August 22, 2017
Leslie Riehl’s District Analysis – Comments and Notes for meeting and discussion on Tues 8/22 1pm
General district Expenses:
1,2) CSD General expenses are Management Expenses for all of the 4 charters which are: Fire, Recreation, Roads, and Water. There is nothing else that the management is for except to make sure that these charters are organized, managed, and provide those services to the community.
3) Only 3 more audits were budgeted to be paid for this year: 2014, 2015 and 2016. The costs of pervious audits were not used as a projection for this year’s general expenses.
4) The additional hire of a second part-time DM will increase staff costs for this coming year. Last year’s DM costs were pushed by the hire of a DM who responded to an ad for a part-time position only to find out it was a full-time job, and the Personnel Committee and Board put him on an hourly wage that pushed his salary to almost $84,000 for the year he was with the District. Based on that and further investigation, the Personnel Committee determined it was a full-time job but might be best divided between two people. The part-time salary had been $55,000 per year, so the full-time salary is now $110,000 p/year plus health benefits, that were always provided, but now provided for two. I was asked to develop a budget to cover all District costs and increased salaries had to be included.
1) The previous DM had allocated 15% of management costs to Fire. I adjusted it down to 10% based on the amount of time spent by staff on Fire. It may seem out of balance with their dedicated expenses but managerial costs need to be covered by the 4 charters, so it can’t be just arbitrarily determined in comparison or balance to normal department expenses. The CSD pays for everything for the Fire Department, the only thing that having a separate budget accomplishes is providing a decision-making framework for the Fire Department. The allocation of management costs just provides a tool by which the Fire Dept. will know how much the department is costing the CSD and how much is needed to provide services, and perhaps, save and plan for capital expenses and improvements. The Fire department is just one of the Governmental Services provided by the CSD.
2) By accounting for the Fire Department separately it makes sure that the $33,400 per year will not be spent on other Governmental Service within the District charter besides Fire.
3) The District staff must manage the renewal of all Insurance policies for the Fire department plus coordinate any grants it receives, or legal requirements necessary to be involved in a specific program and all the relevant paperwork that goes along with it, and manages the Fire Tax. The District has the responsibility and the legal liability for the Fire Dept. even if the Volunteer Fireman provide the physical service. Both the volunteers and the CSD work together as a team to make sure that the District can continue to provide a service within their charter.
1) MBCC does have very tractable dedicated expenses.
2) Actually, quite a bit of District management time goes into managing the CC repairs, improvement projects, dealing with neighborly problematic conditions, coordination of various events, and community activities.
3) Yes, the increase in outsider rental fees at the CC is to hopefully help with some of the deferred maintenance, repairs and upgrades. We have yet to see how it will all work out with higher fees. Most likely, more per rental, but probably less rentals, so we have yet to see if it will be a wash.
4) This is the last year that Measure A funds will go into the General fund which is where they have been going. But looking forward, they are restricted funds that will only be able to be spent on recreational uses, and will need to be kept in a separate bank fund from the normal District funds. Most expenditures that meet the level of spending to be considered a capital improvement come out of the General fund anyway, so it’s probably a wash being as under the District charter, the water is the only CSD business-activity that has funds that are not completely interchangeable with General funds – with the exception of all restricted funds of course.
5) CC full-time staff is for cleaning and grounds maintenance. It does have volunteer staff as well. The staff may be increasing with the new rental fees because all the expenses are now included, so those payments that use to be paid directly to the cleaning crew and facilitators, will now run through the CSD.
6) Yes, Amy does the rental bookings, and various volunteers organize the community events, but the CSD pays the event expenses. This seems to be something the community desires, so the costs are accommodated by the CSD, and work is performed by both District and volunteer staff.
