The document summarizes the San Diego County Water Authority's proposed budget and financial outlook for 2012. It notes that water purchases and capital improvement projects account for 72% of expenditures. It also discusses cost cutting measures like staff reductions and deferred infrastructure spending to reduce expenses passed to ratepayers. The budget represents a 16% decrease from 2010-2011 levels and the "all-in" wholesale water cost is projected to increase 7.7% to $1,148 per acre foot in 2012.

1. May 31, 2011
Eric Sandler
Director of Finance
San Diego County Water Authority

2. Capital Improvement Program
(including CIP labor)
33.6% Water Purchases & Treatment
46.2%
Operating
Departments
Debt Service
5.5% 12.6%
Other Expenditures
Equipment Replacement 1.9%
0.2%
2

3.  Increasing costs to buy, transport water
◦ From 2008-2012, MWD approved rate increases
totaling 55 percent for “Tier 1” treated supply
◦ Additional rate increases expected
 Investing in major water reliability infrastructure
 Changing sales volumes
◦ Water Authority sales down 38 percent since 2007
3

4.  Current budget reductions
◦ $2.4 million cut in FY 2010
◦ $3.6 million cut in FY 2011
 Elimination of spot water purchases
 Selling stored water
 Using rate stabilization reserves
 Challenging MWD’s rate structure
4

5.  Reduced water sales forecasts
 Shifting from “building” agency to “operating”
agency
◦ Reorganization & consolidation for enhanced efficiency
 Manage personnel costs
◦ Staffing reductions to reflect agency’s evolution
◦ Increased employee contributions to pension benefits
 Seeking service efficiencies with Member Agencies
5

6. Water purchases & treatment $700,474 49%
CIP Expenditures $321,129 23%
Debt service $280,394 20%
Operating departments $87,715 6%
Hodges operations $6,052 <1%
Equipment replacement $1,220 <1%
Other expenditures $20,449 1%
$1,417,434 100%
Three categories account for 92% of the total budget:
Water Purchases
CIP Debt Service
and Treatment
49% 23% 20%
6

7.  16 percent below amended FYs 10-11 budget
 Continues to fund vital water reliability
projects and operations
 Comprehensive effort to reduce expenses and
pass savings to ratepayers
◦ Deferred CIP spending (14 projects, $150 million)
◦ Operating department budgets reduced by $6.7
million
◦ Labor and benefit costs (including CIP) reduced by
$4.5 million
7

8. Budgeted Staff Positions
310
Full-Time Equivalents
298.00
300 294.00
289.55
290 285.25
280
(FTEs)
270
259.33
260 253.92
249.50
250
240
230
220
FY08 FY09 FY10 FY11 FY12 FY13 FY14
 16% Reduction in FTEs (2008 – 2014)
8

9.  Recommended “all-in” wholesale treated water
cost in 2012: $1,148 per acre foot
 7.7 percent above estimated treated water
wholesale cost for 2011
9

10. “All-in” Increase Melded Supply
Distribution Rate Increase
$82/AF $41/AF
Storage * Customer
12% Service *
($10) 3%
($2)
Transportation
12%
($10)
Supply Water Authority
MWD Increase 29%
50%
71% ($12)
($41)
($29)
Treatment
23%
($19)
*Converted to $/AF based on sales forecast
10

11. 250
200
$ Millions
150
100
50
0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Fiscal Year
*Includes all estimated debt service payments on senior and subordinate issuances
11

12.  Award-winning budgeting and financial
planning
 High credit ratings
Fitch Moody’s S&P
AA+ Aa2 AA+
 Favorable financing terms
◦ Saving $50 million in interest from January 2010
bond sale
12