December 21, 2017 Board of Directors Meeting:
Annual Audit: The District’s annual financial audit, carried out by the CPA firm of White, Nelson, Diehl & Evans, was presented by the chief auditor. The audit states the District’s financial statements were “presented fairly, in all material respects”, thereby gaining a clean, unmodified opinion. The Board unanimously accepted the Fiscal Year 2017 Comprehensive Annual Financial Report (CAFR) after listening to the auditor’s PowerPoint presentation and receiving questions from the Board. District Adm. Services Mgr., Jeanne Deaver, and Veronica Tamzil, worked hard throughout 2017 to keep the financial end of the District working smoothly while also riding herd over the final stages of converting the District’s new financial software and coordinating the financial component of converting District water meters from manual read meters to automated read meters. For District customers who would like to read through the annual report, the CAFR can be accessed online or obtained from the District offices.
Reserve Fund Balance Reconciliation: The Board voted unanimously to transfer nearly 3.2 million dollars out of the Capital Improvement and Replacement Fund: $526,804 needed to be transferred to the Operating Fund, and $2,666,493 needed to be transferred to the Rate Stabilization Fund. The District has a Reserve Funds Policy, and these two transfers were necessary to follow the policy’s protocols. The following statement is from the staff report: “Two rate increases, effective June 2016 and January 2017 also helped raise operating revenues. In spite of this improvement in the overall financial picture, there were not sufficient funds to contribute to the Capital Improvement and Replacement Fund equal to depreciation expense from operating revenues.” This is the third consecutive year operating revenue was not sufficient to equal depreciation expense.
Oroville Dam Update: District Operations Manager, Cor Shaffer, gave the Board an update on the repairs to the Oroville Dam. As you may recall, the spillways to the Oroville Dam quickly began to disintegrate in February 2017, requiring the emergency evacuation of all downstream communities. Oroville is owned by the State of California, and the Dept. of Water Resources moved into high gear and engaged Kiewit Corp. to carry-out half a billion dollars of repairs to the main spillway; Kiewit completed their work ahead of schedule. One of the consequences of the Oroville Dam incident was for the State of California to issue new Dam Regulatory Requirements. The SFID owned San Dieguito Reservoir is now required to complete a new Dam Inundation Mapping risk analysis. The previous risk analysis was carried out in the mid-1970’s. The San Dieguito Reservoir is considered by the State a high hazard, due primarily to a number of properties with livestock in the inundation pathway. The District will go out to bid in the beginning of 2018 for outside engineering firms to carry out the inundation mapping. Once the mapping report is sent to the Dept. of Water Resources, there will be a period for members of the public to review and present public comments on the inundation mapping risk analysis.
District Staff Salary Schedule: California Code requires the District to approve yearly salary schedules and to make that schedule publicly available. The Board unanimously approved the 2018 salary schedule, which was predetermined at the end of 2015 as a result of a three-year Memorandum of Understanding between the Board and the SFID Employees Association. (2018 salaries increased 2% from the 2017 salary schedule.) The current year salary schedule is available online and can also be obtained from the District offices.
District Customer Water Usage for November 2017: The District’s residential gallons-per-capita-per-day was 360 gallons. As you are aware, while November 2016 – February 2017 brought high rainfall, with the exception of minor rainfall in March 2017, and an even smaller amount of rainfall in May 2017, the remainder of 2017 was completely dry, with increased daily temperatures. Prognostication for our San Diego region projects that this winter will have a double whammy of lower than normal rainfall amounts with increased daily temperatures. It appears that what is now referred to as the “ridiculously resilient ridge” has built up over Southern California, and rainfall that should have come our way will fall in Northern California.
Looking Ahead in 2018: The District will be undertaking a new Cost of Service Study (COSS) in 2018, which is required by Government Code prior to increasing rates. Early 2018 will find the District going out for bid to engage COSS analysts, and once the Board approves the choice of analysts, the schedule should be set for Board meetings/workshops to evaluate possible rate scenarios. The expectation is for 2018 to be busy, with the Board taking final action on a new COSS at their November 2018 Board meeting which would theoretically permit a rate increase to take effect January 2019. I use the term “theoretically”, because Government Code only requires the public COSS process if rates are increased above the previously approved COSS. You may recall that the 2016 COSS study was based on a three-year 9% revenue increase (9%, 9%, and 9%). At the November 2017 Board meeting, the Board voted 3-1-1 to modify the 2018 revenue increase from the anticipated 9% to 4%. (Please note: the Rancho Santa Fe Review December 28, 2017 issue incorrectly stated that the District had approved “…a rate increase of about 12 percent that will take effect on Jan. 1, 2018.”)