Full Text
Enterprise Fund Overview What is an Enterprise Fund? An enterprise fund establishes a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services. Under enterprise accounting, the revenues and expenditures of the service are segregated into a separate fund with its own financial statements, rather than commingled with the revenues and expenses of all other governmental activities. Financial transactions are reported using standards similar to private sector accounting. Revenues are recognized when earned and expenses are recognized when incurred, under a full accrual basis of accounting. An enterprise fund provides management and taxpayers with information to measure performance, analyze the impact of financial decisions, determine the costs of providing a service and identify any subsidy from the general fund in providing a service. Enterprise accounting allows a community to demonstrate to the public the portion of total costs of a service that is recovered through user charges and the portion that is subsidized by the tax levy or other available funds, if any. A community may choose to recover total service costs through user charges, but it is not required. History The enterprise fund statute, MGL Ch 44 § 53F ½ (formerly Chapter 41 § 39K), was enacted in 1986. Before that time, communities used special revenue funds authorized under various general laws or special acts in order to separately account for their business type services. These special revenue funds were limited, however, with regard to the services and costs covered. The funds were most commonly authorized for water, gas and electric utility departments and used primarily to account for annual operating costs, not the indirect costs, capital expenditures or fixed assets of the service. The purpose of the enterprise fund statute was to give communities the flexibility to account separately for all financial activities associated with a broader range of municipal services. As part of the FY 2014 budget process the Mayor requested and the City Council approved the adoption of the Massachusetts Department of Revenue Division of Local Services Bulletin 2012-02B (page 3/7) which allows for the combining of water and sewer enterprise funds voted under MGL Ch 44 §53F ½ into a single water-sewer fund. The combined funds will be treated the same as the individual funds were and will have only one certified retained earnings. For operational and accounting purposes the water and sewer enterprise funds will remain separate and distinct funds but will be combined for the purpose of certifying retained earnings and for reporting on the annual Tax Recapitulation report which sets the annual tax rate. This will allow the City to use the Sewer Fund Balance to help offset Water revenue deficits and to help keep the water and sewer rate increases lower for rate payers. Sec. 5-1 ---PAGE BREAK--- Basis of Accounting Proprietary fund revenues and expenses are recognized on the accrual basis. Revenues are recognized in the accounting period in which they are earned and become measurable; expenses are recognized in the period incurred, if measurable. The following major proprietary funds are classified as Proprietary funds and audited as such: The Sewer Enterprise fund is used to account for the Sewer activities. The Water Enterprise fund is used to account for the Water activities. The Trash Enterprise fund is used to account for the Trash activities. The following major proprietary funds are classified by the City as Special Revenue Funds but are audited and reported as proprietary funds: The Golf Course Enterprise fund is used to account for the Golf Course activities. The following major proprietary fund is budgeted and revenue collected as part of the General Fund but is audited and reported as proprietary funds: The Parking Department Enterprise fund is used to account for