A status report on the district’s finances, present and future, was made at Georgetown Divide Public Utility District’s (GDPUD) board meeting on June 11 by a member of the board’s Public Finance Committee.
Garden Valley resident Dennis Goodenow said he and other committee members had been appointed several months ago to identify the status of the district’s finances and what those finances might look like over time.
Issues they considered included GDPUD’s budget, accounting procedures and fiscal planning process; budget goals and objectives; long-range budget criteria; potential accounting and operational improvements; fiscal policy and operating procedures; district expenses and employee compensation objectives; additional district revenues and cost reduction strategies; and making recommendations based on their findings.
Goodenow mentioned that in putting together the data, they had met with the district’s CPA to ensure their numbers were comparable.
The key issues the committee reported out covered GDPUD’s reserve policy funding status, long-term budget prospects, obligations funding status, and project maintenance and improvements.
Taking into account a series of reserve objectives, the committee reported a desirable goal of $10.8 million in reserves. Their findings, as of June 30, 2012, were that the district only had $7.6 million.
It also projected out the district’s budget for the next five years. The committee estimated they will have surpluses for the next five years including a surplus of $590,000 this year, $603,000 in 2013-14, $525,195 in 2014-15, $444,410 in 2015-16, $360,549 in 2016-17 and $273,516 in 2017-18.
These numbers were based on assuming that operating revenues grow by .5 percent each year, all non-operating revenues grow by 1 percent a year, all operating and non-operating expenses grow by 3 percent a year, and reserve investment is at 50 percent depreciation and increases to one million in the fiscal year 2014-15 to cover the additional cost of the Auburn Lake Trails Water Treatment Plant retrofit.
However, the committee projected that once the district has to cover cash flow, depreciation and debt service, its PERS obligation and ongoing project improvements and maintenance, these surpluses would evaporate and the district would face an accumulated deficit of $2.1 million by 2017-18.
Goodenow concluded his presentation by offering to bring recommendations for addressing the financial shortfalls to a future board meeting.
Board President Bonnie McLane thanked the committee for their work as did other board and community members.
Board member Norm Krizl cautioned the board, saying the numbers in the committee’s report were based on certain assumptions and that the reserve policy the committee used as a reference in drawing up their numbers was a goal, not a hard target. “What’s meaningful is that we have a reserve,” he added.
Krizl went on to say that the committee’s report was more of a wish list if everything they wanted to do got fully funded over a five-year time period. These numbers are dynamic, he said, and could change over time.
Goodenow agreed with Krizl and added that the horizon for solving these potential funding shortfalls is longer than five years and could be 10 years or more. There are a lot of decision points, he said, and promised when he returns with the committee’s recommendations, it will include different options the board can choose from.
Krizl reiterated that while the numbers developed by the committee are all based on certain assumptions, revenues do need to change. Some members in the community and on the board have been vehemently opposed to raising rates but are now starting to recognize the need to raise them. “Our rates are lower than anywhere in the region,” he said.
McLane said Krizl wasn’t running for supervisor yet and he needed to “tone it down” and quit attacking other directors. “You need to just drop it,” she said.
Krizl responded that he wasn’t attacking anyone, but revenue was an issue that needs to be addressed. Numbers can go up and down so we need to keep everything in perspective, he added.
Also discussed at the board meeting was a proposal by board member Maria Capraun to lower the cost of connecting to the district. Currently the cost of hooking up a five-eighth or three-fourth-inch line to the district’s facilities is $9,200. Capraun recommended reducing that to $5,000 plus time and materials.
The proposal was met with little support. Instead the board voted to continue with the current rate schedule until additional analysis can be conducted.
The board also voted to stay with the existing two-year budget plan and to amend it as necessary in the coming months. In addition, the board considered a new organizational chart submitted by Capraun which included 19 full-time positions, one part-time, as well as seasonal workers.
Interim General Manager Kelly Shively said a different organizational chart he had prepared better represented the minimum number of staff needed to run the district and warned against further reductions.
Contact Dawn Hodson at 530-344-5071 or [email protected] Follow @DHodsonMtDemo on Twitter.