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Water and Wastewater Commission Budget Committee AUSTIN WATER FY 2023 PROPOSED BUDGET May 26, 2022 Agenda  Proposed Budget Summary- Item B.1. • Revenue Changes • Rates and Bill Impacts • Requirements Changes • Budget Challenges  Capital Spending Plan – Item B.2. 2 Budget Considerations-B.1.  Increase operational and infrastructure resiliency • AW Priority Since 2019  Maintain financial strength and stability • Financial condition significantly improved since drought from 2011 – 2015 • Stable bond ratings since 2016  Maintain rate affordability • 4.8% Retail Reduction in FY 2018 • No rate increase for 5 years (FY 2019 – FY 2023) 3 Forecast Fund Summary FY22 Estimated FY23 FY24 FY25 FY26 FY27 Beginning Fund Balance $213.70 $229.50 $225.70 $229.30 $223.80 $234.50 Revenue & Transfers In $670.00 $668.10 $702.60 $702.20 $734.80 $748.10 Expenditures & Transfers Out $654.20 $672.00 $699.00 $707.70 $724.10 $735.20 Change in Fund Balance $15.80 ($3.80) $3.60 ($5.50) $10.70 $12.90 Ending Fund Balance Average Monthly Bill (Typical Rate Payer)* FTEs Debt Service Coverage Days Cash on Hand $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 Cash Financing % of Annual CIP Spending - 38.14% 36.42% 33.32% 31.29% 31.77% 4 Forecast complies with all Council approved financial policies. Significant Revenue Changes Description FY23 Significant Changes (In Millions) Wastewater Service Revenue Water Service Revenue Transfers-In from Community Benefit Fund Transfers-In to Reclaimed Water Operating Fund Wastewater Miscellaneous Revenue Water Miscellaneous Revenue Transfers-In to Wastewater Operating Transfers-In to Water Operating Total Significant Revenue Changes 5 $15.8 $9.2 $1.7 $0.7 $0.5 ($0.6) ($5.4) ($7.6) $14.3 Projected Rate Revenue Increases Fund FY23 FY24 FY25 FY26 FY27 Water: Wastewater: Combined WWW: 0.0% 0.0% 0.0% 0.0% 4.7% 4.7% 4.7% 0.0% 0.0% 0.0% 2.0% 4.6% 3.2% 0.0% 0.0% 0.0% Reclaimed: 4.7% 0.0% 2.0% 0.0%  4.8% retail rate reduction in FY 2018  No retail rate increases from FY 2019 through FY 2023  Forecasted FY 24 rate increase would result in rates near 2018 levels 6 Significant Requirements Changes Description FY2023 Significant Changes (In millions) Contractuals and Commodities 45 New FTEs Enterprise Resiliency Operational Optimization Health Insurance Fleet Fuel and Maintenance Compensation adjustment My ATX Water Utility Billing System Support Bad debt expense Other Transfers Total Significant Requirements Changes 7 $5.2 $4.9 $2.7 $2.5 $1.5 $1.1 $0.9 $0.4 ($0.5) ($0.6) ($6.9) $11.2 Austin Water FY23 Proposed New FTEs 8 Initiative Proposed FTEs Operational Optimization Customer Satisfaction Enterprise Resiliency Reducing contracted services Employee Leadership and Development My ATX Water Infrastructure Strategy and Performance Facility Improvements Water Forward Affordability Expedited Development Review Total 9 8 6 5 5 4 3 2 1 1 1 45 Budget Challenges  Supply Chain Challenges/Inflation • 17 contract price adjustments totaling $3.1M  Staffing Plan Increase • Significant increase in budgeted FTEs despite high vacancy rate  Significant Increase in Inter-department Transfers • In FY 2022, transfers for CTECC, CTM, Regional Radio and CPM increases ranged from 12% to 42%  Growing Capital Plan • Several large strategic projects on the horizon • Construction costs continue to rise 9 Hiring and Attrition  Vacancies – FY 22 • Beginning of Year – 138 (includes 62 new FTEs for FY) • Current – 151 (includes April budget amendment for 16 new FTEs)  Hiring – 189 position filled year to date • 68 internal promotions (created 68 new vacancies)  Attrition – 119 Separations • Retirements – 30 • Internal transfers (other City departments) – 36 • Other separations – 53 10 $975M $971M $1,087M CIP Plan Funding Overview- B.2. 