Fiscal Year 2014 - Upper Occoquan Service Authority

Transcription

UPPER OCCOQUAN SERVICE AUTHORITY
Regional Water Reclamation System, Centreville, VA
2014
Comprehensive Annual Financial Report
FISCAL YEAR ENDING JUNE 30, 2014
Upper Occoquan Service Authority is officially known as Upper Occoquan Sewage Authority
2014
Comprehensive Annual Financial Report
FISCAL YEAR ENDING JUNE 30, 2014
P RE P A RE D B Y T H E F I N A NCE D EP ARTM EN T
Upper Occoquan Service Authority is officially known as Upper Occoquan Sewage Authority
In 1971, following extensive studies and
public debate, the Virginia Water Control
Board, with the counsel and recommendations of
the Virginia Department of Health, adopted a bold
and innovative policy to protect a critical water
supply, the Occoquan Reservoir. The Occoquan
Policy mandated the creation of a regional agency,
the Upper Occoquan Service Authority (UOSA), to
provide state-of-the-art treatment for wastewater
generated in the Occoquan Watershed and an
independent organization, the Occoquan Watershed
Monitoring Laboratory, to continuously monitor
the watershed and provide advice on protective
measures for the Reservoir. Since that time, water
quality in the Occoquan Reservoir has steadily
improved, while wastewater reclamation at
UOSA has increased dramatically, in response to
tremendous population growth in UOSA’s service
territory. Today, after significant expansion, the
Millard H. Robbins, Jr. Regional Water Reclamation
Plant operates as one of the nation’s largest and
most successful facilities of its kind.
UOSA’s stewardship efforts continue – as we search
for better, more cost-efficient ways to renew
byproducts, recycle energy, and reclaim water. We
remain committed to doing all we can to protect
and restore the health of the Occoquan Watershed
and the entire ecosystem of the Chesapeake Bay,
while striving to inspire the next generation of
water industry leaders.
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter of Transmittal .............................................................................................................................................. 1-5
Organizational Chart ................................................................................................................................................6
Directory of Board Members and Officials ........................................................................................................ 7
Certificate of Achievement for Excellence in Financial Reporting ................................................................ 8
FINANCIAL SECTION
Report of Independent Auditor ..................................................................................................................... 15-16
Management’s Discussion and Analysis ......................................................................................................... 19-27
Financial Statements
Statements of Net Position .......................................................................................................... 30-31
Statements of Revenues, Expenses and Changes in Net Position ............................................. 32
Statements of Cash Flows .................................................................................................................. 33
Notes to the Financial Statements ............................................................................................. 34-51
Required Supplementary Information
Schedule of Funding Progress - Virginia Retirement System ........................................................... 53
Schedule of Funding Progress - Other Postemployment Benefits (OPEB) ................................... 53
STATISTICAL SECTION (Unaudited)
Financial Trends
Schedule 1: Net Position by Component ....................................................................................... 57
Schedule 2: Changes in Net Position ............................................................................................... 57
Schedule 3: Operating Expenses ....................................................................................................... 58
Schedule 4: Nonoperating Revenues and Expenses ..................................................................... 59
Schedule 5: Expenses by Function .................................................................................................... 59
Revenue Capacity Information
Schedule 6: Operating Revenues by Source .................................................................................. 60
Schedule 7: Source of Wastewater Flow ........................................................................................ 60
Schedule 8: Annual Capital Contributions by Source .................................................................. 61
Debt Capacity Information
Schedule 9: Revenue Bond Coverage .............................................................................................. 62
Demographic and Economic Information
Schedule 10: Principal Employers ..................................................................................................... 63
Schedule 11: Demographic Statistics ............................................................................................... 64
Operating Information
Schedule 12: Authorized Full-Time Equivalents by Function ..................................................... 65
Schedule 13: Operating and Capital Indicators ............................................................................. 65
COMPLIANCE SECTION
Report of Independent Auditor on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed
in Accordance With Government Auditing Standards ................................................................................. 69-70
iii
I N TR O DU C TO RY S ECTIO N
RENEW
Ten years ago, folks at UOSA saw the
writing on the wall. The composted biosolids
generated as a byproduct of the water
reclamation process were getting harder and
harder to dispose of responsibly. Just as the
number of facilities willing to take this solid
waste were shrinking, hauling costs were on
the rise. And staff did not want to rely on
shipping UOSA’s biosolids to landfills. They
needed another solution.
That’s when they installed the first of UOSA’s
two pelletizers. Now, waste solids would
be run through the centrifuge, sent to the
dryer, and turned into granular, pea-shaped
pellets that could be distributed as a desirable
fertilizer, rather than simply hauled away. By
heating the biosolids, the pelletizing process
burns off pathogens and produces a safe, EPA
Certified Class-A/EQ (Exceptional Quality)
fertilizer, which is approved for “unrestricted”
use (meaning farmers, golf courses, and
gardeners can use it without any special
handling or environmental concerns).
In mid-2014, after installing a second dryer,
UOSA achieved its goal of producing nothing
but Class A/EQ pellets. According to Kevin
Gately, who works with the Biosolids
Pellet Program, hauling costs have been cut
significantly as a result. And the income UOSA
generates from its marketing and distribution
of biosolids (which ensures a steady demand
for the pellets throughout the year by
promoting UOSA’s fertilizer to blenders,
farmers, and others) helps to offset the
facility’s remaining solids handling fees.
Best of all, as Gately observes, “we’re taking a
waste product and turning it into something
very useful.”
We’re taking a
waste product
and turning
it into something
very useful.
THIS PAGE INTENTIONALLY LEFT BLANK
Upper Occoquan Service Authority
Leader in Water Reclamation and Reuse
14631 COMPTON ROAD, CENTREVILLE, VIRGINIA 20121-2506 (703) 830-2200
Charles P. Boepple
Executive Director
Michael D. Reach
Deputy Executive Director
November 10, 2014
Board of Directors
14631 Compton Road
Centreville, Virginia 20121-2506
Dear Members of the Board:
The Comprehensive Annual Financial Report (CAFR) of the Upper Occoquan Service Authority (UOSA) for
the fiscal year ended June 30, 2014, is submitted herewith. This CAFR has been prepared by UOSA’s Finance
Department in accordance with accounting principles generally accepted in the United States of America and
conforms to the requirements of the Governmental Accounting Standards Board (GASB).
Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation,
including all disclosures, rests with UOSA. We believe the data, as presented, are accurate in all material respects;
that the data are presented in a manner designed to fairly set forth the financial position and results of the operations
of UOSA as measured by the financial activity of its various accounts; and that all disclosures necessary to enable the
reader to gain the maximum understanding of UOSA’s financial affairs have been included.
This letter of transmittal is designed to complement the Management’s Discussion and Analysis (MD&A) and
should be read in conjunction with it. The Authority’s MD&A can be found immediately following the report of
independent auditor.
A brief history of UOSA, its fiscal operations, and selected accomplishments are presented below.
Organization and Function
UOSA was formed on March 3, 1971, by concurrent resolution of the governing bodies of Fairfax and Prince
William Counties and the Towns (now Cities) of Manassas and Manassas Park. UOSA’s discharge flows via Bull Run
to the Occoquan Reservoir, a major water supply source for approximately 2 million people in the Northern Virginia
communities of Fairfax, Loudoun, Prince William and Alexandria served by the Fairfax County Water Authority
(FCWA).
Studies in 1969-1970 concluded that inadequately treated sewage discharged by eleven secondary treatment
plants in the Occoquan Watershed was largely responsible for the serious water quality problems in the Occoquan
Reservoir. To remedy the problems, the Virginia State Water Control Board (SWCB) (now the Department of
FAI R FAX C OU N T Y / P RI N C E W I L L I A M CO UNT Y / CI T Y O F MA NA S S A S / CI T Y O F MA NA SSAS PARK
1
Environmental Quality) in 1971 adopted a comprehensive policy for the Occoquan Watershed (Occoquan Policy).
A principal requirement of the Occoquan Policy was the construction of a regional water reclamation facility to
replace the eleven existing treatment plants. UOSA was created to address this mandate.
UOSA was created under the provisions of the Virginia Water and Waste Authorities Act (Chapter 51, Title 15.2, Code
of Virginia of 1950 as amended) to construct, finance and operate the regional water reclamation facility mandated by
the Occoquan Policy. The first of nine construction contracts was awarded in early 1974 and UOSA began operation
of the treatment facility on June 26, 1978. The National Pollutant Discharge Elimination System (NPDES) permit
issued to UOSA by the SWCB and the United States Environmental Protection Agency (EPA) contained some of
the most stringent discharge limits in the United States. UOSA has consistently met these limits and, as a result,
eliminated wastewater as a source of pollution in the Occoquan Watershed. Further, the water reclaimed by UOSA
contributes significantly to the water supply of Northern Virginia. Tenacious pursuit of an enhanced environment is
a continuous activity for UOSA.
UOSA is a public body politic, corporate, and an instrumentality of the Commonwealth of Virginia. The governing
body of UOSA is an eight-person Board of Directors consisting of two members appointed for four-year terms by
the governing body of each member Political Subdivision. The UOSA Executive Director is responsible to the Board
of Directors for the day-to-day operations of UOSA. The organization is comprised of four Divisions: Finance,
Operations and Maintenance, Treatment Process and Technical Services.
Reporting Entity
This CAFR includes all funds and accounts of UOSA. As described above, UOSA provides wastewater treatment
and water reclamation services to four Political Subdivisions on a wholesale basis. In accordance with accounting
principles generally accepted in the United States of America for governmental entities, there are no component
units to be included in the reporting entity.
Economic Condition and Outlook
UOSA’s service area is located in the Greater Washington D.C. metropolitan area, which is ranked as the fifth largest
regional economy in the United States. The Washington D.C. metropolitan area provides close proximity to the
federal government and continues to be a premier location for corporate headquarters. It is also the home to twenty
Fortune 500 company headquarters. There have been five major corporate headquarters relocations to the area since
2008 - CSC, Hilton Worldwide, Volkswagen Group of America, Northrop Grumman and SAIC. Other industry
leaders located within the Political Subdivisions include Booz Allen Hamilton, Micron Technology, Lockheed
Martin, General Dynamics and Inova Health System.
