compared to expenditures. - Water sales were $523,238 under the budget projections at $15.6 million. - Expenses (after carryovers of $431,532) were under budget by $639,191, including: / personnel costs ($326,539) / professional services ($83,216) / overhead charges by the General Fund ($115,756) Sewer Operations and Maintenance (O & M) and Debt Funds The Sewer Operating Funds highlights included: - Ending Fund Balance (un-audited and before carryovers) of $4.2 million. - Budgeted draw down of $227,464 from Fund Balance was actually slightly higher at $253,022 (after carryovers of $28,102) - Budget savings included primarily salary savings of $133,113 due to staff turnover/retirements and a reduction in overtime. Note that residential sewer charges are based on fixed rates and do not follow the same trends as water consumption (especially summer irrigation water). Therefore, the projected versus actual variances are often larger for water rate revenues than for sewer rate revenues, which include both local revenues and regional revenues [passed on to the Dublin San Ramon Services District (DSRSD) for sewer treatment and to the Livermore-Amador Valley Water Management Agency (LAVWMA) for export]. For Sewer Fund O&M, the minimum target level for reserves for this smaller enterprise is between 25%-30% of annual revenue (10% to 15% for contingency, 15% for two months cash flow), or about $3.0 million. Currently, the Operations & Maintenance (O&M) Fund does have a Fund Balance of $4.2 million. On the other hand, sewer replacement reserves (that reside in the CIP) are at less than optimum levels. A further review of replacement funding is currently in progress. Page 6 of 10