Budget Message / Highlights - Metropolitan Water Reclamation ...

METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
2009 BUDGET
BOARD OF COMMISSIONERS
2009 BUDGET NARRATIVE
As the policy-making entity of the Metropolitan Water Reclamation District, the Board of Commissioners is charged with the
task of establishing policies and procedures which meet the District’s objective of protecting the water environment for the
citizens of Cook County. The mission of the Board of Commissioners is the mission of the District: to protect the health and
safety of the public in its service area; protect the quality of the water supply source (Lake Michigan); improve the quality of
water in watercourses in its service area; protect businesses and homes from flood damages; and manage water as a vital
resource for its service area.
The Treasurer is charged to: direct the District’s financial program to maximize investment interest income while preserving
safety of principal; issue bonds to meet District capital requirements; make timely payment of required debt service; and
provide continuing sound financial management to maintain the District’s exceptional AAA bond rating.
The 2009 appropriation request for the Board of Commissioners is $4,404,800, an increase of $127,300 or 3.0 percent above
the 2008 appropriation. Staffing requirements for the department remain unchanged at 45 employees.
Significant features of this year’s budget are:
• Investment Interest Income Estimate: $27.4 million or less – 2009 will be a difficult year for investing due to very low
interest rates forecasted for the fixed income market;
• Implementation of web-based CD purchase bidding system – this will begin when the District’s portal technology is
available; work is anticipated for late 2009;
• Creation of a District Debt Policy – the policy will incorporate GFOA guidelines for issuing debt;
• Bond Sale – The District will issue approximately $300 million Limited Tax Capital Improvement Bonds to fund planned
infrastructure improvements and rehabilitation in the second half of 2009;
• OPEB activities – the Investment Advisor will develop the Trust’s Investment Policy and purchase the initial inventory of
investment funds;
• Actuarial valuation of OPEB liability as of January 1, 2009 – an asset-liability modeling study to determine future cash
requirements for the Trust will be included. This study is required to determine how best to invest the Trust’s assets to earn
sufficient investment return to satisfy the Retiree Health Care Plan’s liability for future benefits.
Accomplishments during 2008 were:
• Investment Interest Income is estimated to be $32.3 million. The chart on the following page summarizes Investment
Interest Income and average investment interest rates for the years 2000-2009;
• The District had no exposure to volatile variable rate debt or interest rate swaps. The District terminated its last swap
transaction in March 2007 when the financial conditions were favorable to exit the swap;
• On December 1, 2008, the District called for redemption of $43,700,000 principal value Refunding Bonds, Series July,
1997, maturities of 2010 through 2014. A required 2 percent call premium of $874,000 resulted in a cost of $44,574,000
for call of the bonds. Future interest costs of $12,513,300 were avoided, and tax levies totaling $58,252,124 for future
years have been abated. The call was financed with $22 million of retained interest income and other funds available in the
Capital Improvements Bond Funds;
• The economic downturn in the financial markets created significant new challenges for investing in short-term interestbearing
investments. As of year-end, the District experienced no loss on investments.
The Department’s goals and initiatives for 2009 include the following:
1. Maximize investment income. Maximize investment yield on District investments while protecting principal in
compliance with Investment Policy. A low interest rate environment will continue through 2009. Invest available cash
balances to policy limits to earn highest positive yield without jeopardizing principal value. Develop a Certificate of
Deposit purchase bidding system utilizing new SAP portal technology.
2. Maximize capital financing efficiencies. Treasury will research creation of a Debt Policy that will incorporate
GFOA guidelines for issuing debt. A web-based bond marketing system will be investigated for subsequent Capital
Improvement Bond issuance.
Work with the Information Technology Department to program the remaining legacy debt service processes and
reporting in SAP. This project will include the replication of SRF loan process from Excel to within the SAP Treasury
Module.
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