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Fiscal Year Ending June 30, 2017
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METROPOLITAN ST. LOUIS SEWER DISTRICT ST. LOUIS, MISSOURI
INITIAL PLANTI N
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MSD MISSION “To protect the public’s health, safety, and water environment by responsibly providing wastewater and stormwater management.”
MSD PROJECT CLEAR MSD Project Clear is our initiative to improve water quality and alleviate many wastewater concerns in the St. Louis region. It will invest billions of dollars over a generation in planning, designing, and building community rainscaping, system improvements, and an ambitious program of maintenance and repair.
ON THE COVER Urban Harvest STL has been growing food in downtown St. Louis since 2012, helping to combat food insecurity in the area. To serve more local families, the nonprofit, with the help of grant money from the MSD Project Clear Rainscaping Large Scale Grant Program, built the Urban Harvest STL FOOD ROOF Farm – a rooftop farm and rain garden atop a downtown building. MSD’s rainscaping program seeks to engage partners to identify joint opportunities to incorporate rainscaping techniques – like the example on the cover – into ongoing programs and future redevelopment projects. Each grant awarded allows MSD to create a public-private partnership that contributes to the environmental, social, and economic health of the St. Louis region.
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 1
TABLE OF CONTENTS Directors’ Letter............................................................................................................3 December 2015 Flood v. April/May 2017 Flood..............................4-5 What We Do..................................................................................................................... 6-7 MSD at Work in the Community...............................................................8-9 Year in Review.................................................................................................................10 Looking Ahead ................................................................................................................11 Condensed Statement of Net Position............................................... 12 MSD Assets and Long-Term Obligations ........................................... 13 Income Statement....................................................................................................... 14 Revenues and Expenses ..........................................................................................15 Cash Flow Statement............................................................................................. 16 Performance Against Budget and Credit Rating....................17
2 | METROPOLITAN ST. LOUIS SEWER DISTRICT
“Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the Metropolitan St. Louis Sewer District for its Popular Annual Financial Report for the fiscal year ended June 30, 2016. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability, and reader appeal. We believe our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to the GFOA to determine its eligibility for another Award.�
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 3
DIRECTORS’ LETTER We appreciate your interest in the Metropolitan St. Louis Sewer District (MSD) and are honored to present our Popular Annual Financial Report for the Fiscal Year 2017 (FY 17). MSD fulfills the daily needs of residents by providing basic sewer services, and it looks ahead into the future by planning and implementing small- to large-scale improvements that will benefit the region for years to come. In FY 17, MSD appropriated funds for 223 new or continuing wastewater and stormwater projects that are scheduled for either design or construction. This annual report provides a non-technical overview of MSD’s work and a snapshot of our activities from the most recent fiscal year – July 1, 2016 to June 30, 2017. Within these pages, you’ll find information on how MSD carefully invests the funds it receives to manage and improve our region’s wastewater and stormwater systems. You’ll also find a summary of financial information for the past fiscal year. Please note that while the summary information uses principles and guidelines consistent with Generally Accepted Accounting Principles (GAAP), it has been simplified for general audiences and is not GAAP-compliant. A more in-depth financial review of MSD’s operations can be found in its Comprehensive Annual Financial Report. You can find this document, as well as this Popular Annual Financial Report, online at www.stlmsd.com/our-organization/fiscal-investor-relations/annual-reports. To request a printed copy of this information, contact MSD at 314-768-6260 or send an email to: customersvc@stlmsd.com. We hope you find this report useful and informative. As always, comments and suggestions on how we might improve future reports to better serve your interests and needs are welcome. Respectfully submitted, Brian Hoelscher, P.E.
