Fiscal Year 2018/19 Budget

Budget Discussion and Key Topics New Operations and Maintenance Equipment Renewal and Replacement Software and Information Technology Efforts Bold Initiatives Rates and Fees Performance Pay Reserve Balances Within the budget overview section you will find additional narrative and support that describes the key topics and budget discussions that have taken place in this process since January. This slide produces a list just a few of the main highlights. New Operations and Maintenance New Ops and Maintenance SPC Confluence Martinez IV Equipment Renewal and Replacement Capital - $1,003,605 Replacement Fleet Vehicles (6) Replacement Laboratory Equipment (6) Watershed Park Operations Equipment Software and Information Technology Efforts Clarity – project management Lucity – asset management GIS viewers ADP – payroll and HR services Many other under way Bold Initiatives Floodplain remapping Predictive Modeling LID investments in both the public and private developer sectors Major Projects: moving out on Salitrillo Expansion Rates and Fees Tax Rate Utilities Rates and Other Charges Performance Pay 3.5% approved by the board to support performance pay increases across all SARA Quick plug for the self-evaluations Reserve Balances 25% fund balance policy target Operations - $1,890,591 Supports additional contracted services, some technology improvements Supports increased awareness and outreach campaigns Other special initiatives and partner collaboration

FY 2018/19 Proposed Budget (revised) General Fund (1) Utility Operating Funds (3) Special Revenue Funds (8) Capital Imp. Funds (15) Other Funds (Debt, Insurance) (2) Total All Funds (29) FY 2017/18 Adopted Budget $ 41.1 $19.5 $8.8 $ 159.4 $ 12.9 $241.7 FY 2018/19 Proposed Budget $ 44.6 $ 21.6 $ 8.7 $ 134.6 $ 10.7 $ 220.2 FY 2018/19 Proposed Budget-Revised $ 9.2 $ 136.3 $222.4 As a result of the five recommended revisions to the proposed budget two category areas increased to take the budget from 220 to 222.4M. General Fund increase due largely to tax revenue increases (combination of rate change an total property values across the district) This revenue allows for us to be consistent with previous years in terms of investment in people, operations and capital investments Also allows for transfer to SARA project fund of over $4.0M for the acceleration of some key projects that we discussed Utilities Rates also played a large factors as we built the budgets for utilities (13% Salitrillo; 5% SARA) Staff has invested time in building out the capital improvement plans to ensure we are prepared with the resources to make investments necessary to maintain a top performing wastewater system Over 800K in new resources are proposed, primarily capital to upgrade heavy equipment and operations to bring online MIV Special Revenue Grants Fund (dam rehabilitations, WSC trails, CTP and most recently TCEQ funding for green stormwater infrastructure studies) Remains fairly flat in this budget Capital Improvement Fund These funds are from partners like the City and Bexar County Pretty significant in the amounts, which demonstrates the importance of the project management The reduction from last fiscal year is due to spending down SPC money Other Funds Debt Services Insurance Funds spent down a year of debt services, repayment to BC, insurance expenditures higher than estimated FY18 revenues, reducing ending fund balance All of these budgets meet the fund balance policy in place that requires a target of 25% or 3 months or operating reserves, increases reserves available in utilities for future capital projects identified in the capital improvements plan Dollars in Millions

FY 2018/19 Proposed Budget – Summary Proposed Tax Rate: $.01858 per $100 of property valuation Total Revenues: $167,397,256 Total Expenditures: $185,487,980 Capital Improvement Funds: $115,401,630 Total Reserves (all funds): $36,970,094 Based on the proposed tax rate of 1.858 cents per $100 of property valuation we have the following: Total Revenues: 167M, 101M from intergovernmental partners like BC and CoSA Total Expenditures: 185M, 115M in capital improvement funds such as BC, CoSA, utilities, the SARA project fund, downstream Carry forward beginning balance projected from the current fiscal year balance the shortfall of revenues to expenditures as identified in this slide. pg. I-9

FY 2018/19 Total Available Funds As mentioned we do project a beginning balance of 55M that helps balance the budget for FY19 You’ll find here that intergov funds that come from partners that we perform various services such as project management, studies, etc. is the largerst component Revenue in this budget generated from taxes is 14%

FY 2018/19 Total Appropriations As expected on the expenditure side you see that 49% of the budget is allocated to capital improvement work One of the byproducts of this capital project support are reimbursement to our General Fund that offset personnel expenditures. This number is projected at $1.8M. In the proposed budget we are projecting a fund balance of 36M that is in line with our Fund Balance policy requirements

Rates and Fees – Tax Rate FY18 Current Tax Rate – .01729 Average Annual Tax Amount: $31.30 FY19 Rollback Rate (est.) – .01760 FY19 Proposed Tax Rate – .01858 Average Annual Tax: $35.68 Amount of Proposed Tax Rate was driven by the revenue necessary to fund the recommended new resources (operations and projects under accelerated scenario) Amount was determined to be 1.858 cents

Strategy to fund the recurring operational needs and the accelerated efforts established during strategic planning. Proposed tax rate increase Graph provides the history of our tax rate and how significant our proposed strategy is. The decrease in FY 2015/16 was related to keeping our rate below the Rollback Rate

SARA Projects Fund – Funding History New Authorized Projects Annual Funding for New and Existing FY 2015/16 35 $4,600,325 FY 2016/17 15 $4,292,144 FY 2017/18 5 $3,145,832 FY 2018/19 9 $4,175,705

Utility Funds – Salitrillo WW Salitrillo Plant Expansion Inflow and Infiltration (I&I) Support Fee Rate Changes Connection Fee(s) Variable Fixed Capital Plan capital plan allows for rate model to plan for future cash needs Rates Model we are still reviewing the information received from the various cities we support to help develop recommendations for the FY18 rates; the capital plan, including the Martinez IV plant and a looming Plant Expansion at Salatrillo will be major influencer for any rate decisions. Finance Strategies Evaluating which major capital expenditures would be better to fund through debt issuance versus capturing cash funding through the rate model

Utility Funds – SARA WW Capital Improvement Plan Martinez IV Plant Collection System Planning Martinez II Planning Development in Service Area Rate Proposal issuance versus capturing cash funding through the rate model

SARA Project Fund – Budget Discussion Active Ongoing Projects – 38 New Proposed Projects – 7 Authorized Unfunded – 5 Closed/Closing – 14 pg. I-24 pg. V-4