2012 CAFR - Encina Wastewater Authority

MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Analysis of the Authority (Continued)Revenues, Expenses and Changes in Net AssetsThe following is a summary of the Authority’s revenues, expenses and changes in net assets for the FiscalYear ended June 30:2012 2011 2010Operating Revenues $ 12,649,520 $ 12,603,281 $ 13,148,783Nonoperating Revenues 16,791 24,740 39,688Total Revenues 12,666,311 12,628,021 13,188,471Depreciation Expense 7,899,653 6,259,835 5,986,307Other Operating Expense 12,649,520 12,603,281 13,148,783Nonoperating Expense 840,705 49,556 849,179Total Expenses 21,389,878 18,912,672 19,984,269Capital Contributions 7,806,170 5,877,873 4,657,893Change in Net Assets (917,397) (406,778) (2,137,905)Net Assets at Beginning of Year 124,434,699 124,841,477 126,979,382Net Assets at End of Year $ 123,517,302 $ 124,434,699 $ 124,841,477Operating Revenues in Fiscal Year 2012 were $12,649,520, an increase of 0.37% compared to the prior fiscalyear. Operating revenues represent assessments to member agencies for reimbursement of operatingexpenses, as well as revenues from laboratory services, insurance dividends and industrial environmentalcompliance activities. The fluctuation in operating revenues is primarily driven by operating expenses.Operating Expenses, before Depreciation, during Fiscal Year 2012, totaled $12,649,520, an increase of 0.37%compared to Fiscal Year 2011.A loss on disposal of capital assets results when capital items are replaced before they are fully depreciated, orwhen capital funds have been used towards early development or construction of a c apital project, butmanagement has subsequently determined to discontinue the project or has determined there is no futureasset value to the funds expended and must expense the capital project in accordance with generally acceptedaccounting principles (GAAP). A loss on disposal of capital assets totaled $840,705 in Fiscal Year 2012 forprojects relating to the South Parcel Planning, the Grit and Screening Study, and various additional PlantRehabilitation Projects. I nvestment earnings totaled $16,791 in Fiscal Year 2012 and $24,740 in Fiscal Year2011, a decrease of ($7,949) which is primarily the result of a lower average interest earning rate within theinvestment account throughout Fiscal Year 2012.Capital contributions totaled $7,806,170 in Fiscal Year 2012, an increase of 32.81% from Fiscal Year 2011.Current year contributions principally supported the major plant rehabilitation program and the plannedasset replacement.16