Positive News: MWA’s Balanced Budget Results From Prior Planning

By Staff Reports

(APPLE VALLEY)-Never mind that Mojave Water Agency (MWA) adopted a balanced budget on time as required by law. Never mind that the budget was approved without the use of gimmickry. But, do be mindful of the fact that despite the challenging fiscal environment that public and private agencies face, MWA chose a path three-years ago that has led to adoption of a budget with healthy reserves and the ability to carry out the final phase of $82 million in planned capital projects developed over the last decade.

Before adopting its $76.8 million dollar budget for Fiscal Year 2011-12 (including $38.6 million in remaining capital projects), for the third year in a row the board had to address an additional 2% decline in assessed property valuations and lower property taxes. Property taxes are the largest source of revenue for the Agency and are used to pay for the costs of the State Water Project system as well as overall administration of the Agency. But, the Agency didn’t wait until things got tough to decide what to do about it. “Unlike most public agencies, we approved a Five-Year Cash Flow Risk Model in 2008 that helped us identify potential cash shortfalls so that we could take appropriate action in advance,” said Art Bishop, MWA Board President.

“We adopted several risk mitigation measures that’s helping the Agency maintain a stable and sustainable financial position now and into the future,” he added. The steps taken include:

1. Reduced Water Conservation Incentive Program expenditures

2. Deferral of certain capital projects

3. Reduced departmental initiatives, such as strategic partnerships

4. Reduced departmental administrative expenditures

5. Increase in the Reliability Assessment to cover debt on the 2009 Certificates of Participation

6. Partnering with another State Water Contractor for a water exchange program

7. Hiring freeze of vacant positions

8. Maintaining staff costs at the 2010/2011 level

In addition to leaving vacant positions unfilled to reduce expenses, employees are contributing 2% towards their Public Employees’ Retirement System (PERS) benefit. With the decline in revenues the Agency has been able to bring costs into balance.

One area the Agency has little control over are the costs assessed by the Department of Water Resources (DWR) to pay for the Agency’s share of the State Water Project system. The DWR fixed costs anticipated to be $14.7 million in the coming year are difficult to anticipate due entirely to the unknowns on the State Water Project system, as a result of recent court rulings on the Delta smelt and salmon, aging levee infrastructure, plus potential additional environmental threats to the water supply.

The Agency will have to rely more on its reserves to pay for a variety of capital projects, but the reserve balance will remain above the $20 million minimum identified in the Agency Reserve Fund Policy. “This budget package will help us continue to meet our objective of providing a stable and sustainable financial plan aimed at fulfilling our mission,” said Bishop. The Agency’s board and finance committee held a combination of 13 meetings and workshops starting with a mid-year budget review in February before adopting the new budget.

Created by High Desert voters in July of 1960, the Mojave Water Agency serves approximately 4,900 square miles of the High Desert in San Bernardino County, including the communities of Adelanto, Apple Valley, Barstow, Hesperia, Joshua Tree, Landers, Lenwood, Lucerne Valley, Newberry Springs, Victorville, Yermo, and Yucca Valley. MWA is the only water wholesaler in the region that imports water from the California Aqueduct to ensure a sustainable supply to meet present and future water demands.

For more information about Mojave Water Agency, visit the website atwww.mojavewater.org, or to participate in a community dialogue you can also go to the discussion portion of MWA’s Facebook page at http://www.facebook.com/mojavewater, or to speak to someone at MWA contact

1-800-254-4242.

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