Marion Gee
Executive Director & CEO
Director of Finance
4 | METROPOLITAN ST. LOUIS SEWER DISTRICT
DECEMBER 2015 FLOOD V. APRIL/MAY 2017 FLOOD Extreme rains in 2015 and the heavy downfalls in 2017 resulted in major flooding along the Meramec River, impacting MSD’s Grand Glaize and Fenton Wastewater Treatment Plants. In December 2015, parts of the St. Louis region received more than 9 inches of rain in three days, causing the Meramec River to flood. It crested at more than 44 feet, which is the highest level on record. On December 28, the inflow at the Fenton Wastewater Treatment Plant exceeded the plant’s capacity, causing internal flooding. The decision was made to cut the electrical power in order to minimize additional damage to the plant. The following day, flash flooding caused the river level to overtop the levee that protected the plant. The facility had to be abandoned. The Grand Glaize Wastewater Treatment Plant was also threatened, but there was more time to react. By December 29, MSD reviewed the plant’s topographical map and developed an emergency sandbagging plan, which was executed over the next two days with the help of crew members from other treatment plants. The efforts were mostly successful; however, the Grand Glaize plant still partially flooded. The Fenton plant was back up and running after 91 days, at a cost of $8.15 million. The Grand Glaize plant was fully functional after nine days, at a cost of $3.3 million. Sixteen months later, in April 2017, St. Louis again experienced near historic levels of flooding along the Meramec, but because the river did not rise as quickly, there was more time to prepare. Once the likelihood of flooding was announced, MSD quickly mobilized extra manpower and pumps and installed a temporary block wall, along with secondary protection in case the new wall failed. At the Fenton plant, MSD also mobilized extra resources and built a sandbag wall on top of the levee for additional protection. The spring 2017 rainfall caused the Meramec River to crest just inches below the 2015 flood level, but this time neither the Fenton nor Grand Glaize plants flooded, and both remained operational. Enhanced protection against flooding is planned at both plants, including building a new permanent flood wall at Grand Glaize and raising the levee at the Fenton plant.
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 5
Regional Flooding
6 | METROPOLITAN ST. LOUIS SEWER DISTRICT
WHAT WE DO MSD’s Dual Function
The Metropolitan St. Louis Sewer District owns, operates, and maintains a sewer system which consists of wastewater, stormwater, and combined collection sewers – carrying both wastewater and stormwater – pumping stations, and wastewater treatment facilities that have been incorporated into one entity over the last 60-plus years. It is one of the largest and most complex systems in the United States. MSD is two separate utilities within one organizational structure: Wastewater – collect “used” water disposed of in sinks, toilets, and floor drains by households and businesses, and then treat it to regulatory standards before returning it to the region’s waterways.
Stormwater – operate and maintain the public storm sewer system and help coordinate regional efforts to address pollution carried in or caused by stormwater runoff.
MSD’s service area encompasses approximately 520 square miles, including all 66 square miles of St. Louis City and 454 square miles (87 percent) of St. Louis County. The current population served by MSD is approximately 1.3 million, representing more than 426,000 accounts.
RESIDENTIAL WASTEWATER USER CHARGE ST. LOUIS AND OTHER MUNICIPALITIES
Coldwater WWTP $70 I-270
I-70
Missouri River WWTP
Bissell Point WWTP I-70
I-270
$60
$50
I-170
I-64
Grand Glaize WWTP
I-64
Lemay WWTP I-270
$40
$30
I-44
I-55
I-44
Fenton WWTP
$20
Lower Meramec WWTP
I-255
$10
$0
BOSTON MSD Wastewater Treatment Plants (WWTP) Service Area
DETROIT
NEW ORLEANS
ST. LOUIS
SURVEY NASHVILLE COLUMBUS SPRINGFIELD AVERAGE
Memphis Light, Gas and Water “2017 Utility Bill Comparisons” Survey Rates as of January 1, 2017, based on 10 CCF
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 7
