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FY 2019-2020 and FY 2020-21 Budget

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FY 2019-2020 and FY 2020-21 Budget BUDGET Elsinore Valley Municipal Water District FISCAL YEAR 2020 AND 2021 TABLE OF CONTENTS GENERAL MANAGER BUDGET HIGHLIGHTS 4 GFOA Distinguished Budget Presentation Award 15 CSMFO Certificate of Award for Excellence in Operating Budget 16 BUDGET NARRATIVE 17 Description of the District and the Budget Process 18 Operating Revenues and Expenditures 24 Non-Operating Revenues and Expenditures 29 AUTHORIZED POSITIONS 36 Organization Chart 37 Summary of Changes in Authorized Positions 38 Authorized Position Listing 41 STRATEGIC PLAN & DEPARTMENT ACCOMPLISHMENTS 46 Strategic Plan 47 General Management 49 Business Services Division 53 Engineering & Operations Division 58 CAPITAL OUTLAYS 63 Significant Capital Outlays 64 Fiscal Year 2020 65 Fiscal Year 2021 66 CAPITAL IMPROVEMENT PROJECTS 67 Capital Improvement Projects 68 Fiscal Year 2020 & 2021 76 BUDGET STATEMENTS 79 Fund Structure 80 List of Funds/Programs 82 Elsinore Valley Municipal Water District 1 TABLE OF CONTENTS Relationship between Divisions, Departments, Sections, and Funds 87 Summary of Revenues & Operating Transfers In/Out All Funds 88 Consolidated Statement of Sources and Uses 89 Statement of Sources and Uses of Funds Fiscal Year 2020 90 Statement of Sources and Uses of Funds Fiscal Year 2021 106 Consolidated Statement of Income 122 Computation of Debt Coverage 123 Debt Repayment Requirements & Sources Fiscal Year 2020 & 2021 124 Funding and Cash Flow Diagram 127 Significant Changes in Fund Balances 128 Schedule of Changes in Fund Balance, Fiscal Year 2020 129 Schedule of Changes in Fund Balance, Fiscal Year 2021 131 WATER OPERATIONS 133 Elsinore Water Division Narrative 134 Elsinore Water Division Statement of Revenues & Expenditures 142 Temescal Water Division Narrative 155 Temescal Water Division Statement of Revenues & Expenditures 158 WASTEWATER OPERATIONS 166 Narrative 167 Wastewater Statement of Revenues & Expenditures 170 RECYCLED WATER OPERATIONS 180 Narrative 181 Recycled Water Statement of Revenues & Expenditures 183 Elsinore Valley Municipal Water District 2 TABLE OF CONTENTS GENERAL FUND 189 General and Administrative 190 Vehicles & Equipment 204 Engineering 207 Information Technology 212 Facilities 215 Capital Outlay 218 LAKE MANAGEMENT 220 General and Administrative 221 POLICIES 223 Purchasing Policy 224 Investment Policy 230 Debt Management Policy 240 Reserves Policy 244 Capital Asset Policy 248 SUPPLEMENTARY INFORMATION 250 Population within District Boundaries 251 Economic Statistics 252 FY2018 Rate Comparison 253 Miscellaneous Statistics – Water Divisions 255 Miscellaneous Statistics – Wastewater Divisions 256 Ten Largest Customers 257 GLOSSARY 260 Terminology & Definitions 261 Acronyms & Abbreviations 263 BOARD RESOLUTION 265 Elsinore Valley Municipal Water District 3 Board of Directors General Manager Andy Morris, President Greg Thomas Phil Williams, Vice President District Secretary Darcy Burke, Treasurer Terese Quintanar Harvey R. Ryan, Director Legal Counsel Jared K. McBride, Director Best Best & Krieger Our Mission… EVMWD will provide reliable, cost-effective, high quality water and wastewater services that are dedicated to the people we serve. September 26, 2019 Board of Directors Elsinore Valley Municipal Water District Enclosed are the Elsinore Valley Municipal Water District’s (EVMWD) proposed budgets for Fiscal Year (FY) 2020 and FY 2021. The proposed budgets represent the District’s mission of providing our customers with safe, reliable, and cost-effective water, recycled water, and wastewater services while maintaining a strong financial position. The proposed budgets provide a comprehensive financial plan for the District that includes a forecast of operating and non-operating revenues and expenditures; financing of long-term capital improvement plans to support infrastructure needs; and funding for the repayment of long-term debt. Your participation throughout the development of the proposed budget process demonstrates your sincere dedication and commitment to the community. With your leadership and guidance, staff completed a thorough annual review of the revenues and expenses and matched those to the District’s strategic plan to meet challenges related to growth, economic conditions, and other factors that may have significant financial impacts. The District has a responsibility to deliver reliable water and wastewater services in the most cost-effective manner by maximizing operational efficiencies and seeking various cost saving measures. CURRENT AND ONGOING CHALLENGES Southern California’s climate typically includes a rainy season (approximately 3-4 months), followed by extended drought in the hottest months of the year. Often times these droughts extend