the Parking activities. For the entire MGL on Enterprise Funds visit the Massachusetts Department of Revenue website: http://www.mass.gov/Ador/docs/dls/publ/misc/EnterpriseFundManual.pdf Sec. 5-2 ---PAGE BREAK--- Five Year Financial Forecast Water and Sewer Enterprise Funds FY22 - FY26 Desc FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Recap Recap Proposed Projected Projected Projected projected percent increase 3.0% 3.2% 3.88% 5.5% 5.0% 5.0% Sewer Rates Residential 6.91 7.13 7.41 7.81 8.20 8.61 Non-Residential < 25,000 cu ft 10.46 10.80 11.22 11.83 12.43 13.05 Non-Residential > 25,000 cu ft 13.40 13.83 14.37 15.15 15.91 16.71 SEWER REVENUE User Charges 9,524,455 9,828,959 10,210,323 10,769,693 11,308,177 11,873,586 Penalties and Interest 38,505 37,000 37,000 37,000 37,000 37,000 Sewer Liens 340,000 300,000 300,000 300,000 300,000 300,000 Other Departmental Revenue Investment Income Intergovernmental-SESD SEWER RATES 9,902,960 10,165,959 10,547,323 11,106,693 11,645,177 12,210,586 Retained Earnings Appropriated 100,000 Other Enterprise Available Funds W/S Combine (1,590,616) (1,453,358) (1,523,153) Premiums on Bonds 180,000 SESD PILOT SUBSIDY SEWER OFS/Trans In (1,310,616) (1,453,358) (1,523,153) - - - TOTAL SEWER REVENUE 8,592,344 8,712,601 9,024,170 11,106,693 11,645,177 12,210,586 SEWER EXPENSES 3% Administration 3% Public Services 657,074 646,798 665,861 685,837 706,412 727,604 9% Engineering 640,816 670,518 945,307 973,666 1,002,876 1,032,962 Insurance Expenses (Deductibles) 5,000 5,000 5,000 5,150 5,305 5,464 15% Long Term Debt (Principal and Interest) 1,692,388 1,931,587 1,930,488 2,220,061 2,553,070 2,936,031 Short Term Debt BANS/Professional Fees 47,000 47,000 47,000 48,410 49,604 51,358 2% SESD Assessment 4,881,292 4,763,997 4,735,813 4,841,307 4,949,150 5,059,396 - Subtotal 7,923,570 8,064,900 8,329,469 8,774,431 9,266,417 9,812,816 10% Indirect Costs 668,774 668,774 694,701 764,638 841,616 926,343 Subtotal 8,592,344 8,733,674 9,024,170 9,539,069 10,108,033 10,739,159 TOTAL SEWER EXPENSES 8,592,344 8,733,674 9,024,170 9,539,069 10,108,033 10,739,159 NET CHANGE IN SEWER FUND BALANCE (Projected) - (21,073) 0 1,567,623 1,537,144 1,471,427 Sec. 5-3 ---PAGE BREAK--- Five Year Financial Forecast Water and Sewer Enterprise Funds FY22 - FY26 Desc FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Recap Recap Proposed Projected Projected Projected projected percent increase 4.5% 4.6% 0.5% 4.0% 4.0% 4.0% Water Rates Residential 3.46 3.62 3.64 3.78 3.93 4.09 Non-Residential 4.68 4.90 4.92 5.12 5.33 5.54 WATER REVENUE User Charges 5,134,087 5,370,306 5,397,158 5,613,044 5,837,566 6,071,068 Interest and Penalties 28,000 30,000 30,000 30,000 30,000 30,000 2.0% Other Department Revenue-Water Liens 208,866 200,000 200,000 204,000 208,080 212,242 2.0% Water Meters and Misc. Revenue 30,000 30,000 30,000 30,600 31,212 31,836 2.0% Backflow 80,414 65,000 65,000 66,300 67,626 68,979 WATER RATES 5,481,367 5,695,306 5,722,158 5,943,944 6,174,484 6,414,125 FB Reserved for Expenditures Retained Earnings 100,000 7,506 Subsidy from Sewer Fund Balance 1,523,153 Other Enterprise Available Funds W/S Combined WATER OFS/Trans in - 100,000 1,530,659 - - - TOTAL WATER REVENUE 5,481,367 5,795,306 7,252,817 5,943,944 6,174,484 6,414,125 WATER EXPENSES 5.0% Administration 3.0% Public Services 713,574 693,448 722,511 744,186 766,512 789,507 3.0% Engineering 672,016 709,768 787,907 811,544 835,891 860,967 Insurance Expense (Deductibles) 2,500 2,500 2,500 2,500 2,500 2,500 8.0% Long Term Debt (Principal and Interest) 2,304,157 2,315,546 2,169,309 2,342,854 2,530,282 2,732,705 5.0% Short Term Debt (Interest Only) 46,000 53,000 11,106 11,304 11,260 11,215 4.0% Assessment 2,570,514 2,674,926 2,785,009 2,896,409 3,012,266 3,132,756 Retained Earnings Expended Reserve Fund Other Financing Uses (OFU) Subtotal 6,308,761 6,449,188 6,478,342 6,808,798 7,158,711 