MI-AWWA/MWEA JOINT EXPO 2013New Board is seated ... WCCC , MERC enjoined from jurisdiction ... 2013...
Transcript of MI-AWWA/MWEA JOINT EXPO 2013New Board is seated ... WCCC , MERC enjoined from jurisdiction ... 2013...
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MI-AWWA/MWEA JOINT EXPO 2013
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Board Leadership Changes at DWSD February 11, 2011
Specifies nomination authority for Counties
Professionalizes the Board
Provides for Board staff
Budget & Rates (5/7)
Seated by 4/1/2011
April,2011- current
New Board is seated – 2 new City of Detroit
Commissioners
– New Commissioners for Wayne, Oakland and Macomb
New Chair is seated
Board staff is hired
Board Committees are Active
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Changes effected by Federal Court Orders to achieve long term compliance with the CWA
November 4, 2011 Adopts the Plan of Action
New independent functions: HR, Finance, Legal, Procurement
Expanded Procurement authority
November 4, 2011
Separate DWSD CBAs by 7/1/12 w/o COD bumping
Can outsource/subcontract
Struck past practice
Increased workforce flexibility required
WCCC , MERC enjoined from jurisdiction
Unions enjoined from related grievances, ULPs or arbitration demands
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Management Leadership Change
New Director hired (1/12)
Early observations: Court order Requirements
– Operational Independence
(HR, Law, Finance, Procurement)
Cultural/Structural Issues – Leadership aloofness
– Siloed organization
– Disintegrated Technology & business systems
– Narrowly defined jobs
– Lack of accountability and responsibility
Unacceptable rate trajectory
High Debt
Deferred Capital investment
Absence of planning and strategy
Structure in place for Customer Community engagement – DWSD leadership absence
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0.0%
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150.0%
200.0%
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300.0%
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04
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05
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Fiscal Year
Compounding Effect of Sewage Rate Increases
Wholesale
Retail
0.0%
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150.0%
200.0%
250.0%
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Fiscal Year
Compounding Effect of Water Rate Increases
Wholesale
Retail
10 Year History of Rate Increases
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The affordability picture (June, 2012)
Federal regulations gauge water services as affordable if ‘bills’ are less than 2% of the median annual household income.
Sewer bills are now consuming a higher share of income than in 2009 having risen from 2.43% to 2.64% MAHI (June, 2012)
Water bills are consuming approximately 1% of MAHI
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90 day Assessment Key Findings Siloed organization
Inflexible job descriptions
Multiple reporting levels
Lack of training
Seasonal work issues
Ineffective deployment and use of technology
Disconnected business processes
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Identified Reduction Opportunities (not targeted)
Item Reduction/Year Notes
Staffing $139.6 Million 1,978 to 357
Chemical Use $2.6 Million 15% of $17.4M
Energy Use $4.8 Million 15% of $32.3M
Vehicles $3.6 Million 724 vehicles @ $5,000
Total $150.6 Million 33% Reduction
• Additional costs and projects are required to achieve these savings
• Does not include cost savings from benefit changes already
implemented, reductions in overtime, or staffing savings already
implemented
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DWSD Staff Reduction “potential”
9 Time/Phase
Contracting
Out 19%
Reduction
Sta
ffing
Lev
els
Technology
Upgrades
(Deferred)
5% Reduction
Current
1978
Positions
Budgeted
positions
2,244 Resource Group
373
Positions
Implementation
$32.6M
1,144
Positions
Implementation $98.5M
99
Positions
Implementation
$8.5M
Phase I
Job Design
58%
Reduction
Phase IV (Deferred) Phase II Phase III
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To achieve staff reductions…..
Complete job design, training, re-organization and technology projects
Invest in current systems and technologies through licensing costs and on-going training
Outsource for large engineering projects and for peak times
Contract out non-core functions for low cost services
Does not considered ‘in-sourcing’ of work done by contractors
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-$100
-$50
$0
$50
$100
$150
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
An
nu
al S
avin
gs
(Co
sts)
Mill
ion
s
YEAR
DWSD Reorganization Estimated Savings
Labor Savings Operational Savings Ongoing Expenses Projects Severance Expenses NetSeparation Expense
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DWSD Filled Position Statistics / Projections
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8
9
10
11
12
13
14
1,000
1,200
1,400
1,600
1,800
2,000
2,200Ju
l-1
1
Au
g-1
1
Sep
-11
Oct
-11
No
v-1
1
Dec
-11
Jan
-12
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
No
v-1
2
Dec
-12
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
Dec
-13
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Est
Lab
or
Cost
s -
$ m
illi
on
s
Fil
led
Posi
tion
s
Filled Positions Est Labor Costs - $millions
Remove 123 Budgeted
Positions Attrition since 7/2011
= 185 positions Anticipated additional
attrition thru 7/2012 =
104 positions
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FY 2013-14 Financial Plan Strategy
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While our target budget commitment was to reduce the ‘new revenue’ requirement by
50%, we challenged ourselves to carry the 50% impact through to the increase required.
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“System” Sewage Rate Increases
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0%
2%
4%
6%
8%
10%
12%
14%
16%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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“System” Water Rate Increases
15
0%
2%
4%
6%
8%
10%
12%
14%
16%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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Outstanding DWSD Debt Service
16 (50)
0
50
100
150
200
2013 2018 2023 2028 2033 2038 0
50
100
150
200
250
2013 2018 2023 2028 2033 2038
Jr SRF
Sr SRF
2nd Lien
Sr Lien
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Plan calls for more of our revenue dollar to go to capital and reserves
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Summary DWSD’s circumstances may be exaggerated by the
scale of the operation, but they are not unique:
(Deferred capital, limited appetite for rate increases)
Sources available to finance capital may exist largely within the existing your revenue stream/budget, whether you use those funds for paying debt service or for cash funding of capital.
Financial Planning with support of your Board and Customers is critical to resolving these issues.