through the winter months and rains do not occur. The last extended drought ended in May 2017, however, the District continues to encourage its customers to conserve water. As part of these conservation efforts, the District established four drought stages. The District is currently in drought stage 2 which applies during periods when a reasonable probability exists that EVMWD will not be able to meet all of the water demands of its customers. This past winter, nearly 8 inches of rain fell, filling Canyon Lake and adding 7 feet of water to Lake Elsinore. Even with the rainy, cool winter and spring, Lake Elsinore is currently below 1,239 feet (1,240 feet is considered the minimum level to maintain water quality). Clearly, the past drought is still affecting the District. The District continues to make great progress maximizing less expensive local water sources, which in turn decreases the District’s reliance on more expensive imported water. During FY 2018 and FY 2019 there were lengthy periods of time that the Canyon Lake Water Treatment Plant (CLWTP) and several wells were offline and out of production. The proposed budgets include a new well rehabilitation program to help maximize well production. The budget also includes a redesign of the CLWTP which will help address current environmental standards and should also reduce the amount of effluent discharge to the Regional Water Reclamation Facility. As previously mentioned, the CLWTP and several wells were offline and out of production during FY 2018 and FY 2019, resulting in local water supply production of approximately 4,000 AF (average annual yield is approximately 9,000 AF). With the well maintenance program now in place the District hopes to avoid these situations in the future and reduce the need for additional imported water purchases. The following graphs show production, and costs of production per acre feet, from various sources. 951.674.3146 31315 Chaney Street Fax 951.674.9872 P.O. Box 3000 Lake www.evmwd.com Elsinore, CA 92530 Water Production in Acre Feet (AF) 20,000 19,269 19,141 15,000 10,000 3,680 ACRE FEET ACRE 5,000 2,747 1,215 921 0 Groundwater CLWTP Imported Water FY2018 ACTUAL FY2019 ACTUAL Water Production - Cost per AF $2,000 $1,600 $1,162 $1,068 $1,059 $1,200 $933 $800 $436 $429 $400 $0 Groundwater CLWTP Imported Water FY2018 ACTUAL FY2019 ACTUAL Groundwater production averaged about 3,200 AF between the two years, which is significantly lower than annual averages. This was due to several wells going out of production for repair and maintenance. Local groundwater production is anticipated to return to historical levels with the implementation of the well maintenance program. CLWTP production averaged 1,068 AF during this time. Given ideal conditions, the treatment plant has the capacity to treat 9 million gallons per day but production from this source is dependent on lake levels, water quality and other contractual obligations with the Canyon Lake Property Owners Association, which has leased the rights to use the lake for recreational purposes. District staff has performed an analysis of the plant operation and performance. Based on this analysis the District plans to operate the plant during the months of April to September at a sustainable 4-5 million gallons per day, ultimately targeting 2,500 AF of water from this source. Imported water represents water purchased from the Metropolitan Water District (MWD). This water ultimately comes from rain and snowfall stored in reservoirs in northern California, and from precipitation in Colorado, Wyoming and Utah, stored in Lake Mead, along the Colorado River near Las Vegas, Nevada. Purchases averaged 19,200 AF. As previously mentioned, the increase was due to CLWTP and several wells being offline and out of productions for extended periods over the last two years. Groundwater production costs were relatively steady at just over $430/AF. Groundwater costs are primarily driven by electrical, pumping, and transmission costs and tend to remain fairly steady from year to year. Canyon Lake production costs were very high for the past two years. This was the result of the fixed costs for the water plant being spread out over a very low level of production due to the plant repairs taking place at that time. Production costs are estimated at approximately $827/AF in FY 2020 and FY 2021, based on production of 2,500 AF. Imported water costs averaged $996/AF between the two years as a result of Conjunctive Use Program (CUP) water call credits received. Imported water costs are anticipated to increase in FY 2020 and FY 2021 to an estimated $1,240/AF. Unfortunately supplies of local well and surface water are limited, and as a result, the growing District will continue to rely on more expensive imported water. 5 DISTRICT PRIORITIES As of June 2019, the District
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