Budget Message TIGARD WATER ;)ISTRICT
BUDGET MESSAGE: PY1974-75
May 149 1974
Introduction
Since there are so many new members on the budget committee, a more
detailed budget message is presented.
The Tigard Water District is a non-profit municipal corporation,
incorporated under the laws of the State of Oregon, and its operations
are governed by law. In addition, the Oregon State Board of Health has
statutory authority to publish administrative rules which are applicable
to all public water utilities.
As an aid in preparing the budget the Oregon State Department of
Revenue has published a budget manual. It explains in detail the budget-
ing process including a compilation of abstracts of opinions by the forcer
Law Section of the State Tax Commission and the Attorney General, and of
decisions of the Supreme Court regarding budgets and budgeting. Profes-
sional guidance was also requested from Mr. James Savage, CPA with Coopers
& Lybrand, Auditor for the district. Mr. Savage has seen the proposed
budget document and has approved it as to form.
Since the actual budget document is voluminous, a summarized document
has been prepared for your review and approval. It is shown on the adjacent
page and reflects the General Fund account including historical data, actual
figures on March 319 1974, projected figures for June 309 1974, and the pro-
posed FY1974-75 General Fund budget. Since all bond construction funds have
been expended your primary deliberations will concern the General Fund budget.
Upon approval of the proposed budget, and subsequent publication in the
Tigard Times, a public hearing will be held on June 11, 1974. No public
election or approval of the voters is required because the requested tax levy
is not subject to limitation since the funds received will be used for the
payment of bonded indebtedness principal and interest only.
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General
All water systems consist of three parts:
1. Source
2. Storage
3. Distribution
1. Source
Until 2 years age the Tigard Water District was plagued with chronic
water shortages at peak demand periods in the sumer. Deep wells have been
the main source of water since 1938 when the district was organized. Over
the ensuing years as the water table dropped and as a result of population
growth an ever-increasing demand was placed upon the system. Surface water
had to be imported. The following table reflects the district's rapid
growth during the past 5 years:
1968 im Increase
Meters in service 20686 3036 47%
Water consumption (cu. ft.) 39040000 70076,200 76%
Assessed valuation $61,900,000 $1579037000 154%
During the past year the district has connected to two reliable surface
sources of water with 16-inch mains:
(1) Clackamas River (City of Lake Oswego)
(2) Bull Run (City of Portland)
The engineering firm of Stevens, Thompson & Runyan has estimated that these
two sources, along with the deep wells, will provide adequate water to the
district, including projected growth, until 1985.
' Storage
The Oregon State Hoard of Health requires that each water utility have
at. least 3 days average demand in storage. The average demand of the district
is 1 .1i million gallons per day; therefore, storage capacity should be about
5 million gallons. The district has 7.5 million gallons of storage on hand.
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3. Distribution
For the past 5 years the district has been improving the distribution
system by replacing steel mains with cast iron, increasing the capacity,
completing circulation loops, and installing new pumps stations. These
improvements provide the customers with better service, both quality and
quantity, improved fire protection, and significantly reduces water losses
from old pipe lines.
During the past year Tualatin Rural Fire Protection District was
awarded a fire insurance rating of Class 4 versus the previous Class 6.
Tualatin Rural Fire District is the only rural fire district in the State
of Oregon with such a high rating. Mach of the credit for the high rating
must be given to the water district as it accounts for 39% of this rating.
Three years ago the water losses of the district averaged 36% annually.
This has been reduced to 8%. Water systems with less than 10% water lass
are considered outstanding by the, Oregon State Board of Health.
If the present rate of pipe replacement is continued, within 4 years
the entire system will consist of cast iron or ductile iron pipe, all
adequately sized.
FinancialwEolicies
The financial policies of the water district will remain the same as
in previous years.
With sound fiscal management the Tigard Water District enjoys the lowest
consumer water rates and meter installation charges in Washington County.
Further, all other water purveyors in eastern Washington County intend to
raise their rates on July lot by at least 25%. There are no plans or pro-
posals to increase water rates to our customers during the next fiscal year.
