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policy:financial_management_policy_statement [2017/02/01 19:20] – dustin | policy:financial_management_policy_statement [2017/02/01 19:59] (current) – dustin | ||
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- 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. | ||
- | - Generally, rates charged for each class of customer will be set to reflect the cost of supplying service to that class. Rates that are out of balance with respect to costs may be adjusted over a multi—year period to avoid disruption to any class of ratepayers. | + | - Generally, rates charged for each class of customer will be set to reflect the cost of supplying service to that class. Rates that are out of balance with respect to costs may be adjusted over a multi-year period to avoid disruption to any class of ratepayers. |
- The operating and maintenance budget will be set at a level sufficient to maintain facilities in good condition, provide sufficient staffing to ensure safe and continuous operation, and carry out the operations and programs necessary to meet all permit requirements. | - The operating and maintenance budget will be set at a level sufficient to maintain facilities in good condition, provide sufficient staffing to ensure safe and continuous operation, and carry out the operations and programs necessary to meet all permit requirements. | ||
- Necessary appropriations for annual debt service requirements will be included in the annual budget. | - Necessary appropriations for annual debt service requirements will be included in the annual budget. | ||
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- 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. | ||
- While both debt and pay-as-you-go financing may be used to finance utility capital needs, the debt-financing component will be managed to minimize annual volatility in rate requirements. | - While both debt and pay-as-you-go financing may be used to finance utility capital needs, the debt-financing component will be managed to minimize annual volatility in rate requirements. | ||
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- The District will set rates sufficient to provide debt service coverage in excess of the legal minimums. Rates will be set so that the debt service coverage ratio on the Utilities’ senior lien debt, not including connection charge revenue, shall be at least 1.25. | - The District will set rates sufficient to provide debt service coverage in excess of the legal minimums. Rates will be set so that the debt service coverage ratio on the Utilities’ senior lien debt, not including connection charge revenue, shall be at least 1.25. | ||
- **Management Policies for Debt Obligations** | - **Management Policies for Debt Obligations** | ||
- | - Debt will not be used to finance operating and maintenance requirements. (See Debt Policy) | + | - Debt will not be used to finance operating and maintenance requirements. (See {{: |
- **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. |
+ | - The District will set rates as described in 1A above, primarily as a means of managing potential volatility in rates. The ”level rate increase" | ||
- 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. |