Water district officials say they are working to cut costs
By Joe Tash
Contributor
Officials with the Santa Fe Irrigation District contend they are trying to hold down expenses wherever possible as they consider a plan to raise water rates by as much as 36 percent over the next three years.The first 12 percent increase would take effect on Jan. 1 under a plan that will be considered by the water district’s board of directors at a public hearing on Oct. 21. Additional 12 percent increases could hit water district customers in each of the following two years.
And the new proposed rate hikes follow a three-year period when rates have already increased by 50 percent.
The district’s actions to cut costs have included eliminating staff positions and deferring $6 million worth of capital improvement projects.
In addition, officials are currently in negotiations with employees on a new labor agreement. If the negotiations result in no employee raises and increased employee retirement contributions — as district officials seek — the net effect would be a reduction in total compensation for employees.
“We’re in a cost-containment mode,” said general manager Michael Bardin.
As the district considers increasing the average bi-monthly customer bill from $216 to $303 over the next three years, Bardin said, “We’re asking (employees) to share the pain as well.”
District officials said the main reason for the increase in water rates is the rising cost of purchasing water from its suppliers, the San Diego County Water Authority and the Metropolitan Water District of Southern California.
In an attempt to keep rates as low as possible, the district’s operating budget for the current fiscal year is essentially flat at $21,543,101, a 0.1 percent decrease from the year before. One way the district has kept its budget from increasing is by not building employee raises into the spending plan.
“We think that’s a critical part of controlling our cost increases for those areas we have control over. Hopefully we will have a successful negotiation with employees that moves us forward,” said board president Michael Hogan.
The Santa Fe Irrigation District provides water to residents of Rancho Santa Fe, Solana Beach and Fairbanks Ranch. The district serves its population of 22,500 residents with a staff of 48 employees.
The Rancho Santa Fe Review requested information from the district about salaries and benefits paid to the 10 highest-paid employees, along with expenses for members of the district’s elected five-member board and costs for travel and meals.
The highest-paid employee, Bardin, is slated to receive $279,290 in total compensation during the current budget year, which began July 1. The total sum includes a base salary of $191,500, an $8,400 car allowance, a $1,150 cell phone allowance, retirement contribution and health insurance.
Including Bardin, nine district employees are paid more than $100,000 per year in base salary. The 10th highest-paid employee, the district’s operations supervisor, earns a base salary of $99,688, and total compensation of $144,842.
District managers generally receive the same pay raise and adjustment to benefits as the rank and file employees, Bardin said.
In setting employee salaries, the district tries to stay within 5 percent of the median salaries paid by other water districts in the region, Bardin said.
“We attempt to pay at the market rate for the labor pool that we draw from,” he said.
Members of the board of directors receive a stipend of $200 for each meeting they attend, to a maximum of 10 meetings per month, plus expenses such as mileage and parking, conference fees and reimbursement of travel costs for district business. For the fiscal year that ended June 30, the total for the five-member board was $55,625, compared with $48,304 the previous year, and $43,968 the year before.
Directors also are eligible to receive health and dental benefits at district expense while they are serving on the board. All five directors receive dental benefits, while four of the members — with the exception of director Augustus “Augie” Daddi — receive health benefits. This year, the district has budgeted $46,883 for director health benefits, and $4,370 for dental benefits.
“I think board expenses are reasonable,” said Hogan, adding that the district’s board expenses are lower than other water districts in San Diego County.
For the current budget year, the district has earmarked $58,000 for employee training, travel and meal costs, down from $80,825 the previous year, and $71,719 the year before.
As they seek to keep rates as low as possible, district officials are also dipping into reserves. At the beginning of the current fiscal year, total reserves stood at $27,879,000, which will decrease to $21,187,000 by June 30. Of the amount drawn down, $6.2 million will be spent on capital projects, and $500,000 to augment the district’s operating budget.
The district’s challenge, said director Ken Dunford, a member of the board for eight years, is to keep rates as low as possible while maintaining infrastructure such as pipelines and water treatment facilities, and keeping prudent reserves on hand for unforeseen circumstances.
Earlier this year, the board told Bardin it would approve the use of reserves to help cover operating budget shortfalls for the next two years, but that it wanted operating costs to be covered by revenues by the third year.
“We should not be going into reserves to balance our budget going forward. I think that’s bad fiscal policy,” Dunford said.
Dunford and Hogan said the district has received a number of written comments from customers who are unhappy with the proposed rate increases, and they expect a large turnout for the Oct. 21 meeting when the rate increases will be discussed.
They said the proposal was formulated after deliberations stretching back for about nine months, and reflects anticipated water rate increases averaging about 12 percent a year that will be passed along by the county water authority.
Rancho Santa Fe resident Otto Dieffenbach is among those concerned about the proposed rate increases. While he said he believes the district’s board is comprised of honorable people faced with the difficult task of passing on water rate increases to their customers, he said residents need to know more about the district’s finances. Last month, he wrote to the district asking for information about employee and board member compensation.
“We need to look at all the costs involved in getting us water and make sure nothing has gotten out of hand,” said Dieffenbach. “I just think it’s time for oversight from the public.”