Prudent financial management is a hallmark of the Water Authority’s long-term strategy to ensure a safe and reliable water supply both today and for decades to come. That approach paid off in tangible ways during the fiscal year when the Water Authority received its highest credit rating ever and set water rates near the low end of projections.

The Water Authority also planned a withdrawal of $20 million from the Rate Stabilization Fund in Fiscal Year 2017 to maintain smooth water rate adjustments during a tumultuous period of drought response. And strategic planning efforts didn’t stop there: The Water Authority’s Board adopted a Long-Range Financing Plan to ensure the agency’s stability for decades to come.

• Credit Rating Reaches Historic High

  For the first time in its 72-year history, the Water Authority in May received a AAA credit rating from S&P Global Ratings, reducing the cost of financing vital past and future water reliability projects. The upgrade underscored the Water Authority’s commitment to sterling credit and enhanced already strong ratings from the major credit agencies. It also saved an estimated $200,000 during a bond refunding in June 2016. When issuing its AAA rating, S&P recognized the quality of the Water Authority’s financial planning and policies set by the Board, as well as the agency’s commitment to maintaining its financial position with timely adjustments to rates and charges.

• Bond Refundings Save Millions

  The Water Authority has a long history of refunding bonds to save ratepayer money, including two such actions during the fiscal year that reduced long-term borrowing costs by nearly $80 million.

  $63.2 Million

  Savings from refunding $340 million in fixed-rate bonds issued in 2008 and 2010.* The refunding sale was in June 2016.

  $15.1 million

  Savings from refunding $195 million in fixed-rate bonds issued in 2008 and 2010.** The refunding sale was in September 2015.

  *On a present-value basis over the life of the refinanced bonds

  **On a net present-value basis through 2029

• Aggressive Efforts Control Rates

  Water rates for 2017 were set in June – a 6.4 percent increase for untreated water and 5.9 percent increase for treated water. The increases were near the low end of projections due to careful management, a planned withdrawal from the Rate Stabilization Fund, and the Water Authority’s successful efforts to stop the Metropolitan Water District of Southern California from adopting a new fixed-rate scheme that would have shifted an inappropriate share of costs to the San Diego region. The rising cost of water resulted from continued rate increases by MWD, higher costs for drought-proof water supplies from the Carlsbad desalination plant, and reduced water sales as a result of state emergency regulations.

  

• Financial Plan Focuses on the Future

  The Board of Directors adopted the 2015 Long-Range Financing Plan in January, capping a six-month effort to support the agency’s long-term financial stability. The document highlights the Water Authority’s transition to an agency focused on operations and asset management, instead of construction. It focuses on key financial policies, projected capital expenditures, debt issuances, financial performance metrics, and financial risks facing the Water Authority.

  

• Financial Statements

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  Statements of Revenues, Expenses, and Changes in Net Position

  For the Fiscal Years Ended June 30, 2016 and 2015

  	2016	2015
  Operating Revenues
  Water Sales	524,934,642	584,172,839
  Other revenues	3,240,007	4,567,285
  Total Operating Revenues	528,174,649	588,740,124
  Operating expenses
  Cost of sales	387,123,145	411,037,897
  Operations and maintenance	18,212,388	22,365,531
  Planning	8,651,233	8,416,134
  General and administrative	14,259,469	14,115,738
  Depreciation and amortization	59,493,116	57,751,284
  Total Operating Expenses	487,739,351	513,686,584
  Operating Income	40,435,298	75,053,540
  Nonoperating revenues (expenses)
  Property taxes and in-lieu charges	12,067,223	11,475,607
  Infrastructure access charges	30,434,370	29,895,726
  Investment income	5,985,490	2,905,952
  Other income	13,664,392	7,786,392
  Intergovernmental	12,213,866	11,148,139
  Gain (Loss) on sale/retirement of capital assets	27,580	32,557
  Interest expense	(85,112,986)	(81,792,704)
  Debt issuance costs	(6,381,194)	(16,840)
  Other expenses	(10,557,021)	(10,909,171)
  Total nonoperating revenues (expenses)	(27,658,280)	(29,474,342)
  Income before capital contributions	12,777,018	45,579,198
  Capital contributions
  Capacity charges	15,838,800	22,559,844
  Water standby availability charges	11,088,377	11,106,743
  Contributions in aid of capital assets	791,486	6,897,528
  Total capital contributions	27,718,663	40,564,115
  Changes in net position	40,495,681	86,143,313
  Net position at beginning of year, as restated	1,496,572,700	1,410,429,387
  Net position at end of year	1,537,068,381	1,496,572,700