Public Education and Community Outreach MSD engages with the public at a variety of events throughout the year to inform and educate residents about wastewater and stormwater issues, as well as MSD programs and services, including: St. Louis Earth Day – Even frosty morning temperatures didn’t keep MSD volunteers from handing out information about Project Clear, stormwater management, and flood zone awareness to 2017 St. Louis Earth Day attendees. MSD’s involvement didn’t end there – MSD Project Clear also sponsored the environmental-themed bus painting event. The theme was rain gardens, highlighting the power of beautiful flowers and grasses coupled with an engineered drainage system to reduce the amount of stormwater sent through our storm sewer system. Green Homes Festival – MSD Project Clear sponsored the NatureScaping display at the 16th annual Green Homes Festival at the Missouri Botanical Garden. This popular event is a celebration of sustainable living and healthy lifestyles. MSD handed out reusable bags containing information on MSD Project Clear and responsible stormwater management. Sista Strut Walksm – MSD was a sponsor for the 7th Annual Sista StrutSM Breast Cancer Walk, which supports breast cancer awareness and provides information and resources, saving the lives of women of color in the local community. This event is the largest of its kind in the nation – in 2016, 8,000 walkers participated in St. Louis. Eight MSD employees volunteered to staff a table to provide information on MSD Project Clear and the Customer Assistance Program. The latter offers a 50 percent rate reduction to qualified low-income, elderly, and disabled customers. St. Louis Auto Show – At the St. Louis Auto Show in January, MSD employees provided attendees with information on MSD Project Clear and stormwater best practices. MSD also participated in: • Enterprise Holdings Employee Eco Fairs • TEDxSTL events, and • The Greater St. Louis Hispanic Festival St. Louis Earth Day
St. Louis Auto Show
St. Louis Earth Day
Green Homes Festival
8 | METROPOLITAN ST. LOUIS SEWER DISTRICT
MSD AT WORK IN THE COMMUNITY
Acoustic Inspection Device
Rapid View 3D Scanner
Consent Decree Update Throughout MSD’s service area, there are points where wastewater discharges into local waterways from the sewer system during moderate to heavy rainstorms – these sewer overflow points act as necessary relief valves when too much stormwater enters the wastewater system, saving the St. Louis community from widespread basement backups. Many of these overflow points are a product of the way the St. Louis wastewater systems were first built, predating the District’s creation in 1954 but ultimately falling under its jurisdiction today. In April 2012, a consent decree agreement between MSD, the Environmental Protection Agency, and the Missouri Coalition for the Environment was entered by the United States District Court for the Eastern District of Missouri. Prior to the consent decree, from 1992 to 2012, MSD spent approximately $2.7 billion to remove more than 350 overflows. The consent decree sets a timetable for continued improvements to the
sewer system, including upgrades and maintenance, and additional overflow removals. As part of its consent decree work, MSD Project Clear implemented an aggressive cleaning and preventive maintenance program, called Capacity, Management, Operations, and Maintenance (CMOM). Recent additions to the CMOM program include: the use of an acoustic inspection device to provide sewer line blockage assessment in less than five minutes; the purchase of a second Rapid View 3D scanner truck to support the stormwater inlet inspection program made possible by the passage of Proposition S in 2016; and the addition of GPS capabilities on the rapid scan trucks. The additional technologies allow for quicker, more efficient, and cost-effective determination if cleaning is required, precise system inspection, and improvement to the overall accuracy of system maps. These trucks are capable of a combined 15,000 to 20,000 manhole/inlet inspections annually.
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 9
Updated Title Quote System In FY 17, MSD introduced an updated title quote system to simplify the search process for title companies. Title companies perform a search and contact MSD to finalize sewer billing for the previous customer and to ensure there are no outstanding MSD debts or liens on the property. By requesting title quotes, buyers are protected from unexpected expenses after closing and unforeseen delays in taking ownership of the new property.
MSD’s Updated Title Quote System
Improvements to MSD’s title quote system make the process easier and more efficient. Title companies can now access information immediately, whereas previously there was a 48hour waiting period. Additional changes make the system more accurate. A new account is now only created after a sale is finalized; this means that if a sale falls through, the potential buyer won’t receive an MSD bill in error. The system also now calculates final bills based on usage, rather than calculating based on the last bill amount, thus improving billing accuracy.