7,529,651 10% Indirect Costs 763,222 799,475 774,475 749,475 724,475 699,475 Subtotal 7,071,983 7,248,663 7,252,817 7,558,273 7,883,186 8,229,126 TOTAL WATER EXPENSES 7,071,983 7,248,663 7,252,817 7,558,273 7,883,186 8,229,126 NET CHANGE IN WATER FUND BALANCE (Projected) (1,590,616) (1,453,357) (1,614,329) (1,708,702) (1,815,001) NET CHANGE IN WATER/SEWER BALANCE (Projected) (1,590,617) (1,474,430) (46,705) (171,558) (343,574) Sec. 5-4 ---PAGE BREAK--- CITY OF SALEM ENTERPRISE FUNDS A2 SUMMARY Actual Estimated Budgeted Increase % INCREASE FY2020 FY2021 FY2022 FY21 v. FY22 FY21 V. FY22 REVENUE SEWER RATES 9,667,459 9,828,959 10,210,323 3.9% 381,364 OTHER 375,617 337,000 337,000 0.0% 0 SEWER TRANS/OFS/WATER SUBSIDIES - TOTAL SEWER REVENUE 10,043,076 10,165,959 10,547,323 3.8% 381,364 WATER RATES 5,072,033 5,370,306 5,397,158 0.5% 26,852 OTHER 368,706 325,000 332,506 2.3% 7,506 WATER TRANS/OFS/GF SUBSIDIES/SEWER SUBSIDY 1,399,461 100,000 TOTAL WATER REVENUE 6,840,200 5,795,306 5,729,664 -1.1% (65,642) TRASH FEES 903,408 899,925 899,925 0.0% 0 OTHER TOTAL TRASH REVENUE 903,408 899,925 899,925 0.0% 00 TRASH TRANS/OFS/GF SUBSIDIES 2,836,362 2,976,275 3,062,519 2.9% 86,244 TOTAL TRASH REVENUE WITH GF SUBSIDY 2,836,362 2,976,275 3,062,519 2.9% 86,244 ENTERPRISE FUND TOTAL REVENUE 20,623,046 19,837,465 20,239,431 2.0% 401,966 EXPENDITURES SEWER ADMIN 1,255,158 1,317,316 1,611,168 22.3% 293,852 SEWER FIXED COSTS 8,184,661 6,700,584 6,718,301 0.3% 17,717 TOTAL SEWER EXPENDITURES 9,439,818 8,017,900 8,329,469 3.9% 311,569 Sewer -Indirect Costs/OTHER FINANCIAL USES - 694,701 694,701 0.0% 0 TOTAL SEWER EXPENDITURES WITH INDIRECT COSTS 9,439,818 8,712,601 9,024,170 3.6% 311,569 WATER ADMIN 1,231,722 1,403,217 1,510,418 7.6% 107,201 WATER FIXED COSTS 5,608,458 5,045,972 4,967,924 -1.5% (78,048) TOTAL WATER EXPENDITURES 6,840,181 6,449,189 6,478,342 0.5% 29,153 WATER -Indirect Costs/OTHER FINANCIAL USES - 799,475 774,475 -3.1% (25,000) TOTAL WATER EXPENDITURES WITH INDIRECT COSTS 6,840,181 7,248,664 7,252,817 0.1% 4,153 TRASH PERSONNEL 80,852 96,364 79,844 -17.1% (16,520) TRASH NON-PERSONNEL 3,552,720 3,779,836 3,882,600 2.7% 102,764 TOTAL TRASH EXPENDITURES 3,633,572 3,876,200 3,962,444 2.2% 86,244 ENTERPRISE FUND TOTAL EXPENDITURES 19,913,571 19,837,465 20,239,431 2.0% 401,966 Net Incr/Decr 709,476 - - Sec. 5-5 ---PAGE BREAK--- Sec 5 – 19C ENTERPRISE FUND – A2 REVENUE FY 2022 TOTAL 20,239,431 $ ENTERPRISE FUND – A2 REVENUE TOTAL 19,837,465 $ FY 2021 ENTERPRISE FUND – A2 EXPENDITURES TOTAL 20,239,431 $ FY 2022 ENTERPRISE FUND – A2 EXPENDITURES TOTAL 19,837,465 $ FY 2021 1 2 3 4 Sec. 5-6 ---PAGE BREAK--- Sec 5 – 19C PROPOSED BUDGET SEWER ENTERPRISE FUND TOTAL 8,329,469 $ FY 2022 ADOPTED BUDGET SEWER ENTERPRISE FUND TOTAL 8,064,900 $ FY 2021 PROPOSED BUDGET SEWER ENTERPRISE FUND TOTAL 8,329,469 $ FY 2022 ADOPTED BUDGET SEWER ENTERPRISE FUND TOTAL 7,457,236 $ FY 2021 13 14 15 16 Sec. 5-7 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actual Estimated Budgeted 1. Enterprise Revenues & Available Funds User Charges 14,658,541 14,739,491 15,199,265 15,607,481 2.7% Penalties & Interest 66,505 71,942 67,000 72,506 8.2% Water/Sewer Liens 548,866 503,541 500,000 500,000 Other Departmental Revenue 0 0 0 0 Bond Premium 180,000 0 0 0 Intergovernmental-SESD 30,000 24,407 30,000 30,000 0.0% Water Backflow 80,414 144,433 65,000 67,000 3.1% Total Revenues 15,564,326 15,483,815 15,861,265 16,276,987 2.6% Retained Earnings 100,000 0 100,000 0 Other Enterprise Available Funds - WS Combined 0 0 0 0 OFS/Transfers in 0 79,414 1,680 0 Total Revenue & Available Funds 15,664,326 15,563,229 15,962,945 16,276,987 2.0% 2. Total Costs Appropriated a. Costs appropriated in enterprise fund Public Services 1,370,648 1,196,878 1,340,246 1,388,372 3.6% Engineernig 1,312,832 1,515,950 1,380,286 1,733,214 25.6% Long Term Debt (principal and interest) 3,996,544 3,961,913 