The Greater Washington D.C. area unemployment rate is consistently below the national average and has the
highest median household income in the United States. The area has a highly-educated workforce and is ranked
number one among major metropolitan areas for the percent of population with graduate or professional degrees.
While the U.S. government is a significant employer and customer of services, which provides a stable economic
foundation, in recent years the region has become one of the country’s leaders in Professional and Business Services.
As a result, the economy is increasingly fueled by private-sector growth. The economic forecast from the Center
for Regional Analysis at George Mason University indicates that the region’s economy will continue to grow, but
at a slower pace than the past few years due to the estimated impact of lower federal spending. Residential housing
values have continued to increase as the residential real estate market has improved.
UOSA, with its expansion to 54 million gallons per day of capacity, continues to supply essential wastewater
reclamation services to the four Political Subdivisions in the service area.
2
Major Initiatives
To meet future needs resulting from increases in population and associated wastewater flows in its service area,
UOSA developed an expansion program, Project 54, which included a variety of major additions and improvements
to its wastewater treatment and delivery system.
Project 54 included a two phased expansion of UOSA’s treatment capacity from 27 million gallons per day (mgd)
to 54 mgd. The second phase of construction, Contract 54, incorporated process modifications and improved
technologies that resulted in facilities that were easier to operate and maintain. Contract 54 was completed and
UOSA received an operating permit to process 54 million gallons of wastewater a day beginning February 1, 2005.
UOSA’s Capital Improvement Plan (CIP) identifies additional projects that have either been completed or
programmed to be completed over the next seven years. Primary project categories included the expansion of
UOSA’s delivery system to accommodate full build-out of the UOSA service area, a nutrient reduction project to
be able to comply with regulations designed to protect and restore the Chesapeake Bay and miscellaneous plant and
hydraulic improvements including renewal and replacement projects designed to properly preserve UOSA’s assets
and infrastructure as they age. UOSA’s Capital Improvement Plan is funded by bond issuances, low interest loans
and public grants.
Financial Controls
The Director of Finance is responsible for establishing and maintaining an adequate internal control structure. In
fulfilling this responsibility, estimates and judgments are required to assess the expected benefits and related costs of
control procedures. The objectives of the control system are to provide UOSA with reasonable, but not absolute,
assurance that assets are safeguarded against loss from unauthorized use or disposition and are recorded properly
to permit the preparation of financial statements in accordance with accounting principles generally accepted in the
United States of America. All internal control evaluations occur within this framework. UOSA’s internal control
structure adequately safeguards assets and provides reasonable assurance of proper recording of financial transactions.
UOSA’s accounting records are maintained on the accrual basis. Revenues are recognized in the accounting period
in which they are earned and become measurable; expenses are recognized in the period incurred, if measurable.
The accounting and reporting policies conform to accounting principles generally accepted in the United States of
America and reflect practices appropriate for a governmental enterprise.
The UOSA Board of Directors adopts an annual operating budget based on projected wastewater flows as required
by the Restated Service Agreement between UOSA and the four member Political Subdivisions and the Restated
Agreement of Trust, as supplemented, administered by U.S. Bank National Association, as Trustee. The two
documents provide the basis for debt service payments. Budgetary control is maintained at the budget sub-function
level by a review of revenues and expenses at the staff management level. A review of the sub-function revenues and
expenses compared to budget is conducted with the Board of Directors on a quarterly basis. Appropriations lapse at
year end and may not be carried forward to the next year, except for funds appropriated for multi-year construction
projects. After adoption, increases or decreases in the budget may be made only upon Board approval. The budget
for fiscal year 2014 is as originally adopted and was not amended during the year.
3
Long-Term Financial Planning
UOSA’s Board of Directors endorsed a Capital Improvement Plan (CIP) Update in January 2014 that addresses the
Authority’s capital requirements through 2021. The CIP provides for treatment plant capacity that meets regulatory
requirements and provides for future growth, provides for a completely updated and renewed collection and delivery
system sized for build-out, and provides for the renewal and replacement of aging plant assets. The Plan of Finance
projects financing through 2021 to ensure funding is available to meet capital improvement needs. Capital projects
projections and the associated Plan of Finance are updated on an annual basis.
Currently a bond issue is anticipated for late 2015 to fund the next phase of the CIP, with additional bond issues
planned for 2017 and 2019.
As part of a 2013 bond refunding, Standard & Poor’s reaffirmed its rating on the Authority’s outstanding revenue
bonds at AAA, the highest rating that can be awarded. In addition, Fitch’s and Moody’s both reaffirmed their
respective ratings of AA+ and Aa1 as part of the refunding.
Standard & Poor’s
Fitch’s
Moody’s
Revenue Bonds
AAA
AA+
Aa1
Each of the four Political Subdivisions is required by the Restated Service Agreement to pay its share of the debt
service. The shares of the Political Subdivisions are based on allocated capacity as a percentage of the total capacity
allocated to the four participating Political Subdivisions or as otherwise identified for specific projects within UOSA’s
Service Agreement. Any participating Political Subdivision may reallocate any portion of its allocated plant capacity to
any other participating Political Subdivision on such terms as may be mutually agreeable, subject to certain approvals.
Completion of the second phase of the Project 54 expansion program (Contract 54) provided an increase in capacity
from 32 mgd to 54 mgd. Allocation of the 54 mgd capacity, which was effective February 1, 2005, is shown in Table
1 below.
Table 1
Political Subdivision
Total
Capacity Allocation
Percentage Of Total Capacity Fairfax County Prince William County
City of Manassas City of Manassas Park
27.5999
15.7971
7.6893
2.9137
mgd
mgd
mgd
mgd
51.1109%
29.2539%
14.2395%
5.3957%
Total
54.0000 mgd
100.0000%
Independent Audit
The Restated Service Agreement requires an annual independent audit of UOSA’s financial records and transactions
by an independent certified public accountant selected by the Audit Committee. This requirement has been met and
the report of the independent auditor is included in the Financial Section of this Report.
4
Awards
GFOA Certificate of Achievement for Excellence in Financial Reporting – The Government Finance Officers
Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in
Financial Reporting to UOSA for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended
June 30, 2013. The Certificate of Achievement is the highest form of recognition for excellence in state and local
government financial reporting. This is the twenty-fifth consecutive year UOSA has received the Certificate of
Achievement for Excellence in Financial Reporting.
To be awarded a Certificate of Achievement, UOSA published an easily readable and efficiently organized CAFR,
whose contents conform to program standards. This report satisfied both accounting principles generally accepted
in the United States of America and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe this FY 2014 report continues to
conform to the Certificate of Achievement program requirements, and it is being submitted to the GFOA to
determine its eligibility for a certificate.
NACWA Peak Performance Award – The National Association of Clean Water Agencies (NACWA) awarded
a Platinum Peak Performance Award to UOSA for 2013. NACWA’s National Environmental Achievement
Awards Program annually recognizes individual member agencies that have made outstanding contributions to
environmental protection and wastewater management by consistently meeting all National Pollution Discharge
Elimination System (NPDES) permit limits. This Platinum Peak Performance Award recognized UOSA’s 100%
NPDES permit compliance for nine consecutive years.
Acknowledgements
The preparation of this Comprehensive Annual Financial Report for FY 2014 was accomplished by the staff of
the Finance Department of the Finance Division. We would like to express our appreciation to all members of the
Finance Department who assisted with and contributed to its preparation.
Respectfully Submitted,
Charles P. Boepple
Executive Director
Paulette E. Myers
Director of Finance
5
Organizational Chart
June 30, 2014
Board of Directors
Office of the
Executive Director
Human Resources
Regulatory Affairs
Safety
Finance
Division
Operations &
Maintenance Division
Technical Services
Division
Administration
Delivery Systems
Capital
Improvements
Operations
Support
Finance
Electrical
Systems
Engineering
Liquid
Processing
Purchasing
Facilities
Maintenance
Information
Management
Solids
Processing
Industrial
Controls
Laboratory
Mechanical
Systems
Support Systems
6
Treatment Process
Division
Directory of Board Members and Officials
June 30, 2014
Board of Directors and Officers
Position
Political Subdivision/Affiliation
John M. Weber
Chairman
City of Manassas
John W. di Zerega
Vice-Chairman
Fairfax County
Dean E. Dickey
Secretary
Prince William County
Shahram Mohsenin
Treasurer
Fairfax County
William J. Becker
Member
William C. Boyce, Jr.
Member
City of Manassas
Jeanette M. Rishell
Member
City of Manassas Park
James A. Johnson, Jr.
Member
Paulette E. Myers
Assistant Treasurer
UOSA Staff
June A. Mahoney
Assistant Secretary
UOSA Staff
Officials
Charles P. Boepple
Executive Director
Michael D. Reach
Deputy Executive Director
7
8
UOSA has always
been a highly
advanced plant,
and cogeneration
helps keep us
on that path.
FINA NCIA L SECTION
RECYCLE
A new cogeneration system recently became
operational at UOSA as a part of ongoing
efforts to make operations as efficient, costeffective, and environmentally sustainable as
possible. “UOSA has always been a highly
advanced plant, and cogeneration helps keep
us on that path,” suggests Doug Hague,
who has worked on the system since its
inception. “This project represents just one
of many initiatives UOSA has undertaken to
advance the water treatment process, while
decreasing costs.”
As Hague explains, cogeneration operates a
bit like running coolant through your car’s
engine and exhaust to capture and remove
heat. When the Anaerobic Digesters are
heated as part of the solids stabilization
process, they produce a biogas. This digester
gas is captured and cleaned of contaminants,
then burned in the engine that drives the
generator. The resulting electricity is added
to the UOSA power grid, helping to lower
UOSA’s cost of purchased electricity by
reducing the amount of power required from
the major utility. The cogeneration system
also captures heat from the engine’s exhaust
gases – as well as from the engine’s jacket
water – and then applies this thermal energy
to help heat the Anaerobic Digesters.
In addition, cogeneration helps UOSA avoid
exceeding EPA limits on the amount of
digester gas it releases to the atmosphere,
without having to “flare off” the stack gas.
Instead, the exhaust gasses are captured and
applied to the recarbonation stage of the
water reclamation process, helping to reduce
the pH in the wastewater back to neutral to
avoid harming local wildlife when that water
is released into UOSA’s reservoir.
