2017 Financial Efficiency Report Finance, HR, Administration - PowerPoint PPT Presentation

2017 Financial Efficiency Report • Finance, HR, Administration  Purchasing reductions over 31 transactions: $61,710 savings  IT subscription for GIS software: $18,000 savings  IT staff for livestreaming: $12,927 savings  Increased investment earnings: $99,454 revenue  HR staff and advertisement: $18,441 savings  Administration grant efforts: $ 5,939,564 revenue  Safety experience mod reducing premiums: $ 137,694 savings • Engineering  NID staff vs consultants: $ 56,000 savings 10/11/2017 Nevada Irrigation District 2

2017 Financial Efficiency Report • Operations  Received unused CABY grant proceeds: $10,000 revenue  NID staff for E. George SCADA: $25,000 savings  NID staff for campground automation: $15,000 savings  Two caustic chemical tank purchase discounts: $3,200 savings  Copier maintenance contract cancellation: $2,374 savings  Improved reads from meter reader installs: $156,000 revenue 10/11/2017 Nevada Irrigation District 3

2017 Financial Efficiency Report • Maintenance  Use of existing vs purchase of new materials: $85,000 savings  In house equipment repair vs outsourcing: $39,300 savings  NID staff vs outside installation contractor: $86,000 savings  NID staff vs outside for Penn Valley pipeline: $64,000 savings • Hydroelectric  Dutch Flat and Chicago Park PH LED lighting: $1,200 savings  Combie North & South capacitor bank improvement: $7,500 revenue  NID staff species monitoring & Bowman breaker: $31,720 savings  NID staff for Chicago PH for CCVT & tower: $30,000 savings 10/11/2017 Nevada Irrigation District 4

2017 Financial Efficiency Report • Recreation  Use of surplus trucks: $80,000 savings  NID staff vs Washington Right Fire Crew for tree removal: $40,000 savings  NID staff (2,298 hours, 34 employees) vs contractor for Scotts Flat Gate 1 water line replacement: $232,548 savings 10/11/2017 Nevada Irrigation District 5

2017 Financial Efficiency Report Department Savings Revenue Efficiency Finance, HR, Admin $ 252,772 $ 6,039,018 $ 6,291,790 Engineering 56,000 56,000 Operations 45,574 166,000 211,574 Maintenance 274,300 274,300 Hydroelectric 62,920 7,500 70,420 Recreation 352,548 352,548 Total $ 1,044,114 $ 6,212,518 $ 7,256,632 10/11/2017 Nevada Irrigation District 6

Long-term Cash Forecast FY 2018 - 2022 Revenue (Receipts) Forecast Assumptions:  Water Sales = 6% Rate 2% Growth, Other Revenue = 3%, Taxes = 3%  Electric Power = 5.5%, Recreation Rates = 2.5%, Interest Income flat  Bond Proceeds Drawdown = $13.6M Expense (Disbursements) Forecast Assumptions:  COLA = 3%, Avg. Merits = 2.5%, O&M = 1.5%, Medical = 5%  ER PERS = 6.5% increase (Rates: 29.97 – 31.92 – 33.99 – 36.20 – 38.55)  Capital Spending (Water: $82.9M, Electric: $21M, Recreation: $1.1M), Total = $105M, OPEB = $3.8M Account & Usage Assumptions: Assumes 2% growth in account & demand Treated Water Customers: 19,680 to 20,885 Raw Water Customers: 5,814 to 6,170 Treated Water Demand (AF): 12,346 to 13,102 Raw Water Demand (AF): 122,000 to 129,467 10/11/2017 Nevada Irrigation District 9

Long-term Cash Forecast Water Rate Revenue Forecasting Expenses + Operating Budget (Long-term Assumptions) + Reserve building Revenues _ Water Sales(6% Rate, 2% Demand) _ Water Account & Demand (In Model) _ Other Revenues Indicated _ Transfers In from Hydroelectric ($22.5M) _ Non Operating Surplus ($17.1M) = Over / (Under) Revenue Requirement 10/11/2017 Nevada Irrigation District 10

Water Rate Analysis • Factors Influencing Rates  Board direction  Current financial position  Age of infrastructure  Geographical service area  In-house expertise  Current cost structure (fixed vs variable components)  Water rate development methodology (base vs commodity)  Historical and estimated consumption (drought, precipitation)  Political environment (local, regional, state, federal) 10/11/2017 Nevada Irrigation District 12

