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 2025-26 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 2025-26 Proposed Rolling Biennial Budget;
B. Receive comments and input from the public regarding the Fiscal Year 2025-26 Proposed Rolling Biennial Budget;
C. Incorporate any changes deemed necessary into the Fiscal Year 2025-26 Proposed Rolling Biennial Budget; and
D. Continue this item, if needed, to the April 24, 2025, Special Board Meeting - Budget Work-Study Session.
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SUMMARY:
Santa Clara Valley Water District (Valley Water) develops the annual budget to allocate the public’s necessary 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 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 2025-26 (FY 2025-26) 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 2024-25 Board Work Plan. Staff recommends a proposed FY 2025-26 Operating and Capital Budget of $1.078 billion, less $132 million in intra-district reimbursements, resulting in a net proposed budget of $947 million. The gross budget of $1.078 billion is comprised of:
• $428 million in capital outlays,
• $534 million in operations outlays, and
• $117 million in debt service.
The proposed budget revenue is $744 million, which includes proposed groundwater production and other water charges for FY 2025-26. Debt proceeds are budgeted at $265 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 $540 million, of which $242 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 2026-27 Operating and Capital Plan of $1.361 billion, less $147 million in intra-district reimbursements, resulting in a total net proposed plan of $1.213 billion. The gross plan of $1.361 billion is comprised of:
• $653 million in capital outlays,
• $571 million in operations outlays, and
• $137 million in debt service.
The proposed plan revenue is $766 million, which includes proposed groundwater production and other water charges for FY 2026-27. Debt proceeds are at $458 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 $537 million, of which $221 million are legally restricted. The FY 2026-27 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 2025-26 rolling biennial budget process, the Board will adopt a one-year Budget for FY 2025-26 and approve a one-year Plan for FY 2026-27. 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 23 and 24, the Board will discuss the Budget, Water Charges, and Capital Improvement Program. Depending on the Board direction provided at the meeting, the FY 2025-26 Proposed Budget, as presented, may require additional modifications. The budget process is scheduled to conclude with the Board’s adoption of the FY 2025-26 Proposed Budget at its regularly scheduled meeting on May 27, 2025.
ENVIRONMENTAL JUSTICE AND EQUITY 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 2025-26 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: FY25-26 Proposed Budget
Attachment 3: Project Details Pages
UNCLASSIFIED MANAGER:
Manager
Darin Taylor, 408-630-3068