2010 REVENUES AND EXPENDITURES
Total projected operating and debt service expenditures for this Fiscal Year of 2010 are estimated to be $ 3,880,448.73. This projected total is less than the 2010 projected revenue of $4,034,200.00 by $153,751.27. This favorable variance is due to the Authority approving "A refinancing of the 2004 and 2005 Bond Issues in 2010" as explained below.
# The Authority's Series of 2004 and 2005 bonds were refinanced on February 15, 2010 realizing an approximate savings of $135,000.00. The 2004 and 2005 Bond Issues were not extended beyond their existing final payoffs of 2021. Also, the Trust indenture was renegotiated as to the requirement of having 25% of the Authority's budget to be in the Revenue Fund to a new 10% requirement.
The total expense for operating the collection system and transportation/treatment system in 2010 is projected to be $2,642,050.00. This operating expense total is more than the budgeted total of $2,589,650.00 yielding a negative variance of $52,400.00. This negative variance was due to increases in utility costs and sludge disposal.
The total debt service expense incurred by the Authority in 2010 is $1,238,398.73 and includes the anticipated principal and interest payment due on January 1, 2010 under the terms of the 2010 refinancing of the 2044 and 2005 Bond Issues, and 2007, 2008, and 2009 Wrap-Arounds, PENNVEST Loans of 1997 and 2001 and 1997 Local Bank Loan.
The projected balance of the Revenue Fund at the end of Fiscal Year 2010 will meet the balance required by the terms of the Trust Indenture for 2010 as proposed in this report.
In summary, it is anticipated that revenues and the operating reserve will handle expenses during Fiscal Year 2010. Considering the projected revenues and expenses for the 4th Quarter of Fiscal Year 2010 as well as the balance in the Revenue Fund as of August 31, 2010, the following Revenue Fund Balance is projected for the end of Fiscal Year 2010:
Balance in Revenue Fund as of August 31, 2010 $529,661.66
Estimated Revenues for 4th Qtr. of 2010 $1,389,357.84
(Estimated Expenses for 4th Qtr. of 2010) ($1,328,104.79)
Projected Revenue Fund Balance on December 31, 2010 $590,914.71
In accordance with the requirements of the Authority's Trust Indenture, this Revenue Fund balance should always be equal to not less than ten percent (10%) of the total projected operating expenses for the Fiscal Year or $258,985.00 for Fiscal Year 2010.
2011 PROJECTED REVENUES AND EXPENDITURES
2011 Total Projected Expenditures
Operating and debt service expenses for Fiscal Year 2011 are estimated to be $4,108,874.40. This estimate has been prepared from a careful analysis of operating expenses incurred during Fiscal Year 2010, and anticipated increases for Fiscal Year 2011 including: projected personnel increases and anticipated increases in transportation and treatment system expense items.
In examining the collection system operating budget for 2011, it is projected that overall costs for operating and maintaining the Authority's collector sewer system will increase by approximately (1.5%) over what was actually expended in 2010 for additional pump repair and new employee.
The total transportation and treatment operating expense projected to be incurred by the Authority during Fiscal Year 2011 is $2,361,300.00. This expense reflects a $83,100.00 increase over budgeted expenses incurred during 2010.
In short, several special considerations were taken into account during the preparation of the transportation and treatment budget for 2011. These considerations are as follows:
# Manpower Expense, Hospitalization (15% increase)- $100,000.00
In summary, the total proposed operating expenses (not including debt service) for Fiscal Year 2011 ($2,728,100.00) are approximately (3%) more than expenses incurred during 2010 ($2,642,050.00).
Also the new debt service for the new egg-shaped digester project has been included in the proposed budget for 2011. This debt service requirement is $1,380,779.40 for 2011.
Total projected expenses for Fiscal Year 2011 are $4,108,874.40.
2011 Total Estimated Revenues
The anticipated revenues for Fiscal Year 2011 are projected to be $4,249,250.00. In the preparation of the operating budget for Fiscal Year 2011, there are sufficient sewer service fee revenues being projected so that when combined with the other sources of revenue and borrowing from the revenue fund, they will cover the anticipated operation and maintenance and debt service expenses.
Revenues from sewer service fees anticipated for 2011 total $3,991,500.00.
Other sources of revenue to be received by the Authority are from penalty and interest charges on past due accounts, interest income on Authority investments, and miscellaneous sources of income.
Accordingly, the total amount of revenue estimated to be received during Fiscal Year 2011 is $4,249,250.00.
