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policy:financial_management_policy_statement [2012/07/10 16:02] – Proposed update 7/10/12 dustin | policy:financial_management_policy_statement [2014/10/14 21:44] – Update 10/9/2014 dustin | ||
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- Rates will be adopted as a part of the District’s annual budget process. Rates will be reviewed annually and adjusted as appropriate. As part of that process, a ten year revenue forecast (Revenue Model) should be used for financial planning purposes. The " | - Rates will be adopted as a part of the District’s annual budget process. Rates will be reviewed annually and adjusted as appropriate. As part of that process, a ten year revenue forecast (Revenue Model) should be used for financial planning purposes. The " | ||
- Rates will be set at levels which will generate revenue sufficient to ensure payment of all operating and maintenance expenses and debt service, to ensure compliance with all applicable covenants to bond holders, and to meet such additional requirements as set forth in these policies. | - Rates will be set at levels which will generate revenue sufficient to ensure payment of all operating and maintenance expenses and debt service, to ensure compliance with all applicable covenants to bond holders, and to meet such additional requirements as set forth in these policies. | ||
- | - In the event of lower than projected revenue, the District has established a Rate Stabilization Fund to allow for the District to mitigate unplanned variations in revenues and expenses and to meet any statutory requirements or contractual or policy commitments on debt service coverage. The Rate Stabilization Fund includes a minimum balance equal to at least 4.1% of annual operating revenue, | + | - In the event of lower than projected revenue, the District has established a Rate Stabilization Fund to allow for the District to mitigate unplanned variations in revenues and expenses and to meet any statutory requirements or contractual or policy commitments on debt service coverage. The Rate Stabilization Fund includes a minimum balance equal to the largest estimated budget underrun for 2012-2019, then 10% of annual operating revenue |
- The Rate Stabilization Fund is a subordinate fund of the Maintenance Fund. The District may make transfers into the Rate Stabilization Fund from the Maintenance Fund or from the Rate Stabilization Fund to the Maintenance Fund at any time. Transfers to the Rate Stabilization Fund from the Maintenance Fund shall be segregated and excluded from operating revenues of the Maintenance Fund as reported in the District’s annual income statement. | - The Rate Stabilization Fund is a subordinate fund of the Maintenance Fund. The District may make transfers into the Rate Stabilization Fund from the Maintenance Fund or from the Rate Stabilization Fund to the Maintenance Fund at any time. Transfers to the Rate Stabilization Fund from the Maintenance Fund shall be segregated and excluded from operating revenues of the Maintenance Fund as reported in the District’s annual income statement. | ||
- The Rate Stabilization Reserve requirement will be evaluated each year in conjunction with the annual Budget and CIP adoption. | - The Rate Stabilization Reserve requirement will be evaluated each year in conjunction with the annual Budget and CIP adoption. | ||
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- Major capital investments and other commitments that would significantly affect costs or rates for Utility services will be evaluated using the Revenue Model. Such evaluations will address both short- and long-term impacts on costs and revenues, and address risks and uncertainties associated with the investments. | - Major capital investments and other commitments that would significantly affect costs or rates for Utility services will be evaluated using the Revenue Model. Such evaluations will address both short- and long-term impacts on costs and revenues, and address risks and uncertainties associated with the investments. | ||
- The District requires development projects to complete the infrastructure improvements necessary for new connections, | - The District requires development projects to complete the infrastructure improvements necessary for new connections, | ||
- | - Under state law, the District is allowed to collect a connection or general facilities charge from new connections. The District' | + | - Under state law, the District is allowed to collect a connection or general facilities charge from new connections. The District' |
- The District will not approve any construction contract unless it has sufficient monies in its pay—as—you—go construction fund or bond funded construction fund, which together with approved grants or loans, is sufficient to pay for the amounts expected to become due under the contract. | - The District will not approve any construction contract unless it has sufficient monies in its pay—as—you—go construction fund or bond funded construction fund, which together with approved grants or loans, is sufficient to pay for the amounts expected to become due under the contract. | ||
- When a capital project is funded from both rates and bond proceeds, the District will maintain records to allow a separate accounting of the expenditure of bond proceeds. Bond proceeds will be spent before drawing upon other available cash. The acquisition of grants or loans will not be assumed in the rate planning process. | - When a capital project is funded from both rates and bond proceeds, the District will maintain records to allow a separate accounting of the expenditure of bond proceeds. Bond proceeds will be spent before drawing upon other available cash. The acquisition of grants or loans will not be assumed in the rate planning process. | ||
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- The District will maintain regular communication with rating agencies that rate the bonds and will update the agencies in the event of material adverse changes in its business position. | - The District will maintain regular communication with rating agencies that rate the bonds and will update the agencies in the event of material adverse changes in its business position. | ||
- **Management Policies for District Funds** | - **Management Policies for District Funds** | ||
- | - To accommodate periodic unanticipated or unforeseen needs, the District will maintain at all times an Operating Reserve equal to at least 21 days of utility operating costs. | + | - To accommodate periodic unanticipated or unforeseen needs, the District will maintain at all times an Operating Reserve equal to at least 21 days of utility operating costs. |
- It is the policy of the District to plan capital needs through a 10-year Capital Improvement Program (CIP) and to plan the revenues to fund those capital needs using a 10-year rate revenue forecasting model comprising all expenses and revenues of the system. To provide financial reserves for unplanned capital outlays, the District shall maintain | - It is the policy of the District to plan capital needs through a 10-year Capital Improvement Program (CIP) and to plan the revenues to fund those capital needs using a 10-year rate revenue forecasting model comprising all expenses and revenues of the system. To provide financial reserves for unplanned capital outlays, the District shall maintain | ||
- District funds, including all reserve funds established by this policy statement and any bond proceeds, will be invested according to the following. The District will invest its funds in a manner that preserves capital and ensures the protection of investment principal, allows for its liquidity needs, and achieves the highest investment return consistent with the primary objectives of safety and liquidity. | - District funds, including all reserve funds established by this policy statement and any bond proceeds, will be invested according to the following. The District will invest its funds in a manner that preserves capital and ensures the protection of investment principal, allows for its liquidity needs, and achieves the highest investment return consistent with the primary objectives of safety and liquidity. | ||
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Approved: April 7, 2008 | Approved: April 7, 2008 | ||
- | **Revised: ** July 12, 2012 | + | **Revised: ** October 9, 2014 |