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Massachusetts Water Resources Authority MASSACHUSETTS WATER RESOURCES AUTHORITY Fiscal Year 2019 Final CURRENT EXPENSE BUDGET The Government Finance Officers Association of the United States and Canada (GFOA) presented an award of Distinguished Budget Presentation to the Massachusetts Water Resources Authority for its annual budget for the fiscal year beginning July 1, 2017. In order to receive this award, a government unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communication device. The award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. BOARD OF DIRECTORS Left to right seated: Henry F. Vitale, Paul E. Flanagan, John J. Carroll, Vice-Chairman, Brian Peña Left to right standing: John J. Walsh, Matthew A. Beaton, Chairman, Joseph C. Foti, Jennifer L. Wolowicz, Andrew M. Pappastergion, Secretary, Austin F. Blackmon, Kevin L. Cotter, Fredrick A. Laskey, MWRA Executive Director. Prepared under the direction of Frederick A. Laskey, Executive Director David W. Coppes, Chief Operating Officer Thomas J. Durkin, Director, Finance together with the participation of MWRA staff. Louis M. Taverna, Chairman September 2018 MWRA Advisory Board 100 First Avenue Boston, MA 02129 Dear Chairman Taverna: This letter transmits to the Advisory Board MWRA’s Current Expense Budget (CEB) for Fiscal Year 2019. The CEB was approved by the MWRS’s Board of Directors on June 20, 2018. The FY19 Final Budget recommends a combined assessment increase of 3.07%, which is lower than the 3.8% increase projected for FY19 last year. This increase is in line with the Board of Directors and Advisory Board’s directives. Total expenses are $767.9 million, a $24.3 million or 3.3% increase over the FY18 Budget. Capital financing costs, at $482.4 million, remain the largest portion of the budget, representing 62.8% of the total expenses. Operating expenses are $285.6 million, of which $239.6 million is for direct expenses and $46.0 million is for indirect expenses. The FY19 Final Budget reflects the benefit of a planned $30.0 million defeasance in FY18 with targeted savings primarily during FY19-22. Besides the planned defeasances, the Authority is continuing to address the significant Pension and Other Post-Employment Benefits (OPEB) obligations. To ensure that the MWRA’s long-term goals will continue to be met in future years, it is imperative to continue the conservative fiscally responsible budgeting practices while addressing all outstanding long-term liabilities. This strategy allows MWRA to project assessment increase projections below 3.7% for the next four years. Additional budget information and a copy of this document are available online at www.mwra.com. Questions or comments on this document should be directed to the MWRA Budget Department. We look forward to working with Advisory Board members and staff during your review of the FY19 Final Current Expense Budget. Thank you for your continued support and recommendations. Sincerely, Frederick A. Laskey Executive Director 61 Customer Communities Eleven‐Person Board of Directors 43 sewerage State Secretary of Energy and Environmental Affairs (Chair), appointed by the Governor 51 water Representatives of 2 watershed areas, appointed by the Governor 3 Representatives appointed by the Mayor of Boston 3 Representatives appointed by the Advisory Board 1 Representative appointed by the Town of Winthrop Council President MWRA Advisory Board 1 Representative appointed by the Mayor of Quincy Representative of customer communities Comments on budgets and capital construction plans Executive Director Affirmative Action Law Finance Executive Administration Office of Executive Director Legal Reviews Director's Office Director's Office Public Affairs Litigation Facilities Management Rates and Budget Internal Audit Court Order Compliance Fleet Services Treasurer Office of Emergency Environmental Regulation Human Resources Controller Management Information Risk Management Systems Operations Operations Administration Operations, Engineering & Construction Programs, Policy, & Planning Tunnel Redundancy Operations Administration Operations, Engineering & Construction Programs, Policy and Planning Wastewater Treatment Toxic Reduction And Control Deer Island Environmental Quality Residuals Laboratory Services Clinton Planning Field Operations Wastewater Operations Water Operations & Maintenance Metro Maintenance Operations Support FOD ‐ Administration Engineering and Construction TABLE OF CONTENTS MWRA At A Glance 1 Admistration Division Executive Summary Admistration Division Budget Summary 125 Organization and History 5 Director’s Office 130 FY19 Final Budget Summary 7 Facilities Management 