1) Roads are a charter within the District. The $12,000 is just for planned repairs and maintenance, which this year was to patch Sunset Way. The Infrastructure project to resurface Sunset Way is a capital improvement project and will come out of unrestricted funds and specifically assigned District funds. As the Sunset Road starts to get closer to construction, or as a part of any kind of financial planning to generate funding, there will be a larger allocation of district management time added to the capital cost of the project. The road portion of that project alone should cost close to $600,000+.Â It is not a number that can be budgeted for in daily operations. It will show up in actuals, but will come from reserves, loans, etc.
2) All District charters do have to contribute to their allocated portion of district management time.
3) Any staff time, aside from DM management time, spent on Roads is usually included in the cost of the road repairs and invoices.
4) Yes, the District has major infrastructure projects on the horizon.
5) Water does not subsidize the General District expenses. The District only exists to manage the four charters as described previous, so there is no other service it provides other than to work on the four department’s activities for providing these four governmental and business services. District County Counsel advises that the CSD would actually be on more dangerous footing if it was not allocating enough to its Business-activity enterprise and requiring the Governmental-activities funds to cover it. In effect, using Governmental funds which need to go towards activities of equal benefit to the tax payers, would actually be benefiting the Business enterprise which, while providing equal opportunity for service, does not provide equal benefit based on fees and use. This becomes the dilemma when the District co-mingles funds. It can run at a loss and still pay its bills, until the tax revenues run out, but it really shouldn’t be covering business losses with public funds. The water business essentially must pay for its management and that management is provided for by the CSD who operates the business enterprise.
6) Water rates can only pay for cost of services. This includes producing, distributing, maintaining infrastructure, and management. Over the past years expenses have been going up, and among them most recently, management costs. There now is one part-time manager pretty much dedicated to water and finances. In the last few years, the water system wasn’t paying for management and was letting it be subsidized by property taxes.
7) Water rates are currently just going to cover operating costs and not even start to try to plan for deferred maintenance or how to pay for the larger infrastructure cost in the future – except for the water capital improvement fee which cannot go to daily water operations as it is a restricted fund.
8) You are absolutely right. The biggest challenge facing the MBCSD and the Community is how to pay for these capital projects that are well beyond both the normal Business-activity revenues and current Governmental revenues. We have a Grants committee looking into grants and the Board will have to look hard at the tradeoff between time and money costs. It will completely fall onto the Board to take in community input and figure how to fund these large projects. In an affluent community like MB, grants are far less likely, so it will probably come down to things like municipal bonds, property assessments, loans, or wait and pay-as-you-go. The CSD has never borrowed before, it has always had a pay-as-you-go policy, but everyone is going to have to put their heads together to find solutions. Right now, the water rate increase is just to get the Water operations to cover itself, and while that will free up unrestricted funds for other uses and definitely help, it will not solve all the infrastructure issues facing the District.
1) Itemized management costs for water operations is actually 43%, so an allocation of 40% is pretty close, accurate, and reliable.
Yes, we are looking at all ways to reduce bookkeeping costs, but that will not balance the budget alone.
We are currently in the process of developing a Capital Improvement Schedule – but we do currently have a Capital projects sheet. Water rate increases are being based solely on Business-activities operational costs, not future capital costs at the moment. The WCI fee is currently saving for water capital improvements – albeit slowly in comparison with district infrastructure needs.
Yes, the Board voted for the first time to have a water retiree compromise payment, so thus it must be included.
With the Water management team hire we were trying to find another way to look at having a water system operator by having a team approach but not cost the District any more.
3-5) The District only exists to manage the four charters. The District’s goal is to get the best service and bang for its buck and will continue to do so. Salary and staff costs are the driving force to why management costs have increased to all departments. There is no separating the District from its individual charters â€“ they are basically all one right now. The CSD is planning on the advice of the auditor to separate the Water finances completely from the District’s books but it will still have management costs allocated, although distributed out by proportional percentages for those items that cannot just be expensed directly.
8) Water rate fees cannot directly pay for Sunset Way Road improvements, but it can stop absorbing the property tax revenues that could be used. The WCI fund can help pay for the new Sunset Way water line and Fire hydrants but not road drainage or surfacing improvements.
Mary Halley – MBCSD Staff