Nevada County Grand Jury
• 2005-2006
A Current Look at Nid Reason for Investigation Nevada Irrigation District (nid) is the largest Special District in
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⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 12 findings
F1
NID has made substantial changes to its budgeting process in recent years. The major change was made in the 2005-2007 budget when separate budgets were created for Operations and Maintenance (O&M) and Capital. The O&M budget supports normal day-to-day service and repair work. The Capital budget supports construction of new facilities including treatment plants and pipelines.
No recommendations for this finding
F2
The annual NID budget includes specific line items for withdrawals from or deposits to reserves.
No recommendations for this finding
F3
NID has repeatedly reported that expenses continue to exceed revenues for the O&M portion of the budget resulting in increased rates for both agricultural and treated water in each of the last five years.
Related Recommendations (1)
R5
NID rate increases should be tied directly to the need for balancing revenues against expenses. Nevada County Civil Grand Jury www.civilgrandjury.com Gran d Jury 0506 Special Districts REQUIRED RESPONSE NID Board of Directors – July 18, 2006 Nevada County Civil Grand Jury www.civilgrandjury.com Gran d Jury 0506 Special Districts
F4
In each year from 1999 to 2004, the original approved NID budget substantially underestimated revenues. The total amount of the underestimation of revenue for the six year period was $24,000,000, which represents an average of 20% of budgeted revenues over the same time period.
Related Recommendations (1)
R1
NID should review the process used to estimate water sale revenues, service connections and interest revenues to ensure that budgeted revenues more closely approximate actual revenues.
F5
For 2004, the amount of the underestimation of revenues was $3,100,000. NID staff stated at a Board of Directors meeting that a 1% change in rates is roughly equivalent to $150,000 in revenues. Therefore, the $3,100,000 underestimation has an equivalent impact of a 20% rate increase.
Related Recommendations (1)
R1
NID should review the process used to estimate water sale revenues, service connections and interest revenues to ensure that budgeted revenues more closely approximate actual revenues.
F6
During recent public hearings on the rate increase process, NID did not clearly state the amount of additional revenues required to balance the budget or the amount intended to be raised by the proposed rate increase.
Related Recommendations (1)
R5
NID rate increases should be tied directly to the need for balancing revenues against expenses. Nevada County Civil Grand Jury www.civilgrandjury.com Gran d Jury 0506 Special Districts REQUIRED RESPONSE NID Board of Directors – July 18, 2006 Nevada County Civil Grand Jury www.civilgrandjury.com Gran d Jury 0506 Special Districts
F7
In 2006, NID formally made proactively expanding water services to the existing and new customers within its service territory its top priority.
No recommendations for this finding
F8
NID has been charging all labor costs to the O&M budget even if the labor was related to the Capital budget. As part of the 2006 proposed rate increase process, NID stated that the amount of labor that should be assigned to Capital rather than O&M was $1,200,000 for 2006.
Related Recommendations (1)
R4
NID should allocate day-to-day labor costs to the O&M budget and labor associated with construction projects to the Capital budget to support the process of setting rates to properly support associated costs.
F9
According to NID, the State of California took approximately $1,600,000 in assessment revenues from NID in 2004, $3,200,000 in 2005, and will take an additional $1,600,000 in 2006. The money transferred from NID to the State amounts to approximately $6,400,000.
No recommendations for this finding
F10
Under current NID procedures, if a construction project cannot be completed on schedule, the moneys assigned to the project remain unspent resulting in under running current year capital outlays. Nevada County Civil Grand Jury www.civilgrandjury.com Gran d Jury 0506 Special Districts
No recommendations for this finding
F11
More than 50% of NID projects over the last five years have not been completed on schedule.
Related Recommendations (2)
R2
NID should implement a tighter control over construction projects including a documented five year construction program complete with a list of current year approved projects with schedules and budgets.
R3
NID needs to improve overall management of its construction program in order to accomplish work identified in the Capital budget in a timely manner.
F12
The costs of construction materials and labor have continued to increase over the last five years. CONCLUSIONS
No recommendations for this finding
Conclusions 5
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CL1 Page 3NID’s $24,000,000 underestimation of revenues over the last six years has had a substantial impact on the rate setting process.
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CL2 Page 3Delays in completing more than 50% of scheduled projects have resulted in increasing the cost of projects.
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CL3 Page 3The current NID practice of under-running the Capital budget due to delays in project schedules has contributed significantly to year end surpluses.
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CL4 Page 3A perceived under-funding of the Operations and Maintenance (O&M) budget has been the basis of much of NID’s proposed rate increases.
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CL5 Page 3The recently adopted process of budgeting day-to-day operations separately from construction program requirements appears to be a valid way to manage and control revenues and expenses.