10 | METROPOLITAN ST. LOUIS SEWER DISTRICT
YEAR IN REVIEW Capital Improvement MSD Project Clear made 223 appropriations for new or continuing wastewater and stormwater design and construction projects in FY 17, totaling $287.9 million. These numbers include $1.6 million appropriated for three emerging repair projects. Diversity MSD understands the role of diversity in creating a strong and vibrant St. Louis community. Accordingly, it has had policies in place for many years that help develop and grow minority- and women-owned business enterprises (MWBE). In recent years, MSD has expanded its focus to ensure broader workforce diversity for its capital construction projects. In FY 17, minority-owned firms performed $37,324,055 in capital work, representing 17.03 percent of the District’s capital program spending for the time period. Women-owned firms performed $6,490,358 in capital work, representing 2.96 percent of the District’s capital program spending.* During that same timeframe, minority workforce participation was 460,077 hours or 28.95 percent of total hours worked on capital projects by contractors, and women participation was 77,021 hours or 4.85 percent of total hours worked on capital projects by contractors.* *Numbers are as of September 14, 2017. Please note, as project documentation is finalized, precise numbers may fluctuate. Peak Performance Award In 2017, MSD was selected to receive seven Peak Performance Awards, presented by the National Association of Clean Water Agencies (NACWA). The award recognizes public wastewater treatment facilities for their outstanding compliance records with their National Pollution Discharge Elimination System (NPDES) permit, granted by the
Missouri Department of Natural Resources in the 2016 calendar year. The Lower Meramec and Fenton Wastewater Treatment Plants received Platinum Awards for maintaining a perfect compliance record for five consecutive years. Gold Awards went to Bissell Point, Coldwater Creek, Grand Glaize, and the Missouri River Treatment Plants for achieving 100 percent compliance with their NPDES permit for an entire calendar year. The Lemay plant was given the Silver Award, recognizing facilities that have received no more than five NPDES permit violations per calendar year. Green City Coalition MSD Project Clear is committed to spending $100 million in rainscaping features in the green infrastructure area of the Bissell Point watershed, covering the combined sewer area of St. Louis City and some of northeastern St. Louis County that drains to the Mississippi River. By working with the Green City Coalition – a collaborative effort led by the Missouri Department of Conservation, the Missouri Botanical Garden, and the City of St. Louis to convert vacant spaces to green places – MSD will help fund the demolition of vacant properties. This initiative creates more green space to manage rain where it falls and avoid excessive stormwater entering into the system, while also helping the City accelerate the pace of derelict building demolitions. This unique agreement allows MSD to provide benefits to the region beyond just new sewer improvements. The goal of the demolition program is to use $13.5 million to fund the removal of approximately 1,000 structures throughout the City, creating about 50 acres of green space that can absorb stormwater. After the demolition, the City will maintain the properties and work with outside organizations to retain the pervious surface and utilize the spaces in ways that benefit the community.
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 11
LOOKING AHEAD Wastewater In FY 18, MSD Project Clear has plans for 157 new, ongoing, or continued wastewater project appropriations totaling $329.2 million. These projects are funded primarily from the Sanitary Replacement fund and represent $30.4 million in continued projects and $298.8 million in new and ongoing projects. Stormwater Currently, MSD performs three District-wide stormwater services: Service MSD owns, operates, and maintains stormwater infrastructure, including stormwater sewers, inlets, improved channels, manholes, etc.
The April 2016 voter approval of Proposition S equalized stormwater operations and maintenance throughout the District. In addition to equalizing operations and maintenance, Proposition S also provided $67 million in remaining fund balances to pay for a finite number of stormwater capital projects. As just noted, $67 million is a finite amount – once it is spent, there is no other funding source for capital stormwater projects. There is no long-term funding solution for capital improvements for localized flooding, erosion, and regional flooding.
The Future of Stormwater - Should MSD Provide Full Regional Stormwater Services? MSD has identified approximately $500 million in erosion and flooding issues Management throughout its service area. MSD is not a floodMSD’s responsibilities include but are not control agency and does not own creeks and limited to: streams. Though it cannot prevent localized • Enforcing rules and regulations for flooding and erosion, MSD could provide stormwater improvements projects that would mitigate the impacts of • Investigating and evaluating stormwater future localized flooding and erosion. For complaints regional flooding, the only true answer is to • Monitoring water quality of area creeks fund large-scale property buyouts. and rivers During the first half of 2017, MSD held Compliance public meetings and completed surveys to MSD is a co-permittee with 59 municipalities, seek public and municipal input on whether St. Louis County, and Unincorporated St. Louis additional funding for stormwater projects County. MSD’s responsibilities include but are should be secured. In the second half of 2017, not limited to: the information gathered from outreach was • Ensuring regulatory compliance with the used to develop a rate proposal for stormwater state’s water quality standards funding that will be presented to MSD’s Rate • Inspecting area creeks for illegal Commission in 2018. Additional public meetings discharges are planned to explain the rate proposal. If the • Providing public education Rate Commission and the Board of Trustees • Coordinating permit-related activities by approve this expansion of services and the municipalities and St. Louis County corresponding funding, a ballot initiative would be presented to area voters in 2019. In addition to operating the existing stormwater system, MSD Project Clear plans 16 stormwater design and construction projects in FY 18, including continued projects from FY 17, totaling $9.9 million.