R E P O R T O F IN D E P E N D E N T AUD ITOR
FINANCIAL SECTION
15
16
MANAGEMENT’S DISCUSSION AND ANALYSIS
FINANCIAL SECTION
(Unaudited)
The following discussion and analysis provides an overview of the financial activities of the Upper Occoquan
Service Authority (UOSA) for the fiscal years ended June 30, 2014 and 2013. This information should be read in
conjunction with the letter of transmittal and the basic financial statements.
Financial and Deferred Outflow of Resources Highlights
• Assets and deferred outflows of resources exceeded liabilities by $85.2 million at June 30, 2014 compared to
$90.2 million at June 30, 2013.
• The Authority’s total net position decreased by $5.0 million, or 5.5%, for fiscal year 2014 compared to a decrease
of $6.5 million, or 6.8%, for fiscal year 2013.
• The decrease in net position for the current year is primarily attributable to a $10.4 million decrease in net
investment in capital assets that was partially offset by increases in restricted net position of $5.4 million.
• Fiscal year 2014 operating revenues increased by 4.5% to $28.1 million while operating expenses increased by
5.7% to $52.7 million, which includes depreciation expense of $24.5 million.
• Capital contributions from the Political Subdivisions were $14.0 million and $10.7 million for fiscal year
2014 and 2013, respectively. Grant revenues were $0.8 million and $1.7 million for fiscal year 2014 and
2013, respectively.
Overview of the Financial Statements
UOSA operates as a single enterprise fund (a type of proprietary fund). The Authority’s basic financial statements
are presented using the accrual basis of accounting, therefore revenues are recognized when they are earned and
expenses are recognized when a liability is incurred. The Comprehensive Annual Financial Report is presented in
four sections: Introductory, Financial, Statistical and Compliance. This discussion and analysis is provided to serve as
an introduction to UOSA’s basic financial statements: Statements of Net Position, Statements of Revenues, Expenses
and Changes in Net Position, Statements of Cash Flows, and the accompanying Notes to the Financial Statements.
The Statements of Cash Flows are prepared using the direct method.
19
(Unaudited)
Financial Analysis of UOSA’s Financial Position and Results of Operations
The table presented below provides a summary of UOSA’s financial position and operations for FY 2014 and FY 2013.
Condensed Statements of Net Position
June 30,
2014 2013
Change
Amount
%
Assets
Current & other assets
$108,673,355 $119,478,459 $ (10,805,104)
Capital assets, net
507,540,346 508,262,309 (721,963)
-9.0%
-0.1%
Total assets
-1.8%
616,213,701 627,740,768 (11,527,067)
Deferred outflows
of resources 8,642,846
10,636,054 (1,993,208) -18.7%
Liabilities
Current liabilities
32,513,909 31,855,306 658,603
2.1%
Long-term liabilities
507,122,156 516,311,563 (9,189,407) -1.8%
Total liabilities
539,636,065 548,166,869 (8,530,804)
-1.6%
Net position
Net investment in capital assets 30,369,861 40,722,834 (10,352,973) -25.4%
Restricted 53,939,075 48,554,724 5,384,351 11.1%
Unrestricted
911,546 932,395 (20,849) -2.2%
Total net position
$ 85,220,482 $ 90,209,953 $ (4,989,471)
-5.5%
During FY 2014, net position decreased by $4,989,471; significant factors attributable to the decrease were as follows:
• Net investment in capital assets decreased by $10,352,973, primarily due to a decrease in Restricted Cash and
Cash Equivalents resulting from the planned spend down of construction funds for capital projects. This was
partially offset by a decrease in outstanding debt.
• Restricted net position increased by $5,384,351, primarily due to an increase in Restricted Investments resulting
from the addition of the 2013B Debt Service Reserve Fund of $3,773,500 and increases to principal payments
for phasing in of the 2010 and 2013 Series bonds.
• Unrestricted net position decreased by $20,849 as a result of increases in Accrued Salaries and Benefits, Net
Pension Obligation and Compensated Absences Payable, partially offset by a decrease in Accounts Payable.
20
FINANCIAL SECTION
(Unaudited)
The table presented below provides a summary of UOSA’s financial position and operations for FY 2013 and FY 2012.
Condensed Statements of Net Position
June 30,
2013 2012 (Restated)
Change
Amount
%
Assets
Current & other assets
$119,478,459 $138,942,084 $ (19,463,625) -14.0%
Capital assets, net
508,262,309 491,298,397 16,963,912
3.5%
Total assets
627,740,768 630,240,481 (2,499,713)
-0.4%
Deferred outflows
of resources 10,636,054 7,348,912 3,287,142 44.7%
Liabilities
Current liabilities
31,855,306 35,827,233 (3,971,927) -11.1%
Long-term liabilities
516,311,563 505,006,524 11,305,039 2.2%
7,333,112 1.4%
Net position
Net investment in capital assets 40,722,834 56,169,422 (15,446,588)
Restricted 48,554,724 39,704,788 8,849,936 Unrestricted
932,395 881,426 50,969 -27.5%
22.3%
5.8%
Total liabilities
Total net position
548,166,869 $ 90,209,953 540,833,757 $ 96,755,636 $ (6,545,683)
-6.8%
During FY 2013, net position decreased by $6,545,683; significant factors attributable to the decrease were as follows:
• Net investment in capital assets decreased by $15,446,588, primarily due to an increase in outstanding principal
of related debt, net, while the increase in capital assets related to UOSA’s Capital Improvement Program was
funded by debt proceeds on hand as of July 1, 2012.
• Restricted net position increased by $8,849,936, largely due to an increase in restricted investments resulting
from the addition of the 2013A Debt Service Reserve fund of $10,162,500 offset by a decrease in debt service
accrued interest payable as a result of the 2005 Series bond refunding.
• Unrestricted net position increased by $50,969 as a result of an increase in Cash and Cash Equivalents
offset by increases in UOSA’s Landfill Closure and Postclosure Obligation, Net Pension Obligation and
Accounts Payable.
21
(Unaudited)
Revenues and Expenses
The table that follows summarizes the changes in revenues and expenses for UOSA between FY 2014 and FY 2013.
Condensed Statements of Revenues, Expenses and Change in Net Position
For the years ended June 30,
2014
2013
Change
Amount
Operating
Revenue
$ 28,140,951 $ 26,918,771 $ 1,222,180 Operating Expenses
Operations
28,179,836 26,744,183 1,435,653 Depreciation
24,512,910
23,101,920 1,410,990 Total operating expenses 52,692,746 Operating loss (24,551,795)
Nonoperating revenues, net 4,722,304 Capital contributions
14,840,020 Change in net position
Total net position,
beginning of year
Total net position,
end of year %
4.5%
5.4%
6.1%
49,846,103 2,846,643 5.7%
(22,927,332)
(1,624,463)
-7.1%
4,011,892 12,369,757 710,412
2,470,263
17.7%
20.0%
(4,989,471)
(6,545,683)
1,556,212
-23.8%
90,209,953 96,755,636 (6,545,683) -6.8%
$ 85,220,482 $ 90,209,953
$ (4,989,471)
-5.5%
The table that follows summarizes the changes in revenues and expenses for UOSA between FY 2013 and FY 2012.
Condensed Statements of Revenues, Expenses and Change in Net Position
For the years ended June 30,
2013
2012 (Restated)
Change
Amount
Operating
Revenue
$ 26,918,771 $ 26,284,637 $
634,134
Operating Expenses
Operations
26,744,183 26,100,007 644,176
Depreciation
23,101,920 21,632,622 1,469,298 Total operating expenses 49,846,103 Operating loss (22,927,332)
Nonoperating revenues, net 4,011,892 Capital contributions
12,369,757 Change in net position
Restated net position,
beginning of year
Total net position,
end of year 22
%
2.4%
2.5%
6.8%
47,732,629 2,113,474 4.4%
(21,447,992)
(1,479,340)
-6.9%
8,953,289 13,064,440 (4,941,397) -55.2%
(694,683) -5.3%
(6,545,683) (7,115,420) -1248.9%
96,755,636 96,185,899 $ 90,209,953 569,737
$ 96,755,636 569,737
$ (6,545,683) 0.6%
-6.8%
$30
Expenses (In millions)
Revenues (In millions)
FINANCIAL SECTION
$25
$20
$15
$10
$5
$30
$25
$20
$15
$10
$5
$0
$0
2014
Operating Revenue
Nonoperating Revenues
Contributions
2013
2012
2014
2013
2012
Operating Expenses
Depreciation
Operating Revenue
Operating revenue is derived primarily from billings to the Political Subdivisions for treatment of sewage. The
billings to the four member Political Subdivisions are based on the approved budget and actual monthly flows.
Thousands
Current Year. Compared to 2013, operating revenue increased by $1,222,180, net of an $898,133 credit to the
Annual Debt Service
political subdivisions for the FY 2014 Operations Existing
and Maintenance
budget surplus. The variance was due primarily
to increases in operating costs.
$40,000
Prior Year. Compared to 2012, operating revenue increased by $634,134, net of a $1,924,869 credit to the
$35,000
political subdivisions for the FY 2013 Operations and Maintenance budget surplus. The variance was due primarily
to increases
in operating costs.
$30,000
$25,000 Expenses
Operating
Operating
$20,000 expenses reflect the cost of services associated with the operation of the treatment plant and delivery systems.
Current
$15,000 Year. Operations expenses increased by $1,435,653 compared to 2013. The increase was due to higher
personnel costs from annual merit increases and health insurance premium increases as well as higher requirements
for $10,000
plant maintenance and increased chemical costs due to higher flows than planned. This was partially offset
by lower energy costs for electrical power and natural gas due to staff initiatives to reduce contract pricing and
decrease
$5,000 consumption.
Prior Year. Operations expenses increased by $644,176 compared to 2012. The increase was due to higher labor
2015 rate2017
2019 for 2021
2023 and
2025
2027
2029and 2031
2035cost2037
2039 This
2041
2043
costs from VRS
increases
retirement
life insurance,
health 2033
insurance
increases.
was partially
offset by lower energy costs for electrical power and natural gas due to staff initiatives to reduce contract pricing
Principal
and decrease consumption.
Interest
Current Year. Nonoperating revenues increased by $710,412 in FY 2014 due to a reduction in bond issuance costs
and asset disposals, partially offset by a decrease in revenue in excess of expenses from restricted accounts.