4,247,133 4,099,797 -3.5% Short Term Debt (interest only) 93,000 1,843 54,680 58,106 6.3% Other (SESD/SBWB assessment) 7,451,806 7,450,033 7,438,923 7,520,822 1.1% Insurance Expense (Deductibles) 7,500 4,597 7,500 7,500 0.0% OFU/Trans Out Total costs appropriated in enterprise fund 14,232,330 14,131,214 14,468,768 14,807,811 2.3% b. Costs appropriated in the general fund - Indirect Costs 1,431,996 1,431,996 1,494,176 1,469,176 Total costs appropriated in the general fund 1,431,996 1,431,996 1,494,176 1,469,176 Total Costs 15,664,326 15,563,210 15,962,944 16,276,987 2.0% SCHEDULE A-2 ENTERPRISE FUNDS SALEM WATER & SEWER ENTERPRISE FUNDS COMBINED - FY22 Sec. 5-8 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actual Estimated Budgeted SCHEDULE A-2 ENTERPRISE FUNDS SALEM WATER & SEWER ENTERPRISE FUNDS COMBINED - FY22 3. Calculation of General Fund Subsidy Revenue & available funds 15,664,326 15,563,229 15,962,945 15,664,327 -1.9% less: Total costs 15,664,326 15,563,210 15,962,944 15,664,327 -1.9% less: Prior year deficit (Negative represents general fund subsidy) 0 20 1 0 4. Sources of Funding for Costs Appropriated in the Enterprise Fund a. Revenue & available funds 15,664,326 15,563,210 15,962,944 16,276,987 1.9% b. Taxation c. Free Cash d. Non-Enterprise available funds Total Sources of Funding for Costs Appropriated in Enterprise Fund 15,664,326 15,563,210 15,962,944 16,276,987 1.9% Total Revenue & Other Available Funds 15,664,326 15,563,229 15,962,945 16,276,987 1.9% Total Costs 15,664,326 15,563,210 15,962,944 16,276,987 1.9% Variance 0 20 1 0 Sec. 5-9 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actuals Estimated Budgeted 1. Enterprise Revenues & Available Funds User Charges 9,524,454 9,667,459 9,828,959 10,210,323 3.9% Interest & Penalties 38,505 45,862 37,000 37,000 0.0% Sewer Liens 340,000 329,755 300,000 300,000 0.0% Other Departmental Bond Premium 180,000 Total Revenues 10,082,959 10,043,076 10,165,959 10,547,323 3.8% Retained Earnings Appropriated 100,000 Other Enterprise Available Funds - WS Combined (1,590,616) $ (1,399,461) $ (1,453,358) $ (1,523,153) $ OFS/TRANS IN/SESD Trans 79,414 1,680 Total Revenue & Available Funds 8,592,343 8,723,029 8,714,281 9,024,170 3.6% 2. Total Costs Appropriated a. Costs appropriated in enterprise fund Public Services 657,074 535,683 646,798 665,861 2.9% Engineering 640,816 942,123 670,518 945,307 41.0% Long Term Debt (principal and interest) 1,692,387 1,692,333.00 1,931,587 1,930,488 -0.1% Short Term Debt (interest only) 47,000 0 1,680 47,000 2697.6% Other (SESD assessment) 4,881,292 4,879,519 4,763,997 4,735,813 -0.6% Insurance Expense (Deductibles) 5,000 4,597 5,000 5,000 0.0% OFU/Trans Out Total costs appropriated in enterprise fund 7,923,569 8,054,255 8,019,580 8,329,469 3.9% b. Costs appropriated in the general fund (Indirect Costs) 668,774 668,774 694,701 694,701 0.0% Total costs appropriated in the general fund 668,774 668,774 694,701 694,701 0.0% Total Costs 8,592,343 8,723,029 8,714,281 9,024,170 3.5% SCHEDULE A-2 ENTERPRISE FUNDS SALEM SEWER ENTERPRISE FUND - FY22 Sec. 5-10 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actuals Estimated Budgeted SCHEDULE A-2 ENTERPRISE FUNDS SALEM SEWER ENTERPRISE FUND - FY22 3. Calculation of General Fund Subsidy Revenue & available funds 8,592,343 8,723,029 8,714,281 9,024,170 3.6% less: Total costs 8,592,343 8,723,029 8,714,281 9,024,170 3.6% less: Prior year deficit (Negative represents general fund subsidy) 0 0 0 0 -79.7% 4. Sources of Funding for Costs Appropriated in the Enterprise Fund a. Revenue & available funds 8,592,343 8,723,029 8,714,281 9,024,170 3.6% b. Taxation c. Free Cash d. Non-Enterprise available funds Total Sources of Funding for Costs Appropriated in Enterprise Fund 8,592,343 8,723,029 8,714,281 9,024,170 3.5% Total Revenue & Other Available Funds 8,592,343 8,723,029 8,714,281 9,024,170 3.6% Total Costs 