District of Columbia Water & Sewer Authority Revised FY 2005 & Proposed FY 2006 Budgets General Manager’s Presentation October 27, 2004
Our 2004 Successes • Maintained bond ratings in “AA” category • Reopened negotiations on CSO LTCP and began procurement effort for facilities planning • Significant improvements for our customers – Installed over 93% of new AMR meters and implemented monthly billing for all customers – New consolidated command center & radio system – Expanded Customer Assistance Program – Improved Direct Customer Communication • Surpassed capital spending targets for the second consecutive year • Replaced close to 1,800 lead service lines • Received National Biosolids Partnership certification • Redesigned WASA’s web site • Successfully issued $295 million in auction rate securities 2 Serving the Public ● Protecting the Environment
Board Strategic Plan • FY 2005 & FY 2006 budgets, CIP, and ten-year plan reflect Board Strategic Plan priorities : 1. Customer & Community Services 2. Organizational Effectiveness 3. Environmental Quality 4. Financial Stability • Budget includes funding for update of Strategic Plan in late 2005 / early 2006 and regionalization study in 2005 3 Serving the Public ● Protecting the Environment
FY 2005 & FY 2006 Financial Highlights • Revised FY 2005 operation & maintenance budget (excluding debt service and PILOT / right of way fee) is about the same as the first budget approved by the Board in 1998 $275,266 $258,886 $275,000 $263,425 $249,718 $244,639 $230,614 $239,493 $236,075 $250,000 $225,000 $200,000 $175,000 $150,000 $125,000 $202,502 $191,855 $179,683 $180,378 $180,060 $202,661 $100,000 $198,058 $196,249 $75,000 $50,000 $25,000 $- FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 APPR O VED APPR O VED APPR O VED APPR O VED R EVISED R EVISED R EVISED R EVISED O perations & M aintenance Budgets Total O perating Budget (Including D ebt Service & Paym ent In Lieu of Taxes) 4 Serving the Public ● Protecting the Environment
FY 2005 & FY 2006 Financial Highlights • Revised FY 2005 operating budget totals $275.3 million, in line with the Board-approved budget • Proposed FY 2006 operating budget totals $290.3 million, an increase of $15.0 million over the revised FY 2005 budget – Operations & maintenance budgets grow by 4.0% – Debt service due to CIP spending is fastest growing area of budget – increases by 11% in FY 2006 5 Serving the Public ● Protecting the Environment
FY 2005 & FY 2006 Financial Highlights • FY 2005 & FY 2006 staffing levels remain significantly less than 1998 Historical & Projected Staffing levels • Revised FY 2005 budget reflects addition of 16 positions: 1,600 1,508 – 12 for lead-related activities 1,500 – 4 in Office of the General 1,400 1,344 1,344 Counsel, which is offset by 1,309 1,300 outside legal service savings 1,198 1,200 1,144 – 1 in Public Affairs for 1,122 1,138 1,125 1,100 environmental communications Reduction of 383 positions, or 25 percent 1,000 – 1 in Government Relations FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 – New energy management position • Proposed FY 2006 budget reflects reduction of 13 positions due to Blue Plains IIP 6 Serving the Public ● Protecting the Environment
FY 2005 & FY 2006 Financial Highlights Historical & Projected Capital Spending CAPITAL IMPROVEMENT PROGRAM DRIVES RATE INCREASES & & Completion Rates FINANCIAL PERFORMANCE (In 000’s) • FY 2004 capital spending reached $350,000 120% historical WASA high $317,253 $293,471 106% $300,000 101% $282,562 100% • Low change order rate $247,800 $250,000 $238,268 84% 80% 79% Completion rate $204,563 • Expect to continue this trend for next $203,123 Spending $200,000 3-5 years 60% 58% $140,023 $150,000 49% $113,723 42% • Includes early years of proposed $103,094 40% $100,000 $74,006 CSO LTCP assuming 40 year 20% $50,000 $38,343 implementation schedule $- 0% FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Actual Actual Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Spending in Dollars Completion Rate 7 Serving the Public ● Protecting the Environment
FY 2005 & FY 2006 Financial Highlights • Proposing five percent rate increase for FY 2006, less than presented to Board in July primarily due to better than budgeted financing results • Beyond FY 2006, rate increases of 7.0 to 9.5 percent required, primarily due to addition of lead program to CIP 1 0.0 % 9 .5% 9.5 % 9.5 % 9.0 % 9 .0% 9.0 % 8.0 % 8.0 % 8 .0% 7.0 % 7 .0% 6 .5% 6.0 % 5 .0% 5 .0% 5.0% 5.0 % 5.0 % 5 .0% 5 .0% 5 .0% 5 .0% 5 .0% C u m u la tive R a te In cre as es 4.0 % July 2 00 4 P lan : 64 .5% P rop osed P lan: 61 .5% 3.0 % 2 .5% 2 .5% 2.0 % 1.0 % 0.0 % F Y 2 00 4 F Y 200 5 F Y 2 00 6 F Y 20 07 F Y 20 08 F Y 20 09 F Y 20 10 F Y 20 11 F Y 2 012 F Y 2 01 3 Ju ly 20 04 P la n P ro pose d P lan 8 Serving the Public ● Protecting the Environment
Initiatives & Priorities • Regulatory compliance – Industry-leading role in simultaneous compliance issues – New position to focus on regulatory compliance WASA-wide – Compliance with administrative order requirements • Water quality initiatives – Acceleration of dead end elimination – Continuation of main and valve rehab and replacement programs; evaluation of flushing and fire hydrant programs underway – Review of water quality staffing and restructuring other functions in Water Services • Lead service line replacement program – $300 million capital program – Tentatively added 12 positions to manage lead program; evaluation of in- house vs. external management underway 9 Serving the Public ● Protecting the Environment
Initiatives & Priorities • CSO LTCP – Reopened negotiations – Procurement of facilities planning services underway – Evaluation of alternative CSO rate structures will be presented to Board in Spring 2006 • Stormwater – Discussions with District on overall stormwater responsibilities – Proposed CIP reflects elimination of stormwater pumping station improvements – Evaluation of impact of District’s new stormwater permit on stormwater budget and rate • Mid-course review of Blue Plains Internal Improvement Plan • Energy management • Regionalization study • Communications • Government Relations 10 Serving the Public ● Protecting the Environment
Initiatives & Priorities • Employee-related initiatives – Training - $1.6 million in FY 2005 – New labor agreement negotiations – Labor-Management Partnership – Review of retirement benefits • Customer Service enhancements – Automatic notification of high usage – Summary billing – Lead service line tracking – Language line services • Information technology investment – New phone system – Asset management system – Document management system – PCCS 11 Serving the Public ● Protecting the Environment
Emerging & Long-Term Issues • Ongoing CIP implementation • CSO Long-Term Control Plan • Blue Plains Internal Improvement Program review • Regionalization study • Blue Plains regulatory issues – Chesapeake Bay Agreement changes – Biosolids hauling and disposal issues – Clean Air Act • Sewer system assessment – Impact of SSO & CMOM requirements • Water quality and simultaneous compliance issues – Aqueduct issues • Security & emergency preparedness 12 Serving the Public ● Protecting the Environment
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