12 | METROPOLITAN ST. LOUIS SEWER DISTRICT
KEY FINANCIAL INFORMATION CONDENSED STATEMENT OF NET POSITION (in thousands) ASSETS: Current, restricted, and other assets Capital assets (net of accumulated depreciation) Total Assets DEFERRED OUTFLOW OF RESOURCES: Bonds and notes payable-deferred loss on refunding Pension-related outflows Total Deferred Outflow of Resources LIABILITIES: Current liabilities Non-current liabilities Total Liabilities DEFERRED INFLOW OF RESOURCES: Pension-related inflows Total Deferred Inflow of Resources NET POSITION: Net investment in capital assets Restricted Unrestricted Total Net Position DEFINITIONS: Current, restricted, and other assets: all assets other than fixed assets that are owned or due to the District. Capital assets (net of accumulated depreciation): the total value of all fixed assets, including all sanitary infrastructure, general plant and equipment, and land.
FY 17
FY 16
$ 743,571 3,252,238 3,995,810
$ 707,033 3,052,043 3,759,076
11,321 37,666 48,987
11,974 31,144 43,118
133,679 1,515,345 1,649,024
125,284 1,344,141 1,469,425
4,605 4,605
5,712 5,712
1,876,249 135,259 379,660 $ 2,391,168
1,809,386 136,547 381,124 $ 2,327,057
Non-current liabilities: money owed by the District that is due more than 12 months in the future. Net investment in capital assets: the value or net worth of all fixed assets after related liabilities are deducted. Deferred inflows: the purchase of resources that will be applied to future periods.
Deferred outflows: the use of resources that will be applied to future periods.
Restricted: the value or net worth of all assets designated for specific purposes after related liabilities are deducted.
Current liabilities: money owed by the District and due within 12 months.
Unrestricted: the value or net worth of all remaining assets after remaining liabilities are deducted.
WHAT IT TELLS YOU: A Statement of Net Position, also known as a balance sheet, is a financial statement that summarizes what MSD owns and owes at a given point in time. It also shows our net worth at that specific point in time. OUR FY 17 BALANCE SHEET SHOWS THAT: • MSD’s assets and deferred outflows exceed liabilities and deferred inflows by $2.3 billion. • Overwhelmingly, MSD’s assets are in the form of capital assets. The $3.3 billion in net capital assets is split into the five categories. • Of the $1.6 billion in liabilities, $1.5 billion are in the form of bonds and notes payable.
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 13
WHAT WE OWN: MSD ASSETS
CONDENSED STATEMENT OF CAPITAL ASSETS LESS NET OF DEPRECIATION (in millions) $92 M
KEY $708 M
Other (see detail) Construction In Progress Treatment, Disposal Plant, and Equipment Collection and Pumping Plant
$21 M
$1,716 M
Detail
$736 M
Land General Plant and Equipment
$71 M
WHAT WE OWE: MSD LONG-TERM OBLIGATIONS BONDS AND NOTES PAYABLE
NOTE: Revenue Bonds and Direct Loan balances only
$1,600 $1,400 $1,200
MILLIONS
$1,000 $800 $600 $400 $200
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
14 | METROPOLITAN ST. LOUIS SEWER DISTRICT
INCOME STATEMENT
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION (in thousands)
The financial information included is derived from the CAFR and presented in conformity with the GAAP.