8,592,343 8,723,029 8,714,281 9,024,170 3.6% Variance 0 0 0 0 0.0% Sec. 5-11 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actual Estimated Budgeted 1. Enterprise Revenues & Available Funds User Charges 5,134,087 5,072,033 5,370,306 5,397,158 0.5% Interest & Penalties 28,000 26,080 30,000 35,506 18.4% Water Liens 208,866 173,787 200,000 200,000 0.0% Other Departmental - Connection Fees Bond Premiums Water Meters & Misc. Revenue 30,000 24,407 30,000 30,000 0.0% Backflow 80,414 144,433 65,000 67,000 3.1% Total Revenues 5,481,367 5,440,739 5,695,306 5,729,664 0.6% Retained Earnings Appropriated 0 0 100,000 7,506 Other Enterprise Available Funds W/S Combined 1,590,616 1,399,461 1,453,357 1,523,153 OFS/Trans In Total Revenue & Available Funds 7,071,983 6,840,200 7,248,663 7,260,323 0.2% 2. Total Costs Appropriated a. Costs appropriated in enterprise fund Public Services 713,574 661,195 693,448 722,511 4.2% Engineernig 672,016 573,826 709,768 787,907 11.0% Long Term Debt (principal and interest) 2,304,157 2,269,580 2,315,546 2,169,309 -6.3% Short Term Debt (interest only) 46,000 1,843 53,000 11,106 -79.0% Other assessment) 2,570,514 2,570,514 2,674,926 2,785,009 4.1% Insurance Expense (Deductibles) 2,500 0 2,500 2,500 0.0% Insurance Expense (Deductibles) OFU/Trans Out Total costs appropriated in enterprise fund 6,308,761 6,076,959 6,449,188 6,478,342 0.5% b. Costs appropriated in the general fund - Indirect Costs 763,222 763,222 799,475 774,475 -3.1% Total costs appropriated in the general fund 763,222 763,222 799,475 774,475 -3.1% Total Costs 7,071,983 6,840,181 7,248,663 7,252,817 0.1% SALEM WATER ENTERPRISE FUND - FY22 SCHEDULE A-2 ENTERPRISE FUNDS Sec. 5-12 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actual Estimated Budgeted SALEM WATER ENTERPRISE FUND - FY22 SCHEDULE A-2 ENTERPRISE FUNDS 3. Calculation of General Fund Subsidy Revenue & available funds 7,071,983 6,840,200 7,248,663 7,260,323 0.2% less: Total costs 7,071,983 6,840,181 7,248,663 7,252,817 0.1% less: Prior year deficit (Negative represents general fund subsidy) 0 20 0 7,506 0.0% 4. Sources of Funding for Costs Appropriated in the Enterprise Fund a. Revenue & available funds 7,071,983 6,840,181 7,248,663 7,252,817 0.1% b. Taxation c. Free Cash d. Non-Enterprise available funds Total Sources of Funding for Costs Appropriated in Enterprise Fund 7,071,983 6,840,181 7,248,663 7,252,817 0.1% Total Revenue & Other Available Funds 7,071,983 6,840,200 7,248,663 7,260,323 0.2% Total Costs 7,071,983 6,840,181 7,248,663 7,252,817 0.1% Variance - 20 - 7,506 0.0% Sec. 5-13 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actual Estimated Budgeted 1. Enterprise Revenues & Available Funds User Charges 855,000 894,077 884,925 899,925 1.7% Other Departmental Revenue 15,000 9,332 0 0 Penalties and Interest 0 0 4,300 0 -100.0% Recycling Revenue 0 0 10,700 0 -100.0% Total Revenues 870,000 903,409 899,925 899,925 0.0% Retained Earnings Appropriated** 300,053 Other Enterprise Available Funds OFS/Transfers In Total Revenue & Available Funds 1,170,053 903,409 899,925 899,925 0.0% 2. Total Costs Appropriated a. Costs appropriated in enterprise fund Salaries 100,702 80,852 96,364 79,844 -17.1% Contracted Services - Collection and Disposal (flat fee) 3,905,713 3,513,015 3,779,836 3,882,600 2.7% Recycling and Other Expenses 39,705 0 Exp Trans/OFU Total costs appropriated in enterprise fund 4,006,415 3,633,572 3,876,199 3,962,444 2.2% b. Costs appropriated in the general fund - Indirect Costs Total costs appropriated in the general fund 0 0 0 0 Total Costs 4,006,415 3,633,572 3,876,199 3,962,444 2.2% SALEM TRASH ENTERPRISE FUND - FY22 SCHEDULE A-2 ENTERPRISE FUNDS Sec. 5-14 ---PAGE BREAK--- FY20 FY20 FY21 FY22 % Change RECAP Actual Estimated Budgeted SALEM TRASH ENTERPRISE FUND - FY22 SCHEDULE A-2 ENTERPRISE FUNDS 3. Calculation of General Fund Subsidy Revenue & available funds 