Review the Fiscal Year Adopted 2022 Budget
Review the most recent Audited Financial Statements
Budget Development – A budget prioritization process was utilized to create the requested budget. Each team manager works with staff and submits their requests and recommendations for new programs, equipment, and any significantly increased items when compared to the prior-year adopted budget. All requests are prioritized by each team, and then the priorities are compiled into an overall integrated priority list to best serve the District’s mission of delivering safe, reliable water to our customers.
The requested budget is presented to the Finance Oversight Committee (FOC) for review and discussions. The FOC makes a recommendation to move forward in the process to present the requested budget to the Board of Directors. The Board of Directors reviewed the requested budget with staff during a study session and recommends scheduling a rate hearing if necessary. After the Board of Directors reviews and discusses the requested budget and proposed rate and fee changes, a public information meeting is held to present the proposed changes to all customers. A rate hearing was held on May 10, 2021, to approve rates and fees for both Fiscal Year 2022 and Fiscal Year 2023. This is the District’s first two-year rate approval. In accordance with budgeting best practices, after the revenue was secured/approved, the requested budget was officially presented to the Board of Directors for a final review and adoption at the May 10, 2021, Board meeting.
Budget – Metro Water District has a $33.5 million Adopted Budget for Fiscal Year 2022, with $3.7 million budgeted for depreciation and amortization. The budget includes the following plan:
Operating Budget – $16,849,432 lower by 7.42%
- Major operating expense include salaries and benefits for employees (54.58 full-time equivalent positions) totaling $5,335,144 which is a 0.66% increase over the prior year Adopted Budget.
- CAP water purchases per the District’s CAP allocation / AVRP O&M, and regulatory fees accounting for another large portion of the budget and has decreased 19.75% at $2,772,89.
- Other operating expenses include consultant/contract services have increased 14.18% at $1.4 million, general operating expenses increased 6.83% at $1.37 million. The cost of power increased 4.43% at $1.18 million, and supplies have increased 1.83% at $0.83 million.
- Principal and interest on outstanding debt service is lower by 23.86% at $3,350,373.
- Other budget disbursements include a contingency for sick and vacation payout liabilities of $110,380, and a $500,000 contingency in case of an emergency.
Investments to Support the District – $690,323
Capital investments to support the District’s mission include a three-person maintenance crew $340,428, parking lot overlay $210,500, and variable frequency drive $44,000. The remaining $95,395 of funding to be used for fixed network upgrade, an IT server for telemetry, copier and plotter lease buyouts, a variable frequency drive, roll-up door motor, historian tag license, records management, and floor replacement in the crew room.
Capital Improvement Program – $8,212,222
The entire capital improvement program will be cash-funded again this fiscal year. With $5,059,248 planned for the Northwest Recharge Recovery and Delivery System project and $3,152,974 planned for other District projects. An additional $4,032,318 of outside funding for the Northwest Recharge Recovery and Delivery System Project will be paid for by the collaborative partnership with the Town of Marana and the Town of Oro Valley in accordance with the intergovernmental agreement bringing the total capital improvement program up to $12,244,540.
Non-Cash Expenses – $3,708,103
Depreciation and Amortization are non-cash funded expenses budgeted at $3,708,103 which is an increase of $205,000 with plans to implement GASB 87 at the beginning of Fiscal Year 2022. With this implementation, depreciation, liabilities, and assets will be recorded for all leased vehicles and the solar panels.
Revenue – Metered Water Sales (Water Availability Rate and Water Consumption Charges) make up 80.9% of the District’s revenue. The other revenue sources account for 19.1% of the revenue from operations and consist of various fees, interest earnings, water storage, compensated conservation, penalties/service charges, and the infrastructure rehabilitation fee.
The District has two Water Infrastructure Finance Authority loans one issued in 2007 for $12,625,000 with an outstanding balance of $3,920,826.91 with a 1.531% interest rate, and one issued in 2009 for $4,250,000 with a remaining outstanding balance of $2,545,645.76 with a 1.44% interest rate.
The third debt obligation occurred in October 2020, when the 2013 series subordinate obligation revenue bonds with a par value of $7,937,000, and the Water Infrastructure Finance Authority Refinancing Series 2005/2009A loan with an outstanding balance of $5,785,881.28 were refunded. The outstanding balance at the time of the refunding was $13,722,881.28 and this was reduced to $9,265,000 of Series 2020 senior revenue obligations with a maturity date of January 1, 2026. With the reduction in outstanding debt and the interest savings, this bond refunding reduced outstanding debt and interest payments by $4,581,853.56, eliminated the restricted debt reserve fund, and eliminated the requirement for a restricted repair and replace fund. The District will maintain the repair and replace fund as an unrestricted account.
The outstanding debt balance on three outstanding debt obligations as of July 1, 2021, is $15.1 million.
Bond Rating – On September 23, 2021, Moody’s Investment Service updated the District’s credit and affirmed the Aa3 rating on senior lien revenue bonds stating that the District has a strong management team and a healthy profile.