BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Work-Study Session to Consider the Fiscal Year 2026-27 Proposed Operating and Capital Rolling Biennial Budget.
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RECOMMENDATION: Recommendation
A. Receive, review, and discuss Santa Clara Valley Water District's Fiscal Year 2026-27 Proposed Rolling Biennial Budget;
B. Receive comments and input from the public regarding the Fiscal Year 2026-27 Proposed Rolling Biennial Budget; and
C. Incorporate any changes deemed necessary into the Fiscal Year 2026-27 Proposed Rolling Biennial Budget.
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SUMMARY:
Santa Clara Valley Water District (Valley Water) develops the annual budget to allocate public funds to provide Santa Clara County with safe, clean water for a healthy life, environment, and economy. The development of Valley Water’s budget is accomplished in an open, transparent process providing an opportunity for Board and public input.
Valley Water’s financial planning and budget development processes are governed by the District Act, Section 13 (Taxation), and Section 20 (Adoption of Budget). In accordance with District Act Section 20, “on or before June 15 of each year, the board shall meet, at the time and place designated by published notice, at which meeting any member of the general public may appear and be heard regarding any item in the proposed budget or for the inclusion of additional items.” Board Governance Policy EL-4 Financial Management guides financial planning, budgeting, and ongoing financial activities.
This agenda item presents Valley Water’s Chief Executive Officer’s Fiscal Year 2026-27 (FY 2026-27) Proposed Budget for Board consideration. The Proposed Budget was planned and developed to enable Valley Water to accomplish the Board’s Ends priorities in a cost-efficient and fiscally accountable manner, and to provide a balanced annual budget that is sustainable and complies with the District Act and the Board’s Financial Management Policy (EL-4).
The Proposed Budget was developed based on the Board’s FY 2025-26 Board Work Plan. Staff recommend a proposed FY 2026-27 Operating and Capital Budget of $1.413 billion, less $131 million in intra-district reimbursements, resulting in a net proposed budget of $1.282 billion. The gross budget of $1.413 billion is comprised of:
• $730 million in capital outlays,
• $555 million in operations outlays, and
• $129 million in debt service.
The proposed budget revenue is $811 million, which includes proposed groundwater production and other water charges for FY 2026-27. Debt proceeds are budgeted at $526 million and with the use of budgeted reserves, make up the difference between total outlays (including capital carryforward) and total revenues. Budgeted year-end reserves are $519 million, of which $175 million are legally restricted. Restricted Reserves are reserves with externally imposed legal restrictions, or amounts constrained to specific purposes by their providers (such as grantors, bondholders, higher levels of government, etc.), through constitutional provisions or enabling legislation.
Additionally, Staff provides a FY 2027-28 Operating and Capital Plan of $1.411 billion, less $148 million in intra-district reimbursements, resulting in a total net proposed plan of $1.263 billion. The gross plan of $1.411 billion is comprised of:
• $670 million in capital outlays,
• $580 million in operations outlays, and
• $161 million in debt service.
The proposed plan revenue is $821 million, which includes proposed groundwater production and other water charges for FY 2027-28. Debt proceeds are at $459 million and with the use of reserves, make up the difference between total outlays (including capital carryforward) and total revenues. Planned year-end reserves are $528 million, of which $176 million are legally restricted. The FY 2027-28 Plan will serve as the forecast for the second year’s budget and be approved but not formally adopted by the Board.
For the FY 2026-27 rolling biennial budget process, the Board will adopt a one-year Budget for FY 2026-27 and approve a one-year Plan for FY 2027-28. This means the first year’s appropriations are formally adopted by the Board, whereas the second year’s appropriations are not. The rolling biennial budget process is aligned with the guiding State, District Act and Valley Water Policies, and is conducive to long-term planning while remaining responsive to the dynamic and ever-changing needs of the organization and will need to be updated annually as the just-completed fiscal year rolls off and the new second fiscal year is added.
On April 29 and 30, the Board will discuss the Budget, Water Charges, and Capital Improvement Program. Depending on the Board direction provided at the meeting, the FY 2026-27 Proposed Budget, as presented, may require additional modifications. The budget process is scheduled to conclude with the Board’s adoption of the FY 2026-27 Proposed Budget at its regularly scheduled meeting on May 12, 2026.
ENVIRONMENTAL JUSTICE IMPACT:
Valley Water acknowledges that disadvantaged communities have historically been disproportionately impacted by the effects of drought and flooding and currently provides the Water Rate Assistance Program to help low-income households pay their water bills. The development of Valley Water’s budget is accomplished in an open, transparent process, providing an opportunity for public input into the decision-making process. To ensure meaningful awareness of Valley Water’s budget and engagement in the decision-making process, public hearings are noticed in county newspapers in various languages, including English, Spanish, Chinese, and Vietnamese. The FY 2026-27 Budget, Water Charges, and Capital Improvement Program processes include over nine (9) open session discussions, supported by the Balancing Act online budget simulation tool, providing the public with significant opportunity for input.
FINANCIAL IMPACT:
There is no financial impact related to this agenda item. It is presented for information only.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have the potential to result in direct or reasonably foreseeable indirect physical changes in the environment.
ATTACHMENTS:
Attachment 1: PowerPoint
Attachment 2: FY26-27 Proposed Budget
Attachment 3: Project Detail Pages
*Handout 2.2-A: Revised PowerPoint
UNCLASSIFIED MANAGER: Manager
Darin Taylor, 408-630-3068