The District’s objective is to have 40% of projected annual operating costs maintained in reserves to ensure continuity in the event of business disruption. Adequate reserves are necessary to address unforeseen conditions such as emergency repairs, drought, and seawater intrusion. Rate revenues must cover these reserves. Water utility reserves are not used to fund other District expenditures. The District sets aside less money in reserves than most agencies its size in an attempt to keep rates as low as possible.
The water rate study will include projected expenses and forecasted cost increases over the next five-to-10-year period. If there is additional revenue or expenses the fund will either be slightly in the positive or slightly in the negative, with the objective of a healthy fund to balance revenues with expenses over multiple years. The purpose of a five-year rate study is to reconcile differences in projected expenses and revenues and factor actual expenses and surpluses or deficits into the projected revenue needs for the next five years.