BLOG: Water & Sewer Work from Behind the Desk. How we Budget.
Jerry Greiner, President, The District
Every fall, our managers evaluate our operations for this year and next. This type of planning helps us forecast our financial needs. We review labor, equipment, computer, software replacement, and much more. Our team also does their best to estimate emergency repairs and calls, given the unpredictable Northwest Ohio weather.
These planning efforts move from departmental discussions to a review by our accounting staff, Chief Financial Officer, and President. Board committees are then presented with drafts to discuss. Ultimately, the final draft budget plan from each department is reviewed by our full Board of Trustees in late November.
The District’s budget operates like a “not-for-profit”. We cover our expenses with the money we collect from your water and sewer bill. Our goal is to balance income and expenses each year with no profit. Other utilities, like Columbia Gas and Toledo Edison, are considered private and can profit from their revenue after paying expenses.
For The District, managing our expenses is easier than managing income. Our income is based on how much water and sewer is used. Usage varies each year depending on residential use and commercial or industrial demands. Residential use is primarily driven by weather. Generally, we see more use when there is less rain, less use for more rain. While we have all done a nice job of using less water by installing water-saving plumbing fixtures, this does cause our residential use to remain flat or even decrease. As for commercial and industrial use, last year The District benefited as businesses in Wood County grew and we experienced a partial return to normal from the impact of COVID-19.
Rates and Expenses
Usage and rates determine our revenue. So, if usage varies, our revenue changes. During a twelve-month period, usage is not consistent. For example, less water is used in the winter months, than in the summer. Our highest use usually occurs in June through September.
As we look ahead at the anticipated expenses, we take seasonal variations into account. The challenge is the adjustments in labor and equipment in “emergency” situations, like overtime for call-outs or an unexpected breakdown of a truck. Adjustments can be made month-to-month in these areas, but it’s a challenge. Annually we adjust to keep our revenue and expense stream balanced. Then, we either leave rates unchanged or adjust to keep our revenue-expense stream balanced.
Our budget varies year to year as does our revenue stream. This is why we dedicate four to five months each year to the budgeting process. We review it multiple times before our board reviews and approves it. Proper budget forecasts are essential, but so is the hard work of our team to adapt to changes in those forecasts. As a customer, you should be aware of the efforts our team makes behind the desk to accomplish this.
October 5, 2021