Conclusions and Recommendations About Sewer Rental Rates
It is estimated that the total amount of expenditures to be made by the Franklin Township Municipal Sanitary Authority for Fiscal Year 2011 will total $4,108,874.40. The total estimated amount of revenue to be received by the Authority for the same period under the total operating revenue is $4,249,250.00. Accordingly, revenues are expected to exceed expenditures by $140,375.60 and this amount will be put in the Surplus (Capital) Fund.
The anticipated revenues to be generated from the Authority's current sewer service charges in conjunction with the other sources of revenue are adequate to cover anticipated operating and debt service expenses projected for 2011. Therefore, it is recommended that the following sewer service charge rate structure for Transportation and Treatment and Collection System be adopted for 2011 and be effective as of January 1, 2011.
Recommended Charges
IT IS RECOMMENDED THAT THE FOLLOWING PORTIONS OF THE SEWER RATE STRUCTURE BE AMENDED AS FOLLOWS:
# Transportation and Treatment
Residential Customers:
$28.27 per customer per month
(No Increase per month)
Non-Residential Customers:
$4.81 per 1,000 gallons of water consumed
(No Increase per month)
# Contracted Maintenance Services and Debt Service
Residential and Non-residential Customers:
Delmont: $3.13 per customer per month
(Decrease of $0.45 per month)
Salem Township: $3.89 per customer per month
(Decrease of $0.34 per month)
# Murrysville and Penn Township non-residential customers Collection System Charge
$0.58 per 1000 gallons
(No Increase per month)
# Collection System (served by Plum Borough)
Residential and Non-residential Customers:
$4.19 per customer per month
(Decrease of $0.54 per month)
# Garbage Grinder Charge
All Customers:
$1.83 per customer per month
($0.03 Increase per month from last year)
SUMMARY OF MONTHLY SEWER SERVICE FEES
FOR RESIDENTIAL CUSTOMERS
CUSTOMER CURRENT PROPOSE
Municipality of Murrysville $28.27 $28.27 +$0.00
Delmont Borough 28.53 28.08 -$0.45
Salem Township 28.18 28.84 -$0.34
Export Borough 24.95 24.95 +$0.00
Penn Township 28.27 28.27 +$0.00
Municipality of Murrysville 4.73 4.19 -$0.54
(served by Plum Borough)
(1) The above rate does not include those customers which have garbage grinders. An additional charge of $1.83/customer/month should be added to the charges listed for those customers with garbage grinders, which is an increase of $0.03from last year.
The Franklin Township Municipal Sanitary Authority has taken the necessary steps to promote growth and development in its service area and reduce operating expenses through the construction of innovative facilities at the Meadowbrook Road Water Pollution Control Plant. By expanding and upgrading the sewage treatment complex, the Authority has provided hydraulic and organic capacity to accommodate growth and development in its service area.
It is worthy to note that the Authority has realized only nine sewer rate increases during the past forty-one years, the last one being in 2008 which shows an average of 4.88% increase per year since the Authority started treating sewage on June 1, 1970.
June 1, 1970 $ 9.58/Month or $114.96/Year
January 1, 1974 $12.25/Month or $147.00/Year $2.67/Mo. Increase
February 1, 1984 $13.35/Month or $160.20/Year $1.10/Mo. Increase
February 1, 1989 $14.45/Month or $173.40/Year $1.10/Mo. Increase
February 1, 1994 $15.95/Month or $191.40/Year $1.50/Mo. Increase
February 1, 2001 $18.95/Month or $227.40/Year $3.00/Mo. Increase
January 1, 2003 $21.27/Month or $255.24/Year $2.32/Mo. Increase
January 1, 2005 $24.27/Month or $291.24/Year $3.00/Mo. Increase
January 1, 2007 $26.27/Month or $315.24/Year $2.00/Mo. Increase
January 1, 2008 $28.27/Month or $339.24/Year $2.00/Mo. Increase
January 1, 2011 $28.27/Month or $339.24/year No Increase
As can be seen from examination of the above, there has been no rate increase since January 1, 2008
Through the construction of state-of-the-art sludge digestion and gas utilization facilities, the Authority has taken the necessary steps to reduce energy costs as well as sludge disposal costs. Other system improvement programs have also eliminated needless operating and maintenance costs. In addition, the Authority's actions in completing a refinancing of its outstanding bond issues further reduced annual expenses to be incurred in future years.
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