Prior Year. Nonoperating revenues decreased by $4,941,397 in FY 2013 due to lower grant revenues for the Nutrient
Cap (P1NR) Project, which is nearing completion, a reduction in the Build America Bond Subsidy resulting from
sequestration and a loss on asset disposals.
23
(Unaudited)
Capital Assets
At the close of FY 2014, UOSA had $507,540,346 invested in capital assets. This amount represents a net decrease
of $721,963 or less than 1% under FY 2013.
Capital Assets at June 30,
(net of accumulated depreciation)
2014
2013
Land Treatment Plant and Reservoir
Interceptor Sewers
Pumping Stations Mobile Equipment
Office Furniture and Equipment
Vehicles Construction in Progress
Totals $
7,203,612
332,480,571 53,081,171 94,539,905 523,961 907,137 451,080
18,352,909 $
7,203,612
301,639,027 45,310,634 98,489,063 562,632 1,043,993 513,283 53,500,065 $ 507,540,346 $ 508,262,309 Change
Amount
$
-
30,841,544 7,770,537
(3,949,158)
(38,671)
(136,856)
(62,203)
(35,147,156)
$
%
0.0%
10.2%
17.1%
-4.0%
-6.9%
-13.1%
-12.1%
-65.7%
(721,963) -0.1%
Major additions in FY 2014, at cost, included:
Treatment Plant and Reservoir:
Nutrient Compliance and Cogeneration Improvements and assets placed in service
(removed from Construction in Progress)
Construction in Progress:
Plant and delivery system expansion and improvements
Interceptor Sewers:
Liberia Interceptor Upgrade
Vehicles:
Fleet Vehicles 15,652,355
Furniture and Equipment:
IMS Infrastructure Upgrade $48,471,984
8,254,719
175,471
75,387
This information should be read in conjunction with note 4 to the audited financial statements in order to obtain
more detailed information on UOSA’s capital assets.
24
FINANCIAL SECTION
(Unaudited)
At the close of FY 2013, UOSA had $508,262,309 invested in capital assets. This amount represents a net increase
of $16,963,912 or 3.5% over FY 2012.
Capital Assets at June 30,
(net of accumulated depreciation)
2013
2012
Land Treatment Plant and Reservoir
Interceptor Sewers
Pumping Stations Mobile Equipment
Vehicles Construction in Progress
$
Totals $ 508,262,309
7,203,612
301,639,027
45,310,634 98,489,063 562,632 1,043,993 513,283 53,500,065 $
7,203,612
283,798,616
35,121,038 63,303,013
628,666 1,201,187 557,441 99,484,824 $ 491,298,397
Change
Amount
$
-
17,840,411
10,189,596 35,186,050
(66,034)
(157,194)
(44.158) (45,984,759) $
16,963,912 %
0.0%
6.3%
29.0%
55.6%
-10.5%
-13.1%
-7.9%
-46.2%
3.5%
Major additions in FY 2013, at cost, included:
Treatment Plant and Reservoir:
Primary Clarifiers, Carbon Regeneration Furnace and assets placed in service
(removed from Construction in Progress)
$33,865,368
Construction in Progress:
Plant and delivery system expansion and improvements
33,524,639
Pumping Stations:
Flat Branch Pump Station Phase II Upgrade Winter’s Branch Pump Station Upgrade
24,229,358
11,574,048
Interceptor Sewers:
Winter’s Branch Force Main Upgrade
Flat Branch Interceptor Upgrade
Furniture and Equipment:
IMS Infrastructure Upgrade Vehicles:
Fleet Vehicles 5,144,731
5,041,153 164,295
83,358
This information should be read in conjunction with note 4 to the audited financial statements in order to obtain
more detailed information on UOSA’s capital assets.
25
(Unaudited)
Debt Administration
Current Year. At June 30, 2014, the total principal balance due on UOSA’s outstanding debt was $514,897,000
compared to $521,752,000 at June 30, 2013. The decrease in outstanding debt from FY2013 is equal to
$6,855,000, which reflects a reduction in bonds payable of $46,420,000, partially offset by an increase in loans
payable from FY2013 of $39,565,000.
Expenses (In millions)
Revenues (In millions)
$30 30, 2014, the total outstanding bonds payable balance$30
At June
was $459,530,000. The decrease from FY 2013
reflects
$25 the defeasance of the 2003 Series Bonds and debt retirement
$25 of the 2004 Series Bonds.
$20
$20
At June 30, 2014, the total outstanding loan balance was $55,367,000. The increase consisted of loan proceeds
from$15the 2013B Series loan plus additional draws for the VRA$15(2011A & B) loans partially offset by principal
payments
for the VRA loans.
$10
$10
$5
$5
Prior Year. At June 30, 2013, the total principal balance due on UOSA’s outstanding debt was $521,752,000
$0
compared
to $505,699,000 at June 30, 2012. The increase $0
in outstanding debt from FY2012 is equal to
2014
2013
2014
2013
2012
2012
$16,053,000, which reflects an increase in bonds payable of $8,850,000 and an increase in loans payable from
Operating Revenue
Operating Expenses
FY2012 of $7,203,000.
Depreciation
Contributions
At June 30, 2013, the total outstanding bonds payable balance was $505,950,000. The increase reflects the issuance
of the 2013A Series Bonds, the defeasance of the 2005 Series Bonds, and debt retirements of the 2003 Series Bonds
and 2004 Series Bonds.
At June 30, 2013, the total outstanding loan balance was $15,802,000. The increase consisted of additional draws
for the VRA loans.
Thousands
This information should be read in conjunction with the transmittal letter and note 5 to the audited financial
Existing Annual
Debt Service
statements in order to obtain more detailed information
on UOSA’s
long-term debt.
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
2015
2017
Principal
Interest
26
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
FINANCIAL SECTION
(Unaudited)
Economic Factors and Next Year’s Budget
• The Authority’s adopted Annual Budget for FY15 is $67.8 million and is comprised primarily of $35.0 million
(51.6%) in capital financing costs, $28.7 million (42.3%) in operating expenses, and $4.1 million (6.1%) in
reserve maintenance expenses. The total represents a decrease of $647,190 or 0.95% from the FY14 budget.
The decrease is primarily due to Debt Service bond refundings for the 2005 and 2003 Series bonds partially
offset by modest increases for Operations and Maintenance and Reserve Maintenance Budgets.
• The average daily flow projection for FY15 is 33.2 million gallons a day (mgd). This represents an increase of
0.40 mgd or 1.22% over the FY14 budget.
• The Authority’s Capital Improvements Program (CIP) includes $186 million in forecasted capital projects for
plant renewal and improvements, delivery system improvements and expansion, and nutrient removal through
2021. Estimated spending for CY15 is $15.9 million.
• The 2013B Series Bonds refunded the 2003 Series Bonds in November 2013; resulting in gross debt service
savings of $4.6 million. The 2003 Series Bonds become callable in October 2013 and were refunded using a
direct bank loan as an alternative to a public offering.
• The Authority is considering an advanced refunding for all or part of the 2007A Series Bonds and all or part of
the 2007B Series Bonds in December 2014 with the bonds callable for redemption on July 1, 2017.
• Due to recent bond refundings and remaining funds available, the next bond issuance has been deferred to late
2015 with additional bond issuances planned for 2017 and 2019, which will fund CIP through 2021.
• The FY15 budget reflects efforts to reduce costs by securing fixed pricing for Treatment Plant Electrical Power,
reducing consumption through the recent incorporation of high efficiency blowers, the startup of a new
cogeneration facility that will produce power from digester gas and more energy efficient pump stations.
• UOSA’s favorable loss experience and risk management efforts resulted in a continuation of the 5.0% premium
reduction from VML Insurance for Liability, Automobile and Public Officials Liability Insurance and a 2.0%
premium credit as a result of the Authority’s favorable loss ratio.
Contacting UOSA’s Financial Management
This financial report is designed to provide a general overview of UOSA’s finances to all interested parties. Questions
about this report or requests for additional financial information should be addressed to UOSA’s Director of Finance
at the Upper Occoquan Service Authority, 14631 Compton Road, Centreville, VA 20121-2506, or by telephone at
(703) 830-2200, or visit the Authority’s website at www.uosa.org.
27
FINANCIAL STATEMENTS
STATEMENTS OF NET POSITION
June 30, 2014 and 2013
ASSETS
2014
2013
CURRENT ASSETS
Cash and cash equivalents (note 1)
$
7,405,744 $
7,222,436
Accounts receivable (notes 1 and 2)
367,286
384,010
Inventory 3,425,234 3,560,499
Prepaid expenses
148,722
112,387
Restricted assets (notes 1 and 3): Cash and cash equivalents (note 1)
59,492,560
74,488,780
Deposits
-
5,800 Accounts receivable 1,315,065 1,229,260
Reserve maintenance receivable
2,192,780
1,805,119
Accrued interest receivable
101,250
102,430
Total Current Assets
74,448,641 88,910,721
NONCURRENT ASSETS
Restricted assets (notes 1 and 3): Investments (note 1)
Arbitrage rebate receivable (note 10)
32,424,714
1,800,000
28,767,738
1,800,000
Capital assets (notes 1 and 4):
Utility plant and equipment
799,756,291
743,069,671
Other
9,203,692 9,048,654
Accumulated depreciation (note 1 and 4)
(326,976,158) (304,559,693)
Land
7,203,612 7,203,612
Construction-in-progress 18,352,909 53,500,065
Capital assets, net
507,540,346
508,262,309
Total Noncurrent Assets
541,765,060
538,830,047
TOTAL ASSETS$616,213,701$627,740,768
DEFERRED OUTFLOW OF RESOURCES (note 1)
Deferred amount on refunding$ 8,642,846$10,636,054
The accompanying notes are an integral part of these statements.