In arriving at reasonable water rates, the Board of Commissioners has
attempted to be fair to all segments of the population; namely; customers,
developers, and tax payers. It is this fairness and openness in dealing with
the public that has gained the district the trust and confidence of the people.
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s
Other than a possible increase in water costs from the City of Lake
Oswego, inflation will have the greatest effect upon the proposed budget.
While the cost of living has risen 10%. cost of construction materials,
such as cast iron pipe, copper, brass fittings, fuel, electricity, etc.,
has increased by as such as 25 to 40%. The policy of the water district
is to "hold the line" on price increases, if possible.
Proposed budget FY1974-75
A summary of the major items of the proposed budget is shown below:
General Fund
Income
Meter installations $121,000
Water sales 4259800
Developer's -- overhead, engr.,
equipment & wage reimbursement 500800
Miscellaneous 30,400
Total Income: $6289000
Expenses
Salaries $1529000
Water costs, including electricity 112,100
Pipe replacements and extensions 759000
Bond Sinking Fund 1119840
Miscellaneous 175060
Total Expenses: $628,000
Information on the above items is presented in succeeding paragraphs.
Also, the method of deriving at the estimates is shown on the pages follow-
ing the summarized budget document on the adjacent page.
Income : Meter Installations
Metor installation charges were increased by $145 each and standardized
throughout the district, effective May 10 1974. Fire sprinkler rates were
also increased from $5 to $10 per month. This will result in a significant
increase in revenue.
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Water Sales
Water sales account for s of the total income of the district.
A 15% increase in water sales is estimated for the next fiscal year,
however, the weather has a marked effect upon this projected figure.
Developer's
For all pipe construction projects, including those accomplished by
private contractor$, the district realizes 104 of the total cost for over-
head, inspections, administration, water loss, etc., and 8% for engineering.
John Miller, Foreman, performs the inspections and the Administrator does
the engineering.
When district field personnel perform the actual work for a developer
the district is reimbursed for their wages plus equipment rental.
Revenue from developers amounts to about 10% of the total income.
Expensest
Salaries
Salaries amount to 23% of the total expenditures for the fiscal year.
This subject will be discussed in other paragraphs.
Water Costs
As the 4 wells continue to go dry, more water will have to be purchased
from either Lake Oswego or Portland. It appears now that the State Engineer
will officially prohibit pumping of wells #3 and #41 except in emergencies.
In September 1973 pumping of well #4 was voluntarily curtailed due to the
quality of the water and high cost of pumping. _
We are hopeful that Lake Oswego will not increase their wholesale rates
during the next fiscal year. This could have a drastic effect upon the budget.
Pipe Replacements andExtensions
In continuance of the pipe replacement and extension program, $75000
has been earmarked for this account. Our goal is an all-cast iron system
within a 4-year period, capable of lasting for 100 years.
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Bond Sinking Fund
1974 is the first time since 1959 that a bond issue has not been
required for the ensuing 3-pear period. Bond issues and amounts were
granted as follows:
Year of Issue Amount Year of Maturity
1959 $ 160,000 1980
1962 2509000 1984
1965 250,000 1987
1968 300,000 1990
1971 9809000 1988
Total bonded indebtedness, July 1, 1974 - $1,574,000
No bond issue authority is contemplated for this fiscal year.
Bonded indebtedness is paid off from advalorem taxes and revenue
(Bond Sinking Fund). Funds to pay the indebtedness for this year are
derived as follows:
Estimated funds on hand, July 1 1974: $ 61 ,757 '
Bond Sinking Fund (General Pundit 116,029
Advalore■ taxes: 60,000
$237,786
It is interesting to note that with an estimated assessed valuation
of the district at $2009000,000, each 10 increase per $1,000 valuation
results in $29000 of revenue. During the last bond election the Board
of Comissioners pledged not to increase the tax rate which is now at
30¢ per $1,000 valuation.
Salaries (Again)
To establish fair and reasonable salaries for the employees and to
stay within the budget is always a difficult task- for any budget cosmittee.
An employee's worth to the district and individual capability must be weighed
against available funds. One factor is the coat-of-living index which has
increased 10%.
