2012 CAFR - Encina Wastewater Authority

ENCINA WASTEWATER AUTHORITYNOTES TO FINANCIAL STATEMENTSJUNE 30, 2012 AND 2011Note 1 - Organization and Significant Accounting Policies: (Continued)Significant Accounting Policies (Continued)Allocation of CostsExpenses are allocated to the various member agencies in accordance with their capacity ownershippercentages of the respective units, on usage (strength and/or wastewater flow), on direct costs, and basedupon other special allocations, as provided for in the annual budgetary process.ReservesIn accordance with the Revised Basic Agreement, each member agency agrees to pay its actual portion ofoperating and capital costs on a q uarterly basis. As such, the Authority is not dependent on economicperformance, nor is it directly impacted by major structural changes in federal and state government fiscalpolicy. The Authority has adopted a Financial Reserve Policy to maintain an appropriate amount of cashresources necessary to meet demands during any quarterly period.The policy was amended in July 2008 by Resolution 2008-9 and provides the following:• Operating reserve amount of $1,000,000 allocated on the basis of Weighted Unit I Ownership (seeNote 8).• Remote Facility reserve amount of $50,000 from each member agency that owns, in whole or in part,a remote facility or facilities operated and maintained by the Authority.• Inventory reserve amount of $850,000 allocated on the basis of Weighted Unit I Ownership.• Capital Reserve amount not to exceed $10,000,000 or less than $3,000,000 as established in theannual Budget Appropriation Resolution.The total operating, remote facility, and inventory reserve of $2,000,000 is reported as Net AssetsUnrestricted. The capital reserve is reported as a component of Net Assets Restricted for Capital Program.Member AgencyOperatingReserveRemoteFacilityReserveInventoryReserveCapitalReserveTotal2012Total2011Buena Agency $ 81,600 $ 50,000 $ 69,360 $ 212,850 $ 413,810 $ 413,810City of Carlsbad 248,100 50,000 210,885 1,324,606 1,833,591 1,833,591City of Encinitas 48,400 - 41,140 157,252 246,792 246,792Leucadia Wastewater District 203,400 - 172,890 530,559 906,849 906,849Vallecitos Water District 202,400 - 172,040 1,742,286 2,116,726 2,116,726City of Vista 216,100 50,000 183,685 2,032,447 2,482,232 2,482,232Total Reserves $ 1,000,000 $ 150,000 $ 850,000 $ 6,000,000 $ 8,000,000 $ 8,000,000See accompanying independent auditors’ report.26