Rate Comparison Table Bi-Monthly (Base) Bi-Monthly Total 5/8" Meter 1 10 hcf 2 Year Based on 10 hcf City of Lincoln FY 2017 Rate $68.70 $13.22 $81.92 FY 2018 Rate 76.26 14.70 90.96 PCWA 2017 Rate 67.26 15.06 82.32 Proposed 2018 (6%) 2018 Rate 71.32 15.40 86.72 City of Grass Valley 2017 Rate 52.00 26.25 78.25 no increase 2018 Rate 52.00 26.25 78.25 El Dorado Irrig District 2017 Rate 59.88 14.54 74.42 Proposed 3% 2018 2018 Rate 61.68 14.98 76.66 City of Nevada City FY 2017 Rate 47.00 18.52 65.52 Rates readjusted in 2013 FY 2018 Rate 48.00 18.86 66.86 NID 2017 Rate 46.84 19.30 66.14 Proposed 6% 2018 2018 Rate 49.65 20.50 70.15 1 City of Lincoln does not offer a 5/8" meter, rates are for 3/4" meter 2 City of Lincoln, City of Grass Valley and City of Nevada City bill per 1,000 gallons, shown is for 7,000 gallons (9.36 HCF) 10/11/2017 Nevada Irrigation District 13

Recommendation • Maintain current approved increase due to:  Accepted Rate Study Analysis  2018 Borrowing $7.9M from reserves  Short & Long-term Cash Forecast Analysis  36% Historical conservation mandate  2014 – 2018 revenue loss of $6.7M  Regional Rate Comparison Table  Consistent with public agreement to drive down reserves 10/11/2017 Nevada Irrigation District 15

Executive Summary • Water Conservation Impact • Internal Controls Progress • Financial Reporting & Cash Management • 2017 Operating & Non Operating Budget 10/11/2017 Nevada Irrigation District 17

Internal Control Progress 2016 Audit Findings (no new findings) Finding 2014-1: Year-End Closing Procedures: Staff implemented a Finance Task Journal to assist with monthly and fiscal year closing. Staff is brining on a qualified Accountant to improve financial accounting. Finding 2014-5: Recreation Division Cash Handling Staff is implementing a cash receipt review process requiring supervisor approval for voids and daily cash totals. Finding 2014-7: Accounts Payable Trial Balance Staff will continue to refine the end of year payables recording process but does record these liabilities in accordance with GAAP. 10/11/2017 Nevada Irrigation District 19

Financial Reporting & Cash Management • Weekly department snapshot report Monthly budget vs actual by 15 th of month • • Quarterly investment and cash reserves reporting • Short-term cash forecasting improving investment earnings • Long-term cash forecasting for rating agencies & strategy • Annual assessment district compliance reporting • Continuing bond disclosure compliance reporting • Comprehensive annual financial report (CAFR) • Annual fiscal plan/budget, Budget amendment procedure • Procurement policy & procedures • Adhoc analytic modeling 10/11/2017 Nevada Irrigation District 20

2018 Budget: Development • Revenue Assumptions  Water Sales: 8% over 2017 forecast (6% rate, 2% demand)  Recreation: 3% over forecast to build reserves  Electric: 85% of expected levels  Property taxes: 3% over forecast  2017 Bond Proceeds: $10M draw down • Labor Costs Assumptions  2 FTE increase, 3% Cola, 5% for normal step increase  29.97% PERS (includes unfunded payment), $777K OPEB • O&M and Capital Costs  2.6% over 2017 Budget (excludes Transfers), $4.2M in Debt Reduction  Water: $26.1M, Recreation: $315K, Electric: $4.2M, NID: $2.4M < 2017 fcst • Cash Flow Assumptions  2017: $4.9M contribution from reserves (see Division breakdown)  2018: $7.9M contribution from reserves 10/11/2017 Nevada Irrigation District 21

Budget Comparison: All Divisions 10/11/2017 Nevada Irrigation District 22

Budget Comparison: All Divisions 10/11/2017 Nevada Irrigation District 23

2017 Budget: All Divisions 10/11/2017 Nevada Irrigation District 24

2018 Budget: All Divisions 10/11/2017 Nevada Irrigation District 25

2018 Budget: All Divisions 2015 Act 2016 Act 2017 Fcst 2017 Bud 2018 Bud Operating Revenues 49,821,908 49,963,516 52,148,765 50,519,241 51,585,978 Expenses 52,420,405 49,824,674 59,567,229 57,113,477 59,568,889 Operating Income (7,418,464) (7,982,911) Non Operating Revenues 16,078,211 21,513,608 30,039,121 27,383,175 30,640,984 Expenses 11,844,616 22,903,236 33,016,143 26,557,500 30,635,000 Non Operating Income (2,977,021) 5,984 District Net Income* (10,395,485) (7,976,927) * See Cash Schedule for Reserve Impact 10/11/2017 Nevada Irrigation District 26

2018 Budget: Water Division 2015 Act 2016 Act 2017 Fcst 2017 Bud 2018 Bud Operating Revenues 27,086,274 25,233,161 26,574,294 28,458,889 29,222,756 Expenses 34,655,788 33,896,441 38,181,113 37,466,297 38,134,377 Operating Income (11,606,818) (8,911,621) Non Operating Revenues 12,559,469 18,324,988 23,204,039 22,460,675 26,125,984 Expenses 8,325,874 20,256,068 25,976,061 21,635,000 26,120,000 Non Operating Income (2,772,021) 5,984 Net Income* (14,378,840) (8,905,637) * See Cash Schedule for Reserve Impact 10/11/2017 Nevada Irrigation District 27