To: Members of the Castle Rock Water Commission
From:
Mark Marlowe, P.E., Director of Castle Rock Water
Anne Glassman, business Solutions Manager
Title
Five Year Financial Plan 2022-2026
Town Council Agenda Date: NA
Body
________________________________________________________________________________
Executive Summary
As part of the annual rates and fees study, Castle Rock Water staff gathers several pieces of information to input into the four enterprise models for calculating rates, system development fees and cost of service. Throughout the study, staff will bring to Commission some of those inputs and deliverables used for this process.
5 Year Financial Plan
Castle Rock Water (CRW) each year completes a five-year financial plan for the forecasted revenues and expenses. Attachment A shows the draft five-year financial plan for 2022-2026. Attachment A shows the total of all enterprise funds combined along with a breakdown of each enterprise fund for the last three year’s historical actuals, the 2021 approved budget, the 2021 year-end estimates and the proposed 5 year projections. This summary shows revenues and expenses broken down into the main budget categories. The five-year plan feeds off of the 2021 year-end estimates. On the revenue side, year-end estimates are driven largely by estimated changes to the system development fees from budget. CRW is updating estimates on system development fees monthly based on actual permit activity during the year. These numbers will be updated as additional data becomes available. On expenses, year-end estimates for capital expenditures are slightly lower for capital due to timing of projects and the ability for staff to complete all planned projects. This does lead to an increase in budgeting of capital for next year’s budget plan.
Overall, the revenues are projected to increase fairly consistently for the five year planning period based on growth projections and the continued increase in residential and commercial accounts receiving CRW services. Investment earnings fluctuate from year to year based on the market conditions and amount of investments. The intergovernmental revenues and other revenues are showing a decrease throughout the planning period due to agreements that are being fulfilled and coming to end of term, mostly in the water resources fund. Lastly, the transfers in and transfers out show large variances when comparing the 2021 approved budget to the 2021 YE estimates and the forecasted five-year budget due to completing the annual water to water resources transfer after research has shown it is not needed any longer. Also an Interfund loan for the Liberty Village tank was also budgeted for in transfers and is not projected to be needed any longer.
Overall, the operational expenses are projected to increase slowly and fairly consistently over the five year planning period in response to providing service to an increasing customer base. The changes in expenses can be found mostly in the Capital Improvement Program (CIP) projects and overall capital needs year over year based on the master planning process. The debt is showing a yearly decrease due to the 2012 revenue bonds maturing in 2023 thus no payments needed in 2024 and 2025. The personnel costs are in draft form as staff is in the process of working with the Finance Department to update the personnel costs for the 2022-2026 planning period including any possible FTE additions, merit increases and changes to overall employee benefit costs.
Attachments
Attachment A: Five Year Financial Plan