11 Strategic Projects 12 Discretionary Projects 13 QUESTIONS Austinwater.org 14 Austin Water FY2023 Proposed New FTES and Significant Changes Purpose/EUM/Initiative Operational Optimization Operational Optimization Total Customer Satisfaction Business Process Consultant Sr Oversee records mgmt. &PIR staff and processes Job Title IT Support Analyst Sr. IT Systems Consultant Project Coordinator Street & Bridge Ops Crew Lead Street & Bridge Ops Tech III Supv, AW Pipeline Technician 5860 - Services-other 5860 - Services-other 7134 - Chemicals 5006 - Temporary employees Job Description Hardware/software support Supports Virtual Desktop Infrastructure, mobile tech, cloud tech for mobile first and remote work capabilities. Water Forward Cut Restoration - Street repairs Lead Cut Restoration - Street repairs Cut Restoration - Street repairs Additional contract costs for wastewater emergency overflow, water loss metrics and strategies consultant services, water quality protection land restoration services, 3rd-party hearing process related services. Additional contract costs for preparing, preventing, and responding to weather emergencies and power outages. Increase in chemical costs due to an increase in projected raw water pumpage, as well as an increase in chemical cost. Increase in temporary employees due to additional staff needed for water conservation ordinance violations 3rd-party hearings, creek walking, manhole inspections, and smoke testing. Community Engagement Specialist Marketing Commun Consultant Mgr, Consumer Services Mgr., AW Operations Pretreatment Compliance Specialist Sr. Prgm Mgr, Public Info & Mktng Water Quality Scientist Sr. Responsible for content and communications strategy, website administration, user experience design, visual design and brand oversight. Reputation management and crisis communications. 1st lever management dispatch which operations 24/7 Ops Mgr. level position for Dispatch & CX activity DSD - Expedited Program Oversee media, outreach, & customer relations. Support sampling requirements for the state and federal lead and copper rule AW Pipeline Tech Sr. AW SCADA Analyst AW SCADA Analyst Sr. Engineer C Prgm Coord, Fleet 5240 - Consultant financial 6327 - Insurance-fire/ec 6843 - Government permits and fees Water hauling support Respond to SCADA maintenance, repair and replacements in the field. Supports project delivery, asset management, and implementation standards. Support mobility projects and utility relocations Support Austin Water's fleet of vehicles. Increase in financial consultant service to procure consultants and Impartial Hearing Examiner for the upcoming rate filing. Increase in fire and extended coverage insurance costs due to increased rates caused by Hard Insurance Market. Increase in government permits and fees for right-of-way permits fees. Values Sum of FTE Sum of $ Amount $104,487 1 1 1 1 4 1 9 1 1 1 1 1 1 1 1 8 2 1 1 1 1 $143,764 $109,940 $86,942 $320,480 $104,487 $772,032 $731,507 $554,127 $462,209 $3,389,975 $135,229 $109,940 $121,848 $135,229 $173,058 $109,940 $128,353 $104,487 $1,018,084 $173,884 $121,848 $135,229 $143,764 $86,942 $1,600,000 $387,852 $369,942 Customer Satisfaction Total Enterprise Resiliency Austin Water FY2023 Proposed New FTES and Significant Changes Purpose/EUM/Initiative Job Title Enterprise Resiliency Enterprise Resiliency Total Reducing contracted services Reducing contracted services Total Employee Leadership & Development Employee Leadership & Development Total My ATX Water My ATX Water Total Infrastructure Strategy & Performance Infrastructure Strategy & Performance Total Facility Improvements Facility Improvements Total Water Forward Water Forward Total Affordability Affordability Total Other 6843 - Government permits and fees Job Description Increase in government permits and fees for Austin Water's general permit fees from Development Services Department and public Capital Improvement Project review team. Ofcr, Security Ops Ctr Supv, Security Ops Lobby and foot patrol for Waller Creek. Lead at lobby Waller Creek Lobby desk. Coord, Occupational Health & Safety IT Business Systems Analyst Sr Occupational Health & Safety Specialist Sr Performance Advisor Pgrm Mgr II, Equity and Inclusion Address span of control issues, increase the capacity to support operations, and develop safety culture. Develop online training This replaces a temp employee Develop & engagement team Expand Austin Water's equity program IT Business Systems Analyst Sr IT Business Systems Analyst Sr Water Meter Technician Sr. 5006 - Temporary employees Engineer C Engineer, Consulting Prgm Mgr, Capital Improvement