We are pleased to present the financial operating and capital highlights for the fourth quarter of Fiscal Year 2018-19, period ending June 30, 2019. Some notable highlights include:
· Overall, consolidated enterprise results were favorable to budget:
o Consolidated Enterprise operating revenue was above budget by 1.8%, with total operating expenses below budget by 5.7%.
o Net Operating Margin exceeded the budget by $38.3 million.
· Water system revenue was on target:
o Domestic water sales were 2,716 acre-feet (AF) or 3.4 percent below budget.
o Total water revenues were $132.8 million, which was $0.2 million or 0.1 percent above budget.
o Operating costs were $116.7 million, which was $5.4 million or 4.5 percent below budget.
o Net operating revenue to fund capital commitments was $16.2 million, which was $5.6 million above budget.
· Wastewater system net operating revenue was above target:
o Revenues were $102.0 million, which was $5.0 million or 5.2 percent above budget.
o Operating expenses were $57.3 million, which was $5.4 million or 8.6 percent below budget. Temporary postponement of the hypochlorite disinfection system implementation at the San Jacinto and Perris Valley RWRFs resulted in lower chemical/hypochlorite costs.
o Net operating revenue to fund capital commitments was $44.8 million, which was $10.4 million above budget.
· Recycled system net operating revenue was below target:
o Revenues were $9.7 million, which was 7.3 percent below budget. The District sold 25,811 acre feet of recycled water, which was 10,189 acre feet, or 28.3 percent below budget as a result of heavy rains from January through April 2019.
o Operating expenses were $6.8 million which was in line with budget.
o Net operating revenue to fund capital commitments was $3.0 million, which was $0.7 million below budget.
· Connection fees for 7,613 EDU/EMS through the fourth quarter were higher than the 6,796 EDU/EMS from the same time period last year, and were above the budgeted connection fee revenues by $11.7 million or 26.4 percent.
Attached for the Board’s review is a staff report (Exhibit A) providing data and analysis of the District’s financial and capital position through the fourth quarter of Fiscal Year 2018-19. The report includes a consolidated enterprise summary, an operating services summary, and a summary of capital expenditures for the fourth quarter of Fiscal Year 2018-19. Attached are presentations of the operating and financial highlights and the capital improvement program.