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  Statements of Net Position

  June 30, 2016 and 2015

  	2016	2015
  Assets
  Current Assets
  Cash and investments (Note 2)	$75,806,910	$111,130,235
  Restricted cash and investments (Note 2)	162,359,461	170,873,233
  Water receivables	99,959,059	90,113,890
  Interest receivable	1,054,733	1,222,552
  Taxes receivable	1,198,883	1,159,303
  Other receivables	14,835,074	15,697,438
  Inventories (Note 3)	100,630,252	52,428,622
  Prepaid expenses (Note 4)	4,635,729	4,636,815
  Total current assets	460,480,101	447,262,088
  Noncurrent assets
  Cash and investments (Note 2)	125,312,636	115,405,373
  Restricted cash and investments (Note 2)	72,185,172	70,039,820
  Advances to other agencies	214,436	278,977
  Retention receivable	2,313,364	1,724,761
  Long-term loan receivables (Note 5)	20,000,000	20,000,000
  Net OPEB asset (Note 12)	2,264,891	2,157,000
  Capital assets (Note 6)
  Non-Depreciable	627,237,709	640,109,515
  Depreciable	2,863,737,737	2,617,179,700
  Total noncurrent assets	3,713,265,945	3,466,895,146
  Total assets	4,173,746,046	3,914,157,234
  Deferred outflows of resources
  Deferred loss on refunding	83,475,740	52,891,210
  Employer contributions subsequent to measurement date	6,198,142	4,142,513
  Total deferred outflows of resources	89,673,882	57,033,723
  Liabilities
  Current liabilities
  Accounts payable and other liabilities	128,024,234	75,697,190
  Interest payable	19,462,367	18,448,486
  Construction deposits	434,034	451,123
  Short-term liabilities (Note 9)	345,000,000	360,000,000
  Current portion of long-term liabilities (Note 10)	56,430,666	39,205,400
  Total current liabilities	549,351,301	493,802,199
  Noncurrent liabilities
  Long-term liabilities (Note 10)	2,109,274,211	1,913,161,795
  Net pension liability (Note 11)	62,547,589	57,843,537
  Total noncurrent liabilities	2,171,821,800	1,971,005,332
  Total liabilities	2,721,173,101	2,464,807,531
  Deferred inflows of resources
  Deferred actuarial amounts related to pensions	5,178,446	9,810,726
  Net postion
  Net investment in capital assets	1,148,155,974	1,102,128,289
  Restricted for construction projects	156,718,296	143,366,311
  Restricted for debt service	158,377	113,537
  Unrestricted	232,035,734	250,964,563
  Total net position	$1,537,068,381	$1,496,572,700

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  Cash and Investments

  June 30, 2016 and 2015

  	2016	2015
  As of June 30, 2016 and 2015, restricted cash and investments balances were as follows
  Construction	$55,448,642	$85,370,403
  Debt Service Reserve	22,448,531	12,240,775
  Pay-As-You-Go	156,647,460	143,301,875
  Total	$234,544,633	$240,913,053
  As of June 30, 2016 and 2015, unrestricted cash and investments balances were as follows
  Operating	$49,282,921	$8,150,206
  Designated for Rate Stabilization	125,312,636	115,405,373
  Designated for Equipment Replacement	2,893,890	5,116,513
  Designated for Stored Water	23,630,099	97,863,516
  Total	$201,119,546	$226,535,608
  Total Cash Unrestricted	46.2%	48.5%