FY 17
FY 16
FY 15
FY 14
FY 13
$330,873
$ 306,119
$ 284,367
$ 250,133
$ 238,635
(2,513) 4,036 1,095 333,491
(4,107) 3,620 14,226 319,858
(2,096) 6,657 1,460 290,388
7,210 6,563 1,867 265,773
(2,655) 2,731 3,235 241,946
NON-OPERATING REVENUES: Property taxes levied by the district Investment income Rent and other income Total Non-Operating Revenues Total Revenues
32,458 2,903 106 35,467 368,958
25,671 4,636 103 30,410 350,268
24,764 3,001 37 27,802 318,190
27,450 2,967 303 30,719 296,492
26,016 1,057 293 27,366 269,312
OPERATING EXPENSES: Pumping and treatment Collection system maintenance Engineering General and administrative Water backup claims Depreciation Asset management Total Operating Expenses
60,203 43,928 11,290 58,535 5,035 81,194 14,893 275,078
59,100 42,853 10,998 55,315 7,631 83,984 13,215 273,096
60,766 40,162 10,954 48,551 3,862 78,641 13,586 256,522
54,126 39,988 12,184 45,661 2,713 74,087 12,539 241,298
54,526 37,877 12,020 41,485 3,503 70,030 10,717 230,158
NON-OPERATING EXPENSES: Net (gain) loss on disposal and sale of capital assets Non-recurring projects and studies Interest expenses Total Non-Operating Expenses Total Expenses
673 7,459 31,251 39,383 314,461
325 11,000 28,943 40,268 313,364
1,421 12,317 27,139 40,877 297,399
5,248 3,493 25,661 34,402 275,700
796 4,676 21,062 26,534 256,692
INCOME BEFORE CAPITAL GRANTS AND CONTRIBUTION: Capital grants and contributions
54,497 9,614
36,904 12,037
20,791 12,997
20,791 7,102
12,620 17,535
64,111 2,327,057 —
48,941 2,278,116 —
33,788 2,267,952 (23,623)
27,894 2,240,058 —
30,155 2,209,903 —
$ 2,391,168
$ 2,327,057
$ 2,278,116
$ 2,267,952
$ 2,240,058
OPERATING REVENUES: Sewer service charges Provision for doubtful sewer service charge accounts Licenses, permits, and other fees Other Total Operating Revenues
CHANGE IN NET POSITION: Net position - beginning of year Effect of adoption of GASB68 NET POSITION – END OF YEAR
DEFINITIONS: Operating revenues: all income received from the District’s daily normal business activities. Operating expenses: all expenses related to the District’s daily normal business activities. Non-operating revenues: all income not related to the District’s daily normal business activities. Non-operating expenses: all expenses not related to the District’s daily normal business activities. WHAT IT TELLS YOU: An income statement tells you where MSD gets its funds and how they are spent. It also shows how much money MSD made or lost over a specific period of time. OUR FY 17 INCOME STATEMENT SHOWS THAT: • Sewer service charge revenue increased as a result of the scheduled rate increase that occurred in FY 17. • Operating expenses increased due to changes in reporting requirements for pension plans, depreciation for asset additions, and water backup claims related to excess rain.