The Tigard Water District is not a union shop, and we would prefer to
remain that way. Field employees of both Portland Bureau of Water Works
and Metzger Water District belong to a union and it seems to create more
problems than it solves.
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Soo
Payroll changes are proposed as follows:
1. One additional fringe benefit
2. One additional field employee
3. Payroll increase
1. Fringe benefit
This year the employee's have requested that the budget committee
approve Blue Cross health insurance coverage for their eligible dependents.
Presently, the district pays for the employee only. The additional coverage
amounts to $1,680 annually.
2. Additional employee
With growth comes added work load for the district. All hands are
performing at full tilt and still work remains to be done. John Miller
needs someone who can work without personal supervision to maintain the
7 reservoir sites, 4 pump stations, shop and storage area, in addition
to work as a pipe fitter and read meters. Such a man has been workipg
for the district on a part-time basis for 11 years. He is 36 years old
and capable of performing these tasks for the district. Total cost:
$7,800 per year. Please note that field labor (part-time) has been
reduced to account for this employee.
3. Payroll increases
Office personnel
Two girls normally work in the office and handle all bookkeeping,
clerical work, billing, collecting, etc. The regular bookkeeper will
become a mother in July and she will work only 2 weeks of every month
thereafter. Part-time clerical help will be hired when the bookkeeper
is not in the office. The net result will be a $40 savings in the budget.
• Field employees
An important consideration in evaluating the district's field employees
is the fact that they perform construction duties and should be compared with
workers in that category. The current union scale for similar construction
workers is shown below:
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Backhoe Operators $ 7-11/hr $ 14,789 r
Plumbers ?.68�hr 15,974 yr
Pipe Fitters 7.68/hr 15,9747r
Although the water district is not a union shop, the field employee's
wages should be high enough to adequately compensate these good men, and
also retain their services. You will notice that our field employees will
earn about $10,000 for the district in wage reimbursement from developers.
A pay scale is proposed as follows:
Pipe Fitter IIs $ 4.70/hr $ 9,776 r
Pipe Fitter I: 5.66/'hr 11,7607r
Leadmans 6,00/hr 12:480�yr
The two Leadmen supervise the construction crews and are journeyman
backhoe operators. In addition, one Leadman, Rusty Thomas, is an expert
on fire hydrant repair, a very difficult position to fill. With these
two highly qualified individuals serving in a dual supervisory and workman
capacity, John Miller, Foreman, is able to inspect, supervise, and monitor
several construction projects at the name time.
Supervisors: Administrator/Enaineer and Foreman
Substantial increases in pay are proposed for the Administrator and
the Foreman. Rationale for these major adjustments is explained below.
Administrator/Engineer
As required by all municipalities and public utilities, the water
district previously retained the professional services of a consulting
engineer to design and supervise the installation of all pipe lines, pump
stations, etc. In 1969 when the services of the previous Administrator
were terminated the Board of Commissioners decided that substantial savings
could be realized if the Administrator were also an engineer. Nene of the
other 40 water districts surrounding the City of Portland has an engineer
on its staff.
Upon accepting the position of Administrator in October 1969 the Board
of Commissioners requested that I become registered in the State of Oregon
so that I could practice engineering for the district.
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I graduated from the University of Southern California in 1949 so
it was no small task to regain the knowledge and skills to pass the
required Oregon State engineering examinations after a lapse of 20 years.
After If years of studying during off-duty hours I passed both the
Engineering-in-Training and Mechanical Engineering professional examina-
tions in April 1971. A certificate of registration to practice engineering
in the State of Oregon was issued in July 1971.
When it came time to prepare the next budget, FY1972-739 the budget
committee firmly adhered to the federal limitation on wage increases after
a long, heated discussion. Last year to avoid any disagreement I accepted
a 4.0% increase in salary.
It appears that a major adjustment in my salary, is in order and overdue
if the district's wage scale is to be fair and in consonance with compensation
paid responsible persons in other public bodies.
As a registered, professional engineer I draft, design, and supervise
all engineering work for the district. The district realizes 8% profit for
engineering fees of all construction costs for projects within the district.