131 Rate Assessment and Methodology 30 Fleet Services 133 Statement of Financial Position 35 Human Resources 135 Executive Division Management Information Systems 139 Executive Office Budget Summary 37 Procurement 148 Office of Emergency Preparedness 40 Real Property and Environmental Management 151 Affirmative Action and Compliance Unit 44 Finance Division Internal Audit 46 Finance Division Budget Summary 155 Public Affairs 48 Director's Office 157 Operations Division Rates and Budget 158 Operations Division Budget Summary 53 Treasury 161 Operations Administration 67 Controller 163 Operations, Engineering and Construction 70 Risk Management 164 Deer Island Wastewater Treatment Plant 73 Appendices 167 Residuals 81 A. Direct Expense Budget Line Items Descriptions Clinton Wastewater Treatment Plant 84 B. Budget Process and Timetable 169 Field Operations 88 C. MWRA Budget and Assessment Policies 171 and Procedures 183 Engineering and Construction 98 D. MWRA Planning Estimates FY2019 – FY2028 Programs, Policy and Planning 102 E. Capital Financing Details as of 6/30/18 185 Toxic Reduction and Control 104 F. Advisory Board and Committees 187 189 Environmental Quality 107 G. MWRA Capital Improvement Program Overview 207 Laboratory Services 113 H. Water Supply Protection Trust FY19 Budget vs. FY18 Budget Planning 117 I. MWRA Reserve Summary 209 Law Division J. Glossary of Financial and Operating 211 Terms Law Division Budget Summary 123 MWRA AT A GLANCE Purpose Capital Improvement Program Provide wholesale water and sewer services to Total CIP spending: $8.3 billion since 1984 customer communities, funded primarily through Total Current Indebtedness $5.1 billion rates and charges FY19 CIP Budget: $179.2 million Legal Status Water System Massachusetts public authority established by an 2 protected reservoirs enabling act in 1984 – Chapter 372 of the Acts of o Quabbin 1984 as most recently amended January 2017 o Wachusett 2 water treatment facilities Management o John J. Carroll William A. Brutsch 11‐member Board of Directors (3 Governor o appointees, 3 Mayor of Boston appointees, 1 350 miles of distribution infrastructure including City of Quincy appointee, 1 Town of Winthrop aqueducts, deep rock tunnels, and pipeline appointee, and 3 Advisory Board appointees) 12 active storage reservoirs and standpipes 1 Executive Director (5 divisions: Office of the 11 active pumping stations Executive Director, Operations, Finance, Average Daily flow: 200 mgd Administration, Law) Safe yield: 300 mgd Treatment Capacity: 405 mgd Advisory Board Percentage of capacity utilized: 67%* *based on safe yield Established by the enabling act to make recommendations to the MWRA on the MWRA Wastewater System budget and programs and to serve as liaison to the 240 miles of sewer pipelines and cross‐harbor customer communities tunnels 11 pump stations Service Area 1 screening facility 61 customer communities (43 sewerage, 51 4 CSO treatment/storage facilities water) 2 wastewater treatment plants 3.0 million people (44% of MA population) o Deer Island Treatment Plant 5,500 businesses o Clinton Advanced Wastewater Treatment Plant FY19 Operating Budget ($ in millions) 5 remote headworks Direct Expenses $239.6 1 Pellet Plant for residuals processing Indirect Expenses 46.0 Average daily flow: 365 mgd Capital Finance 482.4 Peak wet weather capacity: 1,270 mgd Total Operating Budget $767.9 Percentage of capacity utilized on average: 30% Revenues* $767.9 Renewable Energy *96.2% of Revenues raised from rate assessments 28% of MWRA’s energy requirement was self‐ Bond Ratings ‐ General Revenue Bonds generated from renewable sources (biomass, hydro, (senior/subordinate) wind, & solar assets) in FY17. Moody’s ‐ Aa1/Aa2 S&P ‐ AA+/AA Fitch ‐ AA+/AA 1 MWRA AT A GLANCE MWRA's water comes from the Quabbin Reservoir, 65 miles west of Boston, and the Wachusett Reservoir, 35 miles west of Boston. The Quabbin alone holds a 4‐year supply of water. The reservoirs are filled naturally. Rain and snow fall onto watersheds (protected land around the reservoirs) and eventually turn into streams that flow into the reservoirs. This water comes into contact with soil, rock, plants and other material as it follows its path. This process helps to clean the water. The Quabbin and Wachusett Reservoirs are protected. Over 85% of the watershed lands that surround the reservoirs are covered in forest and wetlands. About 75% of the total watershed land cannot be built on. The natural undeveloped watersheds help to keep MWRA water clean and clear. Because they are well‐protected, the water in the Quabbin and Wachusett Reservoirs is of very high quality. The MWRA has won numerous awards
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