30
FINANCIAL SECTION
STATEMENTS OF NET POSITION (CONTINUED)
June 30, 2014 and 2013
LIABILITIES
2014
2013
CURRENT LIABILITIES
Accounts payable and accrued liabilities
$
Accrued salaries and benefits
Accrued bond interest payable (note 5)
Accrued loan interest payable (note 5)
Contract retainage payable
Income received in advance
Revenue bonds payable, net (note 5)
Virginia Resources Authority (VRA) loans payable (note 5)
Loans payable, net (note 5)
Compensated absences payable
Total Current Liabilities
5,785,666 $
817,439 9,996,433 543,388
1,097,316 2,220 10,002,975 789,400 1,795,000 1,684,072 6,444,656
553,728
9,910,543
277,498
1,752,679
1,260
11,117,281
235,860
1,561,801
32,513,909 31,855,306
LONG-TERM LIABILITIES Landfill closure and postclosure obligation (note 9)
Contract retainage payable
Revenue bonds payable, net (note 5)
VRA loans payable (note 5)
Loans payable, net (note 5)
Net other postemployment benefit obligation (note 1) Total Long-term Liabilities
TOTAL LIABILITIES
$
3,873,566
20,284
448,768,865
16,842,595
35,940,000
347,277
1,329,569
3,812,149
445,280
495,078,246
15,565,994
316,432
1,093,462
507,122,156 516,311,563
539,636,065 $ 548,166,869
NET POSITION
Net investment in capital assets
$
Restricted: Capital projects
Repairs and replacement
Debt service
Unrestricted
TOTAL NET POSITION
$
30,369,861 3,117,821
5,908,508
44,912,746
911,546
$
85,220,482 $
40,722,834
3,039,188
5,706,815
39,808,721
932,395
90,209,953
31
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
For the Years Ended June 30, 2014 and 2013
2014
2013
OPERATING REVENUES (notes 1 and 6)
OPERATING EXPENSES (notes 1 and 7)
$
28,140,951 $
26,918,771
Operations expenses
Depreciation expense
28,179,836 24,512,910 26,744,183
23,101,920
Total Operating Expenses
52,692,746 49,846,103
Operating Loss
(24,551,795)
(22,927,332)
37,389 1,419,476 (146,377)
(968,829)
(890)
4,381,535 42,067
1,463,069
(1,168,995)
(1,470,689)
(9,015)
5,155,455
4,722,304 4,011,892
NONOPERATING REVENUES (EXPENSES)
Interest income
Federal Build America Bonds subsidy
Bond issuance costs
Loss on asset disposals
Other
Revenue in excess of expenses from restricted accounts (note 8)
Total Nonoperating Revenues, Net
NET LOSS BEFORE CAPITAL CONTRIBUTIONS
(19,829,491)
(18,915,440)
CAPITAL CONTRIBUTIONS (note 8) 14,840,020 12,369,757
CHANGE IN NET POSITION (4,989,471)
(6,545,683)
TOTAL NET POSITION, beginning of year
90,209,953 TOTAL NET POSITION, end of year
$
85,220,482 The accompanying notes are an integral part of these statements.
32
$
96,755,636
90,209,953
FINANCIAL SECTION
STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2014 and 2013
CASH FLOWS FROM OPERATING ACTIVITIES
2014
Cash received from localities
$
Payments to employees for services
Payments to suppliers for goods and services
Net Cash Provided by Operating Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from debt issuance
Defeasance of long-term debt
Bond issuance costs Collections for debt service
Proceeds from grants
Federal Build America Bonds subsidy
Interest payments on long-term debt
Principal payments on long-term debt
Proceeds from loans
Acquisition & construction of capital assets
Proceeds from sale of capital assets 2013
29,769,370 $
(17,237,646)
(8,747,606)
30,020,510
(16,584,298)
(9,600,786)
3,784,118 3,835,426
- (35,620,000)
(146,377)
34,022,484 796,864 1,419,476 (21,590,379)
(10,246,460)
39,011,601 (23,471,296)
30,444 101,615,000
(82,465,000)
(1,168,995)
32,971,343
1,683,394
1,463,069
(34,072,181)
(10,064,140)
6,966,720
(39,445,101)
59,661
(15,793,643)
(22,456,230)
Purchase of investments
Interest on investments
(3,742,197)
938,810 (5,269,032)
697,353
Net Cash Used in Investing Activities
(2,803,387)
(4,571,679)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(14,812,912)
(23,192,483)
CASH AND CASH EQUIVALENTS, beginning of year
81,711,216 104,903,699
CASH AND CASH EQUIVALENTS, end of year
66,898,304 Net Cash Used in Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES
$
$
81,711,216
Reconciliation of Operating Loss to Net Cash Provided by Operating Activities
Operating loss $(24,551,795)$(22,927,332)
Adjustments to reconcile operating loss to net cash provided by operating activities:
Depreciation
24,512,910 23,101,920
Changes in assets and liabilities
Net change in accounts receivable, accounts payable, prepaid expenses and inventory
11,103 265,740
Net OPEB obligation
236,107 235,401 Collections for reserve maintenance
3,877,488 3,918,459
Payments for reserve maintenance costs
(301,695)
(758,762)
Net Cash Provided by Operating Activities
$
3,784,118 $
3,835,426
Noncash Investing, Capital, and Financing Activities:
Decrease in fair value of investments not classified as cash and cash equivalents $
Loss on disposals
Increase in landfill closure and postclosure care liability Increase in net OPEB liability
(85,220) $
(999,273)
(61,417) (346,000) (1,384,742) (1,530,351)
(167,691)
(319,000)
33
NOTES TO THE FINANCIAL SECTION
June 30, 2014 and 2013
1. SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES:
(a) Reporting Entity:
The Upper Occoquan Service Authority (UOSA) is a tax-exempt organization whose principal purpose is the reclamation of
wastewater to protect Northern Virginia’s Occoquan Reservoir as a potable water supply source. UOSA is a joint venture formed
on March 3, 1971 by a concurrent resolution of the governing bodies of Fairfax and Prince William Counties and the Towns
(now Cities) of Manassas and Manassas Park (the Political Subdivisions). UOSA is a public body politic, corporate, and an
instrumentality of the Commonwealth of Virginia. The governing body of UOSA is an eight-person Board of Directors consisting
of two members appointed for four-year terms by the governing body of each member Political Subdivision.
The obligations of UOSA and its member Political Subdivisions are set forth in a Restated Service Agreement. Under the Restated
Service Agreement, UOSA is obligated to process all wastewater delivered to it by the member Political Subdivisions up to their
allotted capacities. The Political Subdivisions are obligated to pay charges for the wastewater processing. These charges include
Operations and Maintenance, Reserve Maintenance (the cost of replacements and necessary improvements, which do not increase
the system capacity), and Debt Service on the loans and bonds issued to finance construction of the UOSA facilities.
As required by accounting principles generally accepted in the United States of America for governmental entities, the financial
statements of the reporting entity include all the funds and accounts of UOSA (the primary government). There are no component
units to be included in the reporting entity.
(b) Basis of Accounting:
(c) Budget and Budgetary Accounting:
The accounting records for UOSA are maintained on the accrual basis with revenue recorded when earned and expenses recorded
when incurred. The accounting and reporting policies conform to accounting principles generally accepted in the United States
of America. UOSA applies all applicable Governmental Accounting Standards Board (GASB) pronouncements.
The Board of Directors adopts an annual budget for operations and maintenance as required by the Restated Agreement of Trust
administered by the Trustee, U.S. Bank National Association. The budget is based on a projected wastewater flow and may be
amended during the year, as determined necessary, by the Board of Directors. Additionally, after adoption, increases or decreases
in the budget may be made only upon Board approval. The charges to the four member Political Subdivisions, based on the
budget and monthly flow, are adjusted upon completion of the annual audit for any deficit or available surplus in the Operating
Account. The deficit or available surplus in the Operating account is recorded as a receivable or liability respectively, at year end.
The budget is prepared on the accrual basis of accounting. Budgetary control is maintained at the sub-function level. A review
of revenues and expenses compared to the budget is conducted with the Board of Directors on a monthly and quarterly basis.
Unexpended budgeted amounts for the Operating Account lapse at year-end and may not be carried forward to the next year.
Design and construction budgets and related funds are multi-year and do not lapse annually.
(d) Cash and Cash Equivalents:
At June 30, 2014 and 2013, all cash of UOSA is maintained in accounts covered by Federal deposit insurance or collateralized in
accordance with the Virginia Security for Public Deposits Act (the Act).
Under the Act, banks holding public deposits in excess of the amounts insured by Federal deposit insurance must pledge collateral
in the amount of 50% of excess deposits to a collateral pool in the name of the State Treasury Board. If any member bank fails,
the entire collateral pool becomes available to satisfy the claims of the governmental entities. With the ability to make additional
assessments, the multiple bank collateral pool functions similar to Federal deposit insurance. Savings institutions are required to
collateralize 100% of deposits in excess of Federal deposit insurance limits.
UOSA considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash
equivalents.
Unrestricted cash and cash equivalents consist of bank deposits, petty cash funds, and certificate of deposit investments.
34
FINANCIAL SECTION
June 30, 2014 and 2013
Unrestricted cash and cash equivalents
2014 Cash
7,405,744
$
7,222,436
7,405,744 $
7,222,436
$
Total unrestricted cash and cash equivalents $
Restricted cash and cash equivalents consist of bank deposits and money fund investments in debt service and project fund
accounts held by a Trustee.
Restricted cash and cash equivalents
Cash
2014
$ 4,003,371 Money market funds held by trustee
Total restricted cash and cash equivalents
2013
2013
$
55,489,189 $ 59,492,560 $
4,407,949
70,080,831
74,488,780
(e)Investments:
UOSA follows GASB Statement No. 31, Accounting and Reporting for Certain Investments and for External Investment Pools,
which prescribes that certain investments be reported at their fair value, with the change in fair value being reported as revenue.
Fair values are based on quoted market prices. Statement No. 31 permits governmental entities other than investment pools to
report certain money market investments that mature within one year or less from the date of their acquisition at amortized cost.
As of June 30, 2014 and 2013, the carrying value of UOSA’s investments, with their respective credit ratings, was as follows:
Investment Type
Credit Rating
U.S. Securities
AAA
Fair Value
2014
2013
$ 32,424,714 $ 28,767,738
Total investments
$ 32,424,714 $ 28,767,738
(1) Credit Risk of Debt Securities:
UOSA’s Investment Policy (Policy) authorizes UOSA to invest in (1) obligations of the United States, the Commonwealth of
Virginia, the Federal National Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Federal Land Banks, Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Financing Corporation (FICO), and
Student Loan Marketing Association, (2) commercial paper with a maturity of 270 days or less rated prime 1 by Moody’s Investors
Service, Inc. or A-1 by Standard & Poor’s Corporation, and (3) repurchase agreements.