During the past few years I have saved or earned significant amounts of
money for the district as shown below:
Engineering Fees Saved or Earned
FY1971-72 FY1972-73 FY1973-74
Funds Saved
Bond Construction $ 9,604 $ 31,037 $ 22,056
Pipe Replacement 49227 3,435 4,168
Pipe Extensions 19732 800 29341
Funds Earned
Developer's 81,479 10,160 139439
Totals $ 24,042 $ 459432 $ 42,004
3-year totals $111,478
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It is estimated that the district will save or earn $23,280 in
engineering fees during the next fiscal year. Obvionsly, I an saving
or earning for the district substantially more than I am compensated as
the Administrator/Engineer. This arrangement is inequitable. In addition,
I am responsible and accountable as an engineer to the Oregon State Board
of Health that each project of the water system is installed as designed.
My salary as Administrator has not kept pace with other public
officials and administrators in comparable positions as shown below:
Administrator, Washington County $27,600
Planning Director, Washington County 229200
City Manager, Lake Oswego 229500
City Manager, Tigard 19,500
Chief, Tualatin Rural Fire District 20,664
Maintenance Officer, Tualatin Rural F.D. 19,860
Administrator, Powell Valley Water Dist. 179200
The Board of Commissioners will have to make the judgment if my past
performance has been satisfactory. I believe the record shows that we`
have solved most of the many problems that previously existed. Instead of
excuses, the customers have ,a water system that functions properly.
Foreman
In John Miller the district has a truly outstanding employee. He is
the "honcho" that stakes it all work. I call him "Mr. Tigard Water District"
because he means so much to the success of the district. A very loyal,
honest individual, John is dedicated to the water business. He has studied
water works systems, is now a Water Works Operator #1, (State of Oregon ,
and is fully capable of assuming the duties of the Administrator. It is
interesting to note that John Miller was fully cognizant and knowledgeable
of the many deficiencies in the water system prior to the engineering study
performed by ST&R in 1971. The study merely substantiated his understanding
of the system.
John as the Foreman gets the maximum amount of work from each -an, but
does it in such a manner so that morale remains high. John ensures that the
district obtains an hour's work for an hour's pay. We have team effort in
our construction projects and each individual is a vital cog.
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fir►`' `rrr�+`
John Miller saves the district thousands of dollars annually With
his skill and expertise of water systems. He inspects and approves the
installation of all new water mains. In this regard he acts as my agent
(engineer) in ensuring that pipe lines are installed in accordance with
the plans and specifications which must be reported to the Oregon State
Board of Health. His personal attention to detail ensures against con-
tamination of the water system. John is generally available on a 24-
hour basis. As a supervisor he receives no over-time pay.
When one has such a competent, loyal employee an adequate salary is
mandatory. He is worth every penny of it.
Future Pro ects
Much has been accomplished during the past 5 years, but to keep pace
with growth, continued improvement must be made. Some of the major
projects for the immediate future are listed below:
Pipe Replacements: $75,000 per year for 4 years
Reservoir: 5-million gallon terminal reservoir at 125th and
Gaarde in 1978, including an extension of the 16-
inch transmission main along MacDonald and Gaarde
from Hall to the reservoir
Developer's:
Summerfields 1,000 connections in 4 years
Commonwealths 360 connections in 2 years
Major items required by the district which will have to wait until
next year are:
(1) Auxiliary power for pressurized systems on both Bull
Mountain and Little Bull Mountain
(2) Building addition to administrative office
(3) Additional telemetry
(4) Surge suppression manifolds for 132nd St. pump station
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Conclusion
The customers have a right to be proud of the water system and the
capital improvements made during the past 5 years. No longer is there
a need to dispatch vehicles and men to announce "turn off your water,
there is a water shortage". We have a first class water system 112nd to
none" of those water districts which have to import water.
The proposed budget is sound and fiscally responsible. Without an
increase in either user rates or the tax rate it ensures the purchase of
vital necessities and the accomplishment of required capital improvements
in furtherance of the master water plan. This is a balanced budget taking
into account the inflation spiral.
Despite the many problems of serving the general public there is
personal satisfaction in accomplishing the job to the best of one's
ability and getting the most for the public's dollar. The district's
employees are doing just that.
Robert E. Santee
Budget Officer
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