1,170,053 903,409 899,925 899,925 0.0% less: Total costs 4,006,415 3,633,572 3,876,199 3,962,444 2.2% less: Prior year deficit (Negative represents general fund subsidy) (2,836,362) (2,730,163) (2,976,274) (3,062,519) 2.9% 4. Sources of Funding for Costs Appropriated in the Enterprise Fund a. Revenue & available funds 1,170,053 903,409 899,925 899,925 0.0% b. Taxation 2,836,362 2,836,362 2,976,274 3,062,519 2.9% c. Free Cash d. Non-Enterprise available funds Total Sources of Funding for Costs Appropriated in Enterprise Fund 4,006,415 3,739,771 3,876,199 3,962,444 2.2% Total Revenue & Other Available Funds 4,006,415 3,739,771 3,876,199 3,962,444 2.2% Total Costs 4,006,415 3,633,572 3,876,199 3,962,444 2.2% Variance 0 106,199 0 0 Sec. 5-15 ---PAGE BREAK--- ENTERPRISE FUND REVENUE DETAIL In FY 2013 the City Council voted to combine the water and sewer enterprise funds as allowed by the Department of Revenue as outlined in Bulletin 2012-B (page 3/7). The water and sewer funds will remain in separate funds for accounting and budgeting purposes within the City. But they will be combined for reporting purposes on the City’s annual financial statements (CAFR) and for calculating Retained Earnings by the Department of Revenue. Revenues for enterprise funds are derived from the following sources: Charges and Fees – Amounts paid by those who use the service. These include late charges, fees and interest incurred in the collection process. Other Revenue Sources (OFS) – Includes all other receipts such as state funding, grants, surplus from South Essex Sewer District (SESD) & the Salem Beverly Water Supply Board and monies from apportioned and un-apportioned betterments and special assessments relating to the enterprise fund. Retained Earnings – The operating surplus of the enterprise fund. Based on the submission of a June 30 balance sheet, the retained earnings of an enterprise may be used for appropriations only after the Bureau of Accounts certifies it as a surplus. This surplus may be used for capital projects or to offset the operating budget, which effectively reduces the user charges, rates, or general fund subsidy. Like free cash and other general fund reserves, the surplus must be appropriated before the subsequent June 20. After July 1, no appropriation can be made from the surplus until after it is certified by the Director of Accounts. General Fund Subsidy – Any revenue deficits in an enterprise fund can and should be funded by the general fund, either during the initial budgeting process (if anticipated) or raised on the Recap after year end. The City of Salem uses the following sources to fund each enterprise fund: Sewer – User fees, penalties and interest, sewer liens, other miscellaneous revenue and any fund balance surplus at the South Essex Sewerage District (SESD). SESD surpluses are the result of our assessment payment being more than the actual costs of running SESD. Water – User fees, penalties and interest, water liens, sale of water meters, backflow testing and revenue from shutoffs. Trash – User fees, penalties and interest and general fund subsidy. Sec. 5-16 ---PAGE BREAK--- SEWER ENTERPRISE FUND Sewer Revenue – The sewer revenues consist of penalties & interest, sewer rates revenues, sewer liens revenue, sewer backflow tests, and miscellaneous revenue. We also request on an annual basis that SESD send us any fund balances that they may be holding in our behalf. In FY 2022 the City is requesting any increase in sewer rates of 3.88%. Fiscal Year Revenue 2012 7,941,520 2013 9,140,124 2014 8,843,453 2015 8,898,048 2016 8,960,699 2017 8,669,477 2018 9,008,028 2019 10,420,115 2020 10,182,959 2021 10,165,959 Estimated 2022 10,547,323 Estimated 3.8% Sewer Enterprise Revenue % Change FY21 vs. FY22 Sewer Current Rate % Increase New Rate Residential 7.13 3.93% 7.41 Commercial 10.80 3.89% 11.22 >25K Usage 13.83 3.90% 14.37 New