(2) Concentration of Credit Risk:
The Policy places no limit on the amount UOSA may invest in any one issuer. UOSA had investment types at June 30, 2014 and
2013, that exceed 5% of the total investments.
2014 2013
% of Total % of Total Investment Type
Fair Value
Investments
Fair Value
Investments
U.S. Treasury Notes and Bills
$ 32,424,714 100% $ 28,767,738 100%
Total investments
$ 32,424,714
100%
$ 28,767,738 100%
35
June 30, 2014 and 2013
(3) Interest Rate Risk:
The Policy limits the investment of funds in the operating and restricted asset accounts in obligations of the following maturities:
•
•
Operating Account - Not to exceed date needed for payment of operating expenses.
Restricted Asset Accounts:
Construction Fund - Not to exceed date needed for payment of construction costs
Reserve Maintenance - Not to exceed seven years
Revenue Bond - Not to exceed date needed for payment of principal and interest
As of June 30, 2014 and 2013, UOSA had the following investments and maturities:
Original Maturity (in years)
Fair Value at
More than
Investment Type June 30, 2014
Less than 1 year
1-2 Years
2 Years
U.S. Securities
$ 32,424,714
Total investments$ 32,424,714 $
-
$
-
$ 32,424,714
$
-
$
- $
32,424,714
Original Maturity (in years)
Fair Value at
More than
Investment Type June 30, 2013
Less than 1 year
1-2 Years
2 Years
U.S. Securities
$ 28,767,738
Total investments$ 28,767,738 $
-
$
-
$ 28,767,738
$
-
$
-$
28,767,738
(4) Custodial Credit Risk:
The Policy requires execution of a third-party custodial safekeeping agreement for all purchased securities, and requires that
securities be held in UOSA’s name. As of June 30, 2014 and 2013, all of UOSA’s investments are held in a bank’s trust
department in UOSA’s name, and therefore UOSA is not exposed to custodial credit risk.
(f) Accounts Receivable:
(g)Inventories:
Management expects all receivables to be fully collectible; therefore, no allowance for bad debts is maintained. Receivables relate
to reserve maintenance, septage facility usage and selected meter stations and pump stations, the latter two of which are operated
on behalf of others.
Inventories consist of chemicals, fuels and maintenance parts. Inventories are carried at the lower of cost or market. Cost is
determined on an average cost basis for chemicals, fuels and maintenance parts.
(h) Capital Assets:
Capital assets consist of the water reclamation system, vehicles, furniture and equipment valued at historical cost. In addition to
property and equipment, other direct acquisition costs, construction period net interest costs, and certain administrative costs
during the construction period have been capitalized. When appropriate, costs are reduced by interest earned on construction
funds. The capitalization threshold for capital assets is $5,000. The assets are depreciated using the straight-line method.
Capital AssetsEstimated Useful Lives
Treatment Plant and Reservoir
Interceptor Sewers
Pumping Stations
Mobile Equipment
Office Furniture and Equipment Vehicles
36
15
20
10
5
5
–
–
–
–
–
50
50
50
10
15
8
years
years
years
years
years
years
FINANCIAL SECTION
June 30, 2014 and 2013
(i) Deferred outflow of resources:
In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate
financial statement element represents a consumption of net position that applies to a future period and so will not be recognized
as an expense until then. UOSA’s one item that meets this criteria is the deferred amount on bond refunding.
(j) Retirement System:
(1) Plan Summary:
UOSA contributes to the Virginia Retirement System (VRS), a mixed agent and cost-sharing multiple-employer public employee
retirement system that acts as a common investment and administrative agent for Political Subdivisions in the Commonwealth of
Virginia. All full-time, salaried permanent UOSA employees are automatically covered by VRS upon employment. Benefits vest
after five years of service credit. Members earn one month of service credit for each month they are employed and their employer is
paying into the VRS. Members are eligible to purchase prior public service, active duty military service, certain periods of leave and
previously refunded VRS service as credit in their plan.
VRS administers three different benefit plans for local government employees: Plan 1, Plan 2 and Hybrid. Each plan has a different
eligibility and benefit structure as described below.
Plan 1: VRS Plan 1 is a defined benefit plan. UOSA employees are eligible for Plan 1 if their membership date is before July 1, 2010
and they were vested as of January 1, 2013. The Plan 1 Basic Benefit is a lifetime monthly benefit based on the retirement multiplier,
1.70% of the employees’s average final compensation multiplied by the employee’s total service credit. Plan 1 average final compensation
is the average of the employee’s 36 consecutive months of highest compensation. Plan 1 retirees are eligible for an annual cost-of-living
adjustment (COLA), not to exceed 5%, effective July 1 of the second calendar year of retirement. During years of no inflation or deflation,
the COLA is 0%. Benefits vest after five years of service credit. Employees are eligible for an unreduced retirement benefit beginning at age
65 with at least five years of service credit or age 50 with at least 30 years of service credit. Employees may retire with a reduced benefit as
early as age 55 with at least 10 years of service credit or age 50 with at least five years of service credit.
Plan 2: VRS Plan 2 is a defined benefit plan. UOSA employees are eligible for Plan 2 if their membership date is on or
between July 1, 2010 and December 31, 2013, or their membership date is before July 1, 2010, and they were not vested on
January 1, 2013. The Plan 2 Basic Benefit is a lifetime monthly benefit based on the retirement multiplier as a percentage of the employee’s
average final compensation multiplied by the employee’s total service credit. The Plan 2 retirement multiplier is 1.65% on service credit
earned on or after January 1, 2013 and 1.70% on service earned before January 1, 2013. Plan 2 average final compensation is the average
of the employee’s 60 consecutive months of highest compensation. Plan 2 retirees are eligible for an annual cost-of-living adjustment
(COLA), not to exceed 3%, effective July 1 of the second calendar year of retirement. During years of no inflation or deflation, the
COLA is 0%. Benefits vest after five years of service credit. Employees are eligible for an unreduced benefit beginning at their normal
Social Security retirement age with at least five years of service credit or when the sum of their age and service equals 90. They may
retire with a reduced benefit as early as age 60 with at least five years of service credit.
Hybrid Plan: The Hybrid Plan is a defined benefit plan and a defined contribution plan. UOSA employees are eligible for the Hybrid
Plan if their membership date is on or after January 1, 2014. VRS Plan 1 and Plan 2 members were allowed to make an irrevocable
decision to opt into the Hybrid Plan during a special election window from January 1, 2014 to April 30, 2014. No Plan 1 or Plan
2 members at UOSA opted into the Hybrid Plan.
•Defined Benefit component- The Basic Benefit of the Hybrid defined benefit plan is a lifetime monthly benefit based on the
retirement multiplier, 1.0%, of the employee’s average final compensation multiplied by the employee’s total service credit.
The Hybrid Plan average final compensation is the average of the employee’s 60 consecutive months of highest compensation.
Hybrid Plan retirees are eligible for an annual cost-of-living adjustment (COLA), not to exceed 3%, effective July 1 of the
second calendar year of retirement. During years of no inflation or deflation, the COLA is 0%. The defined benefit component
vests after five years of service credit. Employees are eligible for an unreduced defined benefit beginning at their normal Social
Security retirement age with at least five years of service credit or when the sum of their age and service equals 90. They may
retire with a reduced defined benefit as early as age 60 with at least five years of service credit.
•Defined Contribution component- The benefit from the Hybrid defined contribution plan is based on contributions made
by the member and UOSA, plus net investment earnings on those contributions. Hybrid members manage the investments
and related risk. Members are eligible to receive distributions upon leaving employment, subject to vesting restrictions on the
UOSA contributions. A percentage of the UOSA contributions to the defined contribution plan are eligible to be withdrawn
based on years of service. After two years, 50% is vested and 50% of UOSA’s contributions may be withdrawn. After three
years, 75% is vested and 75% of UOSA’s contributions may be withdrawn. After four or more years, 100% is vested and 100%
of UOSA’s contributions may be withdrawn.
37
June 30, 2014 and 2013
At retirement with the defined benefit plans, members can elect the Basic Benefit, the Survivor Option, a Partial Lump-sum Option
Payment (PLOP) or the Advance Pension Option. A retirement reduction factor is applied to the Basic Benefit amount for member
electing the Survivor Option, PLOP, or Advance Pension Option or those retiring with a reduced benefit.
VRS also provides death and disability benefits. Title 51.1 of the Code of Virginia (1950), as amended, assigns the authority to
establish and amend benefit provisions of the plan to the General Assembly of Virginia.
VRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary
information for the plans administered by VRS. A copy of the most recent report is available online at http://www.varetire.org/Pdf/
Publications/2013-annual-report.pdf or may be obtained by writing to the Virginia Retirement System’s Chief Financial Officer at
P.O. Box 2500, Richmond, VA 23218-2500.
(2) Funding Policy:
Plan members are required by Title 51.1 of the Code of Virginia (1950), as amended, to contribute 5% of their annual salary
towards their VRS retirement benefit. Through June 30, 2012, UOSA had assumed the 5% member contribution. Beginning
July 1, 2012 as a result of Virginia State legislative changes, new employees were required to pay the 5% member contribution.
In addition, for existing employees, employers were required to implement a transition to have the employee pay the 5% member
contribution. This requirement could be phased in over a period of up to 5 years and the employer is required to provide a salary
increase equal to the amount of the increase in the employee-paid member contribution. UOSA’s Board adopted resolutions to
implement the withholding and related salary increases at 1% effective July 1, 2012 and an additional 2% effective July 1, 2013
for a total of 3% as of June 30, 2014. In addition, UOSA is required to contribute the remaining amounts necessary to fund its
participation in the VRS using the actuarial basis specified by the Code of Virginia and approved by the VRS Board of Trustees.
UOSA’s contribution rate for the fiscal year ended June 30, 2014 was 8.95% of annual covered payroll.
(3) Annual Pension Cost:
For the fiscal year ended June 30, 2014, UOSA’s annual pension cost of $1,411,017 for VRS was equal to UOSA’s required and
actual contributions.