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 15
REVENUES
WHERE THE MONEY COMES FROM (in thousands) $106
$1,095
Other (see detail) Sewer Service Charges, Net
$2,903
$40,598
KEY
$4,036
Detail
Rent and Other Income Other Operating Revenues Investment Income Licenses, Permits, and Other Fees Property Taxes Levied by the District
$32,458
$328,360
EXPENSES WHERE THE MONEY GOES (in thousands)
KEY
$673 $31,251 $34,691
$81,194
$7,459
$99,357
$51,197
$14,454 $5,243
$3,293 $16,771
Other (see detail) Employment Costs Utilities Contracted Services Depreciation Interest Expense
Detail $3,569
Net Loss on Sale of Assets Materials and Supplies Chemical Supplies Insurance Other Operating Expenses Non-Recurring Projects and Studies
16 | METROPOLITAN ST. LOUIS SEWER DISTRICT
CASH FLOW STATEMENT CONDENSED STATEMENT OF CASH FLOWS (in thousands)
FY 17
Cash flows from operating activities Cash flows from non-capital financing activities Cash flows from capital activities Cash flows from investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and Cash Equivalents at End of Year
$ 156,259 32,013 (154,634) (34,721) (1,083) 49,196 $ 48,113
FY 16
$ 127,665 25,583 (91,512) (74,347) (12,611) 61,807 $ 49,196
DEFINITIONS: Cash flows from operating activities: all cash received or spent related to MSD’s daily normal business activities. Cash flows from non-capital financing activities: all cash received related to taxes. Cash flows from capital and related financing activities: all cash received or spent related to construction of MSD’s infrastructure. Cash flows from investing activities: all cash received or spent related to investing MSD’s cash reserves. WHAT IT TELLS YOU: A cash flow statement summarizes both the cash and the net cash coming in and going out of MSD during a given period. OUR FY 17 CASH FLOW STATEMENT SHOWS THAT: • Cash flows from operating activities increased due to increased receipts from customers. • Cash flows from non-capital financing activities increased due to more tax revenue collected. • Cash flows from capital and related financing activities increased as a result of additional payments for capital assets during FY 17. • Cash flows from investing activities decreased due to a decrease in the volume of maturities of investments.
CASH FLOWS COMPARISON 200000
KEY
FY 17
150000 $156,259
$127,665
50000 $32,013
0
$25,583 ($34,721) ($91,512)
-50000
($74,347)
($154,634)
-100000 -150000 -200000
Operating Activities
Non-Capital Financing Activities
Capital Activities
Investing Activities
THOUSANDS
100000
FY 16
POPULAR ANNUAL FINANCIAL REPORT FY 17 | 17
PERFORMANCE AGAINST BUDGET Budget
Expenses
Unspent Budget
Capital Improvement and Replacement Program (CIRP)
$378.5 M
$268.8 M
$109.7 M The largest contributing factor to underspending this budget line is postponed work. Postponements can occur for various reasons including easement acquisition delays, scope revisions, and delays in choosing contractors. These delays contributed $65 million to the variance. The remainder of the savings was a result of favorable bids.
Operating
$196.6 M
$189.8 M
$6.8 M Personnel Services, due in large part to vacancies, were $6.4 million under budget. Supply expenses were also favorable by $4 million mostly due to savings of approximately $1 million in Operations Support, Treatment Plants, and Maintenance Yards. Additionally, Pump Stations and Environmental Compliance combined for another $0.7 million in savings on Supplies. Contractual Services and Capital Outlay offset a portion of these savings, with expenses exceeding those budgets by nearly $4 million in total.
$98.8 M
$91.4 M
$7.4 M Debt Service expenses were favorable for the new debt issued during FY 17. The District participated in two State Revolving Fund bonds and budgeted $5.5 million for debt service expenses, but no debt service was paid on these new issuances in FY 17. Additionally, the District issued Senior Revenue Bonds for which $4.3 million was budgeted in debt service expenses. Of the $4.3 million budgeted, only $2.5 million was required in FY 17.
$673.8 M
$549.9 M
Debt Service
Total
$123.9 M
WHAT IT TELLS YOU: In MSD’s case, it shows that MSD has been a good steward of the funds allocated to the District.
CREDIT RATING WHAT IT TELLS YOU: A credit rating provides an assessment of an organization’s credit worthiness, based on its history of borrowing and repayment of funds, as well as its assets and liabilities. A poor credit rating makes it more difficult to find financing and often results in higher interest rates. As the chart below illustrates, MSD has premium credit, with consistent ratings at the top of each credit rating agency’s scale. On a scale of AAA to D, MSD earned AAA and AA+ ratings from Standard & Poor’s and Fitch, respectively. Similarly, on a scale of Aaa to C, MSD earned an Aa1 rating from Moody’s. MSD has demonstrated to creditors and credit rating agencies its ability to manage large annual capital plans. The District’s solid financial management, including close monitoring of its financial performance, strong debt coverage, and liquidity also contribute to these ratings, which have remained constant the past three years.
FY 17
FY 16
FY 15
Standard & Poor’s (S&P)
AAA
AAA
AAA
Fitch
AA+
AA+
AA+
Moody’s
Aa1
Aa1
Aa1
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