FYE 14 Budget prelim - City of Norman

CITY OF NORMANReserve PolicyEnterprise funds have reserve policies to reserve portions of fund balance as follows:• Operating Reserve equal to 8% of the annual operating cost• Capital Reserve equal to the annual average of the next 5 year capital expenditureplanThe FYE 14 ending fund balance is projected to be $12,364,950, of which $12,364,950 isused for meeting the Fund’s reserve requirements.The Water Reclamation Fund provides a subsidy to the Sewer Maintenance Fund for theportion of maintenance expenses attributable to user fees accounted for in the Water ReclamationFund. Water Reclamation Fund reserve levels should be considered in conjunction with SewerMaintenance Fund reserve levels.Transfer PolicyThe amount of transfer from the Water Reclamation Fund in support of the General Fund isbased on a policy that provides for continuity in both funds. A transfer equal to 5% of the WaterReclamation Fund’s operating revenues returns to the General Fund an amount consistent with whatnon-governmental utilities provide in franchise fees.Five Year OutlookOver the next five years net income is projected to increase. The revenue forecast for FYE2015 assumes a 35% increase to the rate structure, to provide funding for expansion of the WaterReclamation Facility.SummaryIn the twelve years since the voters of Norman last approved an adjustment to the sewerutility’s rate structure, an aggressive program of capital improvements has been undertaken. Thiscapital improvement program is reflected in the budgets of the Water Reclamation Fund, SewerMaintenance Fund, Wastewater Excise Tax Fund, and Sewer Sales Tax Fund. This program hasincluded major repairs and improvements to the sewer interceptors and neighborhood lateral linesthroughout the City; the construction of additional sewer mains in northern and southeasternNorman; the construction of major sewerage collection and conveyance systems and lift stations;and major improvements to the handling processes for sewer treatment by-products (“sludgehandling”). The Sewer Utility has successfully sought and obtained matching federal funding forthe construction of many of these improvements, and will continue to pursue matching funds whenfeasible.ANNUAL BUDGET89