Fiscal Year
2012
2013
2014
Three-Year Trend Information
Annual Pension Percentage of
Net Pension Cost (APC) APC Contributed Obligation
$ 1,331,009
1,581,147
1,411,017
100%
100%
100%
-0-0-0-
The FY 2014 required contribution was determined as part of the June 30, 2011 actuarial valuation using the entry age actuarial
cost method. The actuarial assumptions at June 30, 2011 included: (a) 7.00% investment rate of return (net of administrative
expenses), (b) projected salary increases ranging from 3.75% to 5.60% per year, and (c) a cost-of-living adjustment of 2.50%
per year for Plan 1 employees and 2.25% for Plan 2 employees. Both (a) and (b) included an inflation component of 2.50%.
The actuarial value of the UOSA’s assets is equal to the modified market value of assets. This method uses techniques that
smooth the effects of short-term volatility in the market value of assets over a five-year period. UOSA’s unfunded actuarial
accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization
period at June 30, 2013 for the Unfunded Actuarial Accrued Liability (UAAL) was 30 years.
38
FINANCIAL SECTION
June 30, 2014 and 2013
(4) Funded Status and Funding Progress:
As of June 30, 2013, the most recent actuarial valuation, UOSA’s funding progress of the Plan is as follows:
Actuarial
Actuarial
Value of Valuation
Assets
Date
(1)
June 30, 2013 $ 35,542,753 Actuarial Unfunded
Accrued
Actuarial Liability –
Accrued Liability
Funded
Entry Age
(UAAL)
Ratio
(2)
(2-1)
(1/2)
$ 46,653,625 $ 11,110,872
76.2% Annual
Covered
Payroll
(3)
$ 12,374,810 UAAL as
% of
Payroll
[(2-1)/3]
89.8%
The schedule of funding progress, presented as required supplemental information (RSI) following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of the plan assets is increasing or decreasing
over time relative to the actuarial accrued liability (AAL) for benefits.
(k) Deferred Compensation Plan:
Schedule of Funding Progress
UOSA offers its employees a deferred compensation plan in accordance with Internal Revenue Code, Section 457. The funds are
held in a trust and managed by a third party. Therefore, UOSA is no longer reporting such assets and associated liabilities on its
statement of net position as stated under GASB 32 (Accounting and Financial Reporting for Internal Revenue Code, Section 457,
Deferred Compensation Plans). The deferred compensation amounts as of June 30, 2014 and 2013 were $233,528 and $211,762
respectively.
(l) Compensated Absences:
UOSA’s employee benefits program provides for the earning and accumulation of vacation and sick leave. The accumulation
of vacation leave is limited to 240 hours for employees with less than 10 years of service and 320 hours for 10 or more years.
Accumulated vacation hours in excess of the limit are transferred to sick leave. Accrued vacation leave balances are paid to
employees who terminate employment. The liability for accrued vacation leave as of June 30, 2014 and 2013, included in accounts
payable on the statement of net position, was $1,212,318 and $1,136,498 respectively.
Sick leave may be accumulated up to 480 hours for employees in the VRS Hybrid Plan and without limit for all other full-time
employees. A portion is paid upon termination based on years of service and does not exceed 25% of the total accumulated
balance. As of June 30, 2014 and 2013, the liability for accrued sick leave included in accounts payable on the statement of net
position was $819,031 and $741,735 respectively.
(m)Risk Management:
UOSA is exposed to various risks of loss related to torts; thefts of, damage to, and destruction of assets; errors and omissions;
injuries to employees; and natural disasters. UOSA purchases insurance coverage for risks including workers’ compensation,
automobiles, boiler/machinery use, land use, public officials’ liability, crime, general liability, and earthquake. UOSA has not
incurred any environmental losses through June 30, 2014 and in the past three years there were no insurance settlements that
exceeded insurance coverage. Costs resulting from non-insured losses will be charged to operations when incurred.
(n) Other Postemployment Benefits:
(1) Plan Description:
UOSA administers a single-employer defined postemployment health care benefit plan (“the Plan”). The Plan provides
postemployment health care benefits to eligible employees who have retired from UOSA on or after July 1, 1999. In order to
participate, retirees must meet the requirements of the Virginia Retirement System (VRS) and have attained age 55 with at least ten
years of continuous service. The benefit levels, employee contributions and employer contributions are governed by UOSA’s Board
of Directors and can be amended by UOSA’s Board of Directors. Separate financial statements were not issued for the Plan.
Retirees under the age of 65 and their dependents (spouse and children) are eligible to obtain health insurance from the same medical
plans available to active employees provided the retiree was previously enrolled in UOSA’s, or another, group medical plan for a
minimum of one year immediately prior to retirement. UOSA contributes 2% towards the total cost of the selected coverage for every
year of accrued service up to 40 years. Partial years of service are counted in increments of one month. Participation in UOSA’s health
39
June 30, 2014 and 2013
insurance plan ends once the retiree becomes eligible for Medicare at age 65. At that time, the retiree’s dependents will be offered
health care coverage under COBRA and the Medicare eligible retiree is provided a monthly health care subsidy based on years of
service to help offset any expenses not covered by Medicare. UOSA pays each participating Post-65 retiree $5 per month per year of
service with a subsidy minimum of $50 and maximum of $150. Employees who retired prior to age 65 do not need to participate in
the health insurance plan to receive the monthly health care subsidy at age 65. The health care benefits end at the death of the retiree.
Current UOSA Pre-65 retirees who qualify for health insurance benefits receive an implicit rate subsidy by participating in the active
employee health care risk pool.
(2) Membership:
At June 30, 2014, membership consisted of the following:
Number of Participants
a. Active Employees with UOSA Health Coverage 163
b. All Active Employees 175
c. Pre-65 Retirees
10
d.Post-65 Retirees
24
(3) Funding Policy:
The contribution requirements of plan members are established and may be amended by UOSA’s Board of Directors. UOSA is not
required to fund the Plan for an amount greater than the pay-as-you-go balance necessary to provide current benefits to retirees.
As of June 30, 2014, UOSA has not established a trust fund to irrevocably segregate assets to fund the OPEB liability; however,
UOSA’s Board of Directors designated $300,000 in FY14 and the four preceding fiscal years for a total of $1,300,000 towards
future OPEB funding. For the fiscal year ended June 30, 2014 and 2013, UOSA paid $109,893 and $83,599, respectively, in
pay-as-you-go expenses on behalf of the Plan.
(4) Annual OPEB Cost and Net OPEB Obligation:
UOSA’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount
actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that,
if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding
excess) over a period not to exceed thirty years.
UOSA’s annual OPEB cost, the actual amount contributed, and the net OPEB obligation for 2014 and 2013 are as follows:
2014
2013
Discount Rate
4%
4%
Annual Required Contribution (ARC) $ 356,000
$
325,000
Interest on Net OPEB Obligation
44,000 34,000 Adjustment to Annual Required Contribution
(54,000)
(40,000)
Annual OPEB Cost (expense)
Pay-As-You-Go Annual Employer Contribution
40
346,000 (109,893)
319,000 (83,599)
236,107 1,093,462 235,401
858,061 Increase in Net OPEB Obligation
Net OPEB Obligation, Beginning of Year
Net OPEB Obligation, End of Year
$ 1,329,569 $
1,093,462 FINANCIAL SECTION
June 30, 2014 and 2013
UOSA’s annual OPEB cost, the percentage of annual OPEB cost contributed, and the net OPEB obligation for the fiscal year ended
June 30, 2014 are as follows:
Fiscal Year
Ended
June 30, 2012
June 30, 2013
June 30, 2014
Three Year Trend Information
Annual OPEB Percentage of Annual OPEB
Cost
Cost Contributed
$ 301,000
$ 319,000
$ 346,000
27.7% 26.2%
31.8% (5) Funded Status:
For the year ended June 30, 2014, UOSA’s OPEB funding progress of the Plan is as follows:
Net OPEB
Obligation
858,061
$
$ 1,093,462
$ 1,329,569
Unfunded
Actuarial
Actuarial
Actuarial Annual
UAAL as
Actuarial
Value of Accrued
Accrued Liability
Funded
Covered
% of
Valuation
AssetsLiability (UAAL)
RatioPayrollPayroll
Date
(1)
(2)
(2-1)
(1/2)
(3)
[(2-1)/3]
July 1, 2013
$ - $ 3,713,000 $ 3,713,000
0.0% $ 13,364,110
27.8%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability
of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care
cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The
schedule of funding progress, also presented as required supplementary information following the notes to the financial statements,
presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to
the actuarial accrued liabilities for benefits.
(6) Actuarial Methods and Assumptions:
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and
the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques
that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value assets, consistent
with the long-term perspective of the calculations.
In the July 1, 2013 actuarial valuation, the Projected Unit Credit actuarial cost method was used. The actuarial assumptions
included a 4.0% investment rate of return (net of administrative expenses), which is the expected long-term investment returns on
the employer’s own investments calculated based on the funded level of the plan at the valuation date, and a 2.5% payroll growth
rate. The medical trend assumption was based on the Society of Actuary’s Long-Run Medical Cost Trend Model, using the baseline
assumptions except for the real wage growth assumption of 0.9%. The initial health care cost trend rate was 6.5% and the assumed rate
of increase in 2048 is 4.8%. The unfunded actuarial liability is being amortized as a level percentage of projected payroll on a closed
basis. The remaining amortization period at June 30, 2014 was twenty-five years. Additional information as of the latest actuarial
valuation follows:
Long-Run Medical Cost Trend Assumptions:
Rate of Inflation
Rate of Growth in Real Income / GDP per capita
Income Multiplier for Health Spending
Extra Trend due to Technology and other factors
Health Share of GDP Resistance Point
Year for Limiting Cost Growth to GDP Growth
2.8%
0.9%
1.3
1.1%
23.0%
2060
41
June 30, 2014 and 2013
(o) Revenues and Expenses Classification:
(p) Significant Accounting Policy:
Revenues from billings to the Political Subdivisions for treatment of sewage are reported as operating revenues. All other
transactions are reported as nonoperating revenues. All expenses related to operating UOSA are reported as operating expenses.
Interest expense and financing costs are reported as nonoperating expenses.
Net position is classified as net investment in capital assets, restricted and unrestricted. Restricted assets present constraints on
resources that are either externally imposed by creditors, contributors, laws and regulation of other governments or imposed by
law through state statute.
(q) New Accounting Pronouncements:
GASB Statements No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position,
and No. 65, Items Previously Reported as Assets and Liabilities, provides guidance for reporting transactions that result in the
consumption or acquisition of net assets in one period that are applicable to future periods, and the related accounting and
financial reporting standards to reclassify such items from their prior reporting basis. Statements 63 and 65 were implemented
during the year ended June 30, 2013.