My ATX Water analytics and system data updates. My ATX WaterScrum master, requirements, testing, interfaces Lead services inspections Increase in temporary employees to support AMI installation and quality control activities. Wastewater CIP, Find it Fix it - IDIQ Technical expertise - Consulting Responsible for data analysis and reporting for Austin Water's CIP and IDIQ programs Maintenance Worker III Mgr., General Maintenance Will develop manufactory preventative maintenance schedule for elevators and fire alarms. Manage HVAC Supervisor, Facilities Supervisor, and Master Electrician Engineer C Water Forward Financial Analyst IV Responsible for planning and supporting the current and future Texas Water Development Board Loans. Administrative Specialist 9747 - Trf to Wastewater CIP fund DSD - Expedited Program Increase in the operating fund cash transfers for pay-as-you-go cash financing for Wastewater capital projects. Values Sum of FTE Sum of $ Amount 6 4 1 5 1 1 1 1 1 5 1 1 2 4 1 1 1 3 1 1 2 1 1 1 1 1 $352,600 $3,372,061 $333,860 $104,487 $438,347 $115,709 $128,353 $109,940 $109,940 $152,879 $616,821 $128,353 $128,353 $173,884 $361,187 $791,777 $143,764 $162,626 $143,764 $450,154 $71,663 $115,709 $187,372 $143,764 $143,764 $128,353 $128,353 $80,120 $8,000,000 Austin Water FY2023 Proposed New FTES and Significant Changes Purpose/EUM/Initiative Job Description Values Sum of FTE Sum of $ Amount Job Title 9700 - Trf to General Fund 9752 - Trf to Reclaimed Water CIP (D2107) 6242 - Interdeptl-Admin.Support 6240 - Interdeptl data systems 9728 - Trf to CIP Mgm - CPM (5460) 6250 - Fleet-equip.preventative maint 6255 - Transportation-city veh fuel 5115 - Compensation adjustment 6241 - Interdeptl-Utility billing 6898 - Bad debt expense 9893 - TRF Operating to Debt Defeasance 9892 - TRF CFR to Debt Defeasance Increase in the transfers to the General Fund, Reclaimed Water Fund, Administration Support, Interdepartmental Data Systems, and Capital Project Management Fund. Increase in fleet fuel charges and fleet preventative maintenance costs. Additional funding to cover the cost of a 2.0% wage increase in FY2022-23. Decrease in the transfer to Austin Energy for utility billing system support. Decrease in bad debt expense based on revenue collection trends. Decrease in the transfer from Operating to Debt Defeasance for one-time transfer in FY2022. Decrease in Debt Service CRF Defeasance transfer to reduce Austin Water debt using impact fee/capital recover fee collections. $2,867,504 $1,053,248 $896,824 ($520,582) ($607,883) ($4,826,000) ($13,000,000) 1 ($6,056,769) Other Other Total Austin Water FY22 Contract Price Adjustment Log Contract Vendor Description Anhydrous Ammonia Liquid Ammonium Sulfate Liquid Phosphate Liquid Ferric Sulfate GA190000058 Shrieve GA180000031 Brentag GA190000060 Carus GA190000044 USALCO NA190000126 Premier Magnesia Magnesium Hydroxide Slurry & Equipment GA180000034 DPC GA190000042 DPC GA190000058 Shrieve GA190000042 DXI GA190000042 DXI GA200000018 Core & Main GA180000023 Core & Main GA180000022 Badger Meter GA200000013 Iconix Waterworks Gate Valves GA210000045 Techline GA160000043 Allied Sales NA180000109 Underwater Sodium Hypochlorite Chlorine, Bulk Anhydrous Ammonia Chlorine, 1-ton cylinders Chlorine, 150 lb. cylinders Pipe -HDPE Ball and Gate Valves Reclaimed and Cold Water Meters Brass Fittings Industrial Lubricants Diving Services Contract Extend Exp. Date Commodity Type Chemical Chemical Chemical Chemical Chemical Chemical Chemical Chemical Chemical Chemical Other Other Other Other Other Other Other Date of Price increase 3/1/2022 3/22/2022 3/22/2022 3/22/2022 4/22/2022 5/22/2022 5/22/2022 5/22/2022 5/23/2022 5/24/2022 1/22/2022 2/1/2022 3/22/2022 3/22/2022 3/22/2022 4/22/2022 4/22/2022 % of Increase 14.00% 83.98% 38.20% 13.50% 9.78% 86.95% 47.67% 26.30% 68.67% 37.81% 10.00% 20.00% 5.52% 25.00% 29.50% 56.64% 7.21% Contract Increase Amount $58,800 $51,150 $230,189 $78,900 $658,316 $910,000 $262,500 $134,400 $538,125 $1,575 $3,874 $21,744 $6,102 $5,174 $34,975 $172,822 $2,913 8/22/2024 3/7/2023 8/18/2024 5/27/2024 4/29/2024 4/26/2023 4/28/2025 8/22/2024 4/28/2025 4/28/2025 Expired 2/4/2023 2/7/2023 1/29/2023 6/1/2026 9/30/2022 5/27/2023