Rates Calculations Sec. 5-17 ---PAGE BREAK--- WATER ENTERPRISE FUND Water Revenue – The water revenues consist of penalties & interest, water rates revenues, water liens revenue, backflow testing revenue, and miscellaneous revenue. In FY 2022 the City is requesting any increase in water rates of 0.45%. Fiscal Year Revenue 2012 4,934,150 2013 5,616,609 2014 5,175,132 2015 4,765,690 2016 4,663,821 2017 4,666,970 2018 4,985,062 2019 5,456,388 2020 6,840,200 2021 5,795,306 Estimated 2022 5,729,664 Estimated -1.1% Water Enterprise Revenue % Change FY21 vs. FY22 Water Current Rate % Increase New Rate Residential 3.62 0.55% 3.64 Commercial 4.90 0.41% 4.92 New Rates Calculations Sec. 5-18 ---PAGE BREAK--- TRASH ENTERPRISE FUND Trash Revenue – The trash revenues consist of penalties & interest and trash fee revenue. The general fund subsidizes 73% of the trash fund expenditures. In FY 2016 the City contracted with Waste Management to take over for North Side Carting due to North Side Carting’s inability to fulfill their contractual obligations. The Solid Waste Collection line increased in FY 2016 due to the change in vendor but leveled out in FY 2017 due to mandatory recycling which leveled out the solid waste disposal costs. There is no increase projected for FY 2022. Fiscal Year Revenue 2012 686,835 2013 689,358 2014 689,358 2015 699,082 2016 820,890 2017 877,785 2018 1,069,713 2019 935,128 2020 903,408 2021 899,925 Estimated 2022 899,925 Estimated 0.0% Trash Enterprise Revenue % Change FY21 vs. FY22 In FY 2022 we anticipate an increase in the General Fund Subsidy to the Trash Enterprise Fund based on the use of retained earnings. Fiscal Year Revenue 2012 2,089,981 2013 2,160,684 2014 1,734,930 2015 1,725,206 2016 2,071,893 2017 2,118,620 2018 2,054,990 2019 2,359,895 2020 2,836,362 2021 2,976,275 Estimated 2022 3,062,519 Estimated 2.9% GF Subsidy to Trash Enterprise Fund % Change FY21 vs. FY22 Sec. 5-19 ---PAGE BREAK--- Sec 5 – 19C ESTIMATED REVENUES SEWER ENTERPRISE FUND TOTAL 10,547,323 $ FY 2022 ESTIMATED REVENUES SEWER ENTERPRISE FUND TOTAL FY 2021 ESTIMATED REVENUES WATER ENTERPRISE FUND TOTAL 5,729,664 $ FY 2022 ESTIMATED REVENUES WATER ENTERPRISE FUND TOTAL 5,795,306 $ FY 2021 5 6 7 8 Sec. 5-20 ---PAGE BREAK--- Sec 5 – 19C ESTIMATED REVENUES TRASH ENTERPRISE FUND TOTAL 3,962,444 $ FY 2022 ESTIMATED REVENUES TRASH ENTERPRISE FUND TOTAL 3,876,200 $ FY2021 TOTAL ESTIMATED REVENUES ENTERPRISE FUNDS TOTAL 20,239,431 $ FY 2022 TOTAL ESTIMATED REVENUES ENTERPRISE FUNDS TOTAL 19,837,465 $ FY 2021 9 10 11 12 Sec. 5-21 ---PAGE BREAK--- CITY OF SALEM, MASSACHUSETTS FY 2022 OPERATING BUDGET ACTUAL ADOPTED DEPT MAYOR CITY COUNCIL EXPENDED BUDGET BUDGET BUDGET BUDGET FY 2020 FY 2021 FY 2022 FY 2022 FY 2022 Amount Percentage Inc/Decr FY21 vs. FY22 Budget ENTERPRISE FUNDS SEWER : Sewer - Public Services 535,683 646,798 665,861 665,861 665,861 (129,181) -16.25% Sewer - Engineering 756,015 670,518 945,307 945,307 945,307 274,789 40.98% Long Term Debt 1,692,333 1,931,587 1,930,488 1,930,488 1,930,488 (1,099) Short Term Debt 716 47,000 47,000 47,000 47,000 - SESD Assessment 4,879,519 4,763,997 4,735,813 4,735,813 4,735,813 (28,184) -0.59% Sewer - Insurance Deduction 4,597 5,000 5,000 5,000 5,000 - 0.00% TOTAL SEWER 7,868,862 8,064,900 8,329,469 8,329,470 8,329,469 116,325 1.42% WATER : Water-Public Services 661,195 693,448 722,511 722,511 722,511 29,063 4.19% Water-Engineering 573,826 709,768 787,907 787,907 787,907 78,139 11.01% Long Term Debt 2,269,580 2,315,546 2,169,309 2,169,309 2,169,309 (146,237) -6.32% Short Term Debt 1,843 53,000 11,106 11,106 11,106 (41,894) -79.05% SBWS Assessment 2,570,514 2,674,926 2,785,009 2,785,009 2,785,009 110,083 4.12% Water - Insurance Deduction 0 2,500 2,500 2,500 2,500 - TOTAL WATER 6,076,958 6,449,188 6,478,342 6,478,342 6,478,342 29,154 0.45% Solid Waste : Solid Waste - Engineering 3,633,572 3,876,199 3,962,443 3,962,443 3,962,443 86,244 2.22% TOTAL TRASH 3,633,572 3,229,608 3,962,443 3,962,443 3,962,443 86,244 2.22% PEG Access : Access Cable 471,155 691,250 691,250 691,250 691,250 - 0.00% TOTAL TRASH 471,155 3,229,608 691,250 691,250 691,250 - 0.00% ENTERPRISE FUND TOTAL 18,050,547 20,973,304 19,461,504 19,461,505 19,461,504 231,723 1.21% GRAND TOTAL ALL FUNDS 160,422,470 162,160,297 179,895,308 179,868,047 179,868,046 15,160,183 10.92% Sec. 5-22 ---PAGE BREAK--- Sec 5 – 19C PROPOSED BUDGET WATER ENTERPRISE FUND TOTAL 6,478,342 $ FY 2022 ADOPTED BUDGET WATER ENTERPRISE FUND TOTAL 6,449,188 $ FY 2021 PROPOSED BUDGET WATER ENTERPRISE FUND TOTAL 6,478,342.00 $ FY 2022 ADOPTED BUDGET WATER ENTERPRISE FUND TOTAL 6,147,650.00 $ FY 2021 17 18 19 20 Sec. 5-23 ---PAGE BREAK--- Sec 5 – 19C PROPOSED BUDGET TRASH ENTERPRISE FUND TOTAL 3,962,444 $ FY 2022 ADOPTED BUDGET TRASH ENTERPRISE FUND TOTAL 3,876,200.00 $ FY 2022 PROPOSED BUDGET TRASH ENTERPRISE FUND TOTAL 3,962,444 $ FY 2022 ADOPTED BUDGET TRASH ENTERPRISE FUND TOTAL 3,876,200 $ FY 2021 21 22 23 24 Sec. 5-24 ---PAGE BREAK--- Last Rate % change Residential Commercial Residential Commercial Discounts Fund Adjustment Salem - 7/1/2020 3.62 $ 4.90 $ HCF 7.13 $ 10.80 $ 0-250 HCF yes Enterprise Fund 8/1/2019 3.70% Water: 434.40 $ FY2021 13.83 $ 251+ HCF 10% water if pd. Water & Sewer Sewer: 855.60 $ within 15 days Combined: 1,290.00 $ Salem - 7/1/2021 3.64 $ 4.92 $ HCF 7.41 $ 11.22 $ 0-250 HCF yes Enterprise Fund 8/1/2020 3.00% Water: 436.80 $ Proposed 14.37 $ 251+ HCF 10% water if pd. Water & Sewer Sewer: 889.20 $ within 15 days Combined: 1,326.00 $ Beverly 3.65 $ same HCF 5.61 $ same HCF no Enterprise 7/1/2018 -0.06% Water: 370.80 $ Water & Sewer Sewer: 673.20 $ Combined: 1,044.00 $ Chelsea 5.47 $ same 0-10 HCF 9.47 $ same 0-10 HCF no Enterprise Fund 7/1/2020 0.00% Water: 656.40 $ 6.67 $ same > 10-15 HCF 10.33 $ same > 10-15 HCF Water & Sewer Sewer: 1,136.40 $ 8.38 $ same > 15HCF 12.45 $ same > 15HCF Combined: 1,792.80 $ Danvers 5.92 $ 5.92 $ 0-40 HCF 6.69 $ 7.38 $ 0-40 HCF yes General Fund 7/1/2018 2.10% Water: 788.00 $ 6.66 $ 6.66` balance 6.96 $ 7.68 $ balance 15% water Water & Sewer Sewer: 813.60 $ 8.54 $ 8.37 $ elderly/low Combined: 1,601.60 $ income Gloucester 8.30 $ same kgal 14.83 $ same kgal no Enterprise Fund 7/1/2018 3.30% Water: 747.00 $ Water & Sewer Sewer: 1,334.70 $ Combined: 2,081.70 $ Lynn 4.04 $ same 0-27 HCF 7.40 $ same 0-27 HCF yes Enterprise Fund 7/1/2020 3.66% Water: 484.80 $ 4.16 $ same 27-73 HCF 7.65 $ same 27-73 HCF owner occ. Water & Sewer Sewer: 888.00 $ 4.23 $ same 73-2,812 HCF 7.79 $ same 73-2,812 HCF elderly/disabled Combined: 1,372.80 $ 4.29 $ same balance 7.84 $ same balance single @ 15%, 2-fam @ 7.5%, 3-Fam @ 5% Marblehead 5.90 $ same 0-30 HCF 10.30 $ same 0-30 HCF no Enterprise Fund 11/1/2020 10.49% Water: 784.40 $ 7.90 $ same balance 10.30 $ same balance Water & Sewer Sewer: 1,310.40 $ Combined: 2,094.80 $ Peabody 3.31 $ same 0-15 HCF 4.41 $ same 0-15 HCF no General Fund 7/1/2019 0.16% Water: 422.60 $ 3.65 $ same 15-25 HCF 4.92 $ same 15-25 HCF Water & Sewer Sewer: 566.00 $ 3.90 $ same 25-30 5.23 $ same 25-30 HCF Combined: 988.60 $ 4.04 $ same balance 5.52 $ same balance Revere 3.91 $ 5.93 $ HCF 11.79 $ 18.55 $ HCF yes Enterprise Fund 7/1/2019 0.00% Water: 469.20 $ senior Water & Sewer Sewer: 1,414.80 $ Combined: 1,884.00 $ Swampscott 7.11 $ same HCF 5.58 $ same HCF no Enterprise Fund 7/1/2020 4.43% Water: 906.20 $ Water & Sewer Sewer: 749.60 $ Combined: 1,655.80 $ NOTE: All data taken from MWRA Annual Water and Sewer Retail Rate Survey - 2020 Water: 625.49 $ Water: (188.69) $ Sewer: 987.41 $ Sewer: (98.21) $ Combined: 1,612.90 $ Combined: (286.90) $ Average Costs of listed communities: FY2022 COMBINED RETAIL WATER AND SEWER RATE COMMUNITY CHARGE COMPARISION Annual Cost per 120 HCF (approx 90,000 gallons) Water Sewer Salem vs. Comparable Communities Sec. 5-25