2. ACCOUNTS RECEIVABLE:
Accounts receivable consists of the following at June 30, 2014 and 2013:
2014
2013
Fairfax County $ 283,172
13,509
City of Manassas
8,667
Other
61,938
Total
$
$
367,286 $
349,718 3,886
5,108
25,298
384,010
3. RESTRICTED ASSET ACCOUNTS:
UOSA’s restricted assets are accounted for within the Enterprise Fund accounts rather than through separate fund entities. Therefore,
in accordance with the Restated Agreement of Trust and Supplements administered by the Trustee, UOSA had the following restricted
asset accounts in operation at June 30, 2014:
Reserve Maintenance - This account receives all revenue derived by UOSA to pay the cost of replacements and necessary improvements
that do not increase the system capacity or scope. In accordance with Section 606 of the Restated Agreement of Trust, UOSA charges
and collects from the Political Subdivisions amounts sufficient to make the current balance in the Reserve Maintenance account equal
to the greater of (1) $2,000,000, (2) the estimated cost of replacements and necessary improvements which do not increase the system
capacity or scope as set forth in the current fiscal year budget, or (3) the amount certified by UOSA’s consulting engineer, provided,
however, that if such amount certified by the consulting engineer is greater, UOSA may charge and collect the amount over a period
not to exceed five fiscal years, so long as the amount on deposit at all times during the year is at least equal to the amount required to
pay the cost of replacements and improvements which do not increase the system capacity or scope.
Revenue Bonds - These accounts receive all revenue derived by UOSA to pay the principal and interest on the bonds. At all times, there
is on deposit in the Revenue Bond Interest Accounts the amount of interest on the bonds accrued to the last day of the current month.
At all times, there is on deposit in the Revenue Bond Principal Accounts the amount of principal due on the outstanding bonds during
the next succeeding twelve months accrued to the last day of the current month. At all times, there is on deposit in the Revenue Bond
Sinking Fund Accounts the amount of any sinking fund installment due within the next succeeding twelve months accrued to the last
day of the current month with respect to any Bonds that are subject to redemption, in accordance with Section 607 of the Restated
Agreement of Trust and the First Supplemental Restated Agreement of Trust.
42
FINANCIAL SECTION
June 30, 2014 and 2013
Bond Debt Reserve - This account contains at all times an amount deposited from the proceeds of UOSA’s bonds sufficient to cover
the maximum amount payable on account of principal and interest in any fiscal year (the Required Reserve) in accordance with the
Restated Agreement of Trust, Section 608. According to Section 608, in lieu of the Required Reserve or any portion of it, the account
may contain on deposit a surety bond or an insurance policy payable to the Trustee for the benefit of the bondholders, in an aggregate
amount equal to the difference between the Required Reserve and the amount on deposit in the Debt Reserve Account.
Construction - This account receives proceeds from the issuance of bonds and is used to pay for construction in accordance with the
Restated Agreement of Trust, as supplemented, Section 501.
As of June 30, 2014 and 2013, the Restricted Asset Accounts are summarized below:
2014
Reserve
CIP
Maintenance
Debt Service
Total
Cash and Cash Equivalents
$
Investments
Accounts Receivable
Arbitrage Rebate Receivable
Reserve Maintenance Receivable
Accrued Interest Receivable
32,559,833
1,315,065
1,800,000
2,755
Total
35,677,653 $
$
$
4,003,369
2,192,780
-
6,196,149 $
$
22,929,358
32,424,714
98,495
$
59,492,560 32,424,714
1,315,065
1,800,000
2,192,780
101,250
55,452,567 $
97,326,369
2013
Reserve
CIP
Maintenance
Debt Service
Total
Cash and Cash Equivalents
$
Investments
Accounts Receivable
Deposits
Arbitrage Rebate Receivable
Reserve Maintenance Receivable
Accrued Interest Receivable
49,354,087
$
- 1,229,260 5,800 1,800,000 - 4,128 4,003,970
1,805,119
-
Total
52,393,275 5,809,089 $
$
$
$
21,130,723
28,767,738
98,302
$
49,996,763 $
74,488,780 28,767,738
1,229,260
5,800
1,800,000
1,805,119
102,430
108,199,127
43
June 30, 2014 and 2013
4. CAPITAL ASSETS:
(a) Changes in capital assets for the years ended June 30, 2014 and 2013 follow:
2014
BalanceBalance
June 30, 2013
Additions
Retirements
Transfers June 30, 2014
Non-depreciable Capital Assets Land $
7,203,612
$- $- $-
$
7,203,612
Construction-in-progress
53,500,065 21,926,568 - (57,073,724)
18,352,909
Depreciable
Capital Assets Utility Plant and Equipment: Treatment Plant and Reservoir
563,175,715 50,334,555 (2,518,585) -
610,991,685
Interceptor Sewers
59,498,439 9,105,634
(479,435) -
68,124,638
Pumping Stations
117,547,083 149,201 (1,878) - 117,694,406
Mobile Equipment
2,848,434 97,128 -
2,945,562 Other:
7,454,742 175,472 (48,404) -
7,581,810 Vehicles
1,593,912 75,386 (47,416) - 1,621,882
Total Capital Assets
$ 812,822,002 $
81,863,944
$
(3,095,718) $
(57,073,724)
$ 834,516,504
2013
BalanceBalance
June 30, 2012
Additions
Retirements
Transfers June 30, 2013
Non-depreciable Capital Assets Land $
7,203,612
$- $- $-
$
7,203,612
Construction-in-progress99,484,824 38,494,812
-(84,479,571)53,500,065
Depreciable
Capital Assets Utility Plant and Equipment: Treatment Plant and Reservoir
528,209,185 35,823,921
(857,391)
-
563,175,715
Interceptor Sewers
48,965,353 11,541,924
(1,008,838)
-
59,498,439
Pumping Stations
84,396,460 39,787,267
(6,636,644)
-
117,547,083
Mobile Equipment
2,764,130 91,206
(6,902) -
2,848,434 Other:
7,382,081 202,738
(130,077) -
7,454,742 Vehicles
1,566,697 100,768
(73,553)
- 1,593,912
Total Capital Assets
44
$ 779,972,342 $ 126,042,636 $
(8,713,405) $
(84,479,571)
$ 812,822,002
FINANCIAL SECTION
June 30, 2014 and 2013
(b) Changes in accumulated depreciation for the years ended June 30, 2014 and 2013 follow:
2014
Balance
Balance
June 30, 2013
Additions
Retirements
June 30, 2014
Depreciable
Capital Assets Utility Plant and Equipment: Treatment Plant and Reservoir $ 261,536,688 $ 18,616,165 $
(1,641,739) $ 278,511,114
Interceptor Sewers
14,187,805 1,243,696 (388,034)
15,043,467
Pumping Stations
19,058,020 4,098,359 (1,878) 23,154,501
Mobile Equipment
2,285,802 135,799 -
2,421,601 Other:
6,410,749 288,152 (24,228) 6,674,673 Vehicles
1,080,629 130,738 (40,565) 1,170,802
Total Accumulated Depreciation
$ 304,559,693 $
24,512,909 $
(2,096,444) $ 326,976,158
2013
Balance
Balance
June 30, 2012
Additions
Retirements
June 30, 2013
Depreciable
Capital Assets Utility Plant and Equipment: Treatment Plant and Reservoir $ 244,410,569 $ 17,890,377 $
(764,258) $ 261,536,688
Interceptor Sewers
13,844,315 1,090,467 (746,977)
14,187,805
Pumping Stations
21,093,447 3,463,463 (5,498,890) 19,058,020
Mobile Equipment
2,135,464 152,755 (2,417) 2,285,802 Other:
6,180,894 359,932 (130,077) 6,410,749 Vehicles
1,009,256 144,926 (73,553) 1,080,629
Total Accumulated Depreciation
$ 288,673,945 $
23,101,920 $
(7,216,172) $ 304,559,693
45
June 30, 2014 and 2013
5. LONG-TERM DEBT:
(a) Bonds Payable
The Authority issues revenue bonds to provide funds for acquisition and construction of major capital facilities and for refunding
higher-interest revenue bonds. Bonds payable as of June 30, 2014, consist of the following:
$288,600,000 Sewage System Revenue Bonds, Series 1995A; dated December 1, 1995, principal maturing annually with interest
from 4.30% to 6.00% payable semiannually through July 1, 2029.
Of the total 1995A Series Bonds issued, $225,965,000 has been currently refunded from the proceeds of future bond
issuances and are considered defeased. Accordingly, the liability relating to these bonds has been removed from the
Authority’s financial statements.
$49,395,000 Sewage System Revenue Bonds, Refunding Series 2004; dated November 1, 2004, principal maturing annually with
interest from 3.00% to 5.00% payable semiannually through July 1, 2015.
$90,315,000 Sewage System Revenue Bonds, Refunding Series 2007A; dated March 14, 2007, principal maturing annually with
$119,715,000 Sewage System Revenue Bonds, Series 2007B; dated December 20, 2007, principal maturing annually with interest
$85,180,000 Sewage System Revenue Bonds, Series 2010; dated December 23, 2010, principal maturing annually with interest
$101,615,000 Sewage System Revenue Bonds, Refunding Series 2013A; dated May 30, 2013, principal maturing annually with
For each outstanding bond series, principal payments are made annually on July 1 and interest is payable semi-annually on January 1
and July 1. Future debt service requirements are as follows:
Fiscal Year
Principal
Interest
Total
2015
$ 10,055,000 $
2016
10,715,000 2017
11,390,000 2018
11,925,000 2019
12,440,000 2020-2024
80,075,000 2025-2029
125,845,000 2030-2034
72,265,000 2035-2039
69,160,000 2040-2044
55,660,000 46
$ 459,530,000 $
18,344,850
17,772,182
17,260,001
16,734,595
16,204,578
73,229,502
57,254,182
34,639,920
20,511,245
4,643,786
$
276,594,841 $
28,399,850
28,487,182
28,650,001
28,659,595
28,644,578
153,304,502
183,099,182
106,904,920
89,671,245
60,303,786
736,124,841
FINANCIAL SECTION
June 30, 2014 and 2013
Current Year Refunding:
On November 15, 2013, UOSA issued $37,735,000