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Water and Wastewater Budget Committee April 25, 2022 Agenda  February 2022 Boil Water Notice Budget Amendment  Austin Water Financial Forecast Fiscal Year 2023- 2027  Revenue Summary  Requirements Summary  Rates and Bill Impacts  Forecast Fund Summary  Debt Management Update  Budget Schedule  Budget Committee Recommendations/Input 2 Revenue Background & Assumptions  Service rate increases forecasted in FY 2024 and FY 2026  Modest customer account growth of 1.5%  5,800 average monthly residential water consumption  3,700 average monthly residential wastewater flows  Minimal pandemic impact on revenues  Working to update wholesale rates as contracts come up for renewal 3 Forecast Revenue Summary Amended Forecast (In Millions) FY22 FY23 FY24 FY25 FY26 FY27 Water Service $ 311.1 $ 315.2 $ 334.7 $ 339.0 $ 350.4 $ 354.9 Wastewater Service 273.5 278.1 294.2 297.1 313.9 317.1 Reclaimed Service Other Revenue Transfers In 2.4 8.0 2.7 9.1 2.9 9.4 2.9 9.6 3.0 9.7 75.0 63.0 61.4 53.6 57.8 3.0 10.0 63.1 Total Revenue $670.0 $668.1 $702.6 $702.2 $734.8 $748.1 $ Increase from Prior Year % Increase from Prior Year $ (1.9) -0.3% $ 34.5 5.2% $ (0.4) -0.1% $ 32.6 4.6% $ 13.3 1.8% 4 Requirement Assumptions  Personnel costs  Forecasted 2% across the board wage increase  Inter-departmental costs provided by Budget Office  Continued staffing investments – new FTEs proposed to support resiliency, strategic initiatives and customer growth  Increased costs due to inflation and supply chain issues  Cash funding as a percent of capital projects expected to decline as capital spending plan grows  Continued debt management efforts 5 Program Requirements Assumptions Amount Increased in FY23 Forecast (in millions) Description $4.9 $3.7 $2.3 $1.3 $0.9 $0.4 $0.3 $0.3 $0.1 $14.2 45 New FTEs Significant Increase items: $0.7M for on- going and $3M for FY2023 one-time cost 2% Wage Adjustment 8% Health Insurance 2% Inflation Other Contractuals 7% Fleet Maintenance 2% Inflation Chemical 2% Inflation Other Commodities 5% Fleet Fuel Total Forecast Program Requirements Assumptions 6 Budget Office FY23 City-wide Assumptions  Insurance: $13,550 per FTE in FY 2023 (8% Increase from FY22 Approved); 10% increases in out-years  Fleet Fuel: 5% increase  Fleet Maintenance: 7% increase  CTM: 10% increase  CTECC: 5% increase  Radio Network Ops (formerly Trunked Radio): 5% increase  Wireless Maintenance: 5% increase  Accrued payroll: 3% increase  Administrative Support: 5% increase  Worker’s Compensation: 8% increase  Liability Reserve: 0% 7 Austin Water FY23 Proposed New FTEs Initiative Proposed FTEs Forecast Amount Operational Optimization 15 1,652,544 Enterprise Resiliency Employee and Leadership Development Reducing contracted services Customer Satisfaction Stakeholder Understanding and Support My ATX Water Water Forward Affordability Product Quality Total Infrastructure Strategy and Performance 7 5 5 3 3 2 2 1 1 1 777,376 606,205 305,678 360,138 317,646 256,704 253,704 128,352 135,230 104,487 45 4,898,064 8 Forecast Requirements Summary (In Millions) FY23 FY24 FY26 FY27 Amended FY22 Forecast FY25 Operating Requirements $ 272.4 $ 288.4 $ 296.9 $ 305.8 $ 315.1 $ 324.9 Debt Service 161.6 168.7 181.0 185.4 183.7 185.1 Transfers Out 220.7 214.8 221.0 216.5 225.3 225.2 Total Requirements $ 654.7 $ 671.9 $ 698.9 $ 707.7 $ 724.1 $ 735.2 $ Increase from Prior Year $ 17.7 $ 27.0 $ 8.8 $ 16.4 $ 11.1 % Increase from Prior Year 2.7% 4.0% 1.3% 2.3% 1.5% 9 Projected Rate Revenue Increases Projected Service Rate Revenue Increases Fund Water: Wastewater: Combined WWW: Reclaimed: FY23 0.0% 0.0% 0.0% 0.0% FY24 4.7% 4.7% 4.7% 4.7% FY25 0.0% 0.0% 0.0% FY26 2.0% 4.6% 3.2% FY27 0.0% 0.0% 0.0% 0.0% 2.0% 0.0%  Revenue Stability Reserve Fund Surcharge  Reduction in 2018 from $0.19 to current rate of $0.05 per 1,000 gallons  Reached 120 days of Operations & Maintenance in 2018 10 Forecast Fund Summary Beginning Fund Balance Revenue & Transfers In Expenditures & Transfers Out Change in Fund Balance Ending Fund Balance Average Monthly Bill (Typical Rate Payer)* FTEs Debt Service Coverage Days Cash on Hand Cash Financing % of Annual CIP Spending FY22 Estimated FY23 FY24 FY25 FY26 FY27 $213.70 $229.50 $225.70 $229.30 $223.80 $234.50 $670.00 $668.10 $702.60 $702.20 $734.80 $748.10 $654.20 $672.00 $699.00 $707.70 $724.10 $735.20 $15.80 ($3.80) $3.60 ($5.50) $10.70 $12.90 $229.50 $225.70 $229.30 $223.80 $234.50 $247.40 $80.79 $80.79 $84.49 $84.49 $87.49 $87.49 1,298 1,343 1,384 1,399 1,414 1,429 1.85 276 1.75 256 1.78 252 1.75 239 1.86 242 1.82 248 - 38.14% 36.42% 33.32% 31.29% 31.77% Forecast complies with all Council approved financial policies. 11 Debt Management Efforts Total Debt Service Requirements Comparison FY2017 to Current - Budget Basis $45.9 $48.7 $43.8 $52.9 $70.7 $72.9 $66.9 $66.4 $71.8 $53.5 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Forecast 2022-23 Forecast 2023-24 Forecast 2024-25 Forecast 2025-26 Forecast 2026-27 Forecast Current Debt Service Requirements 2016 Debt Service Requirements Fiscal Year Debt Svc Reduction 12 $280 $240 $200 $160 $120 $80 $40 $0 ) s n o i l l i m n i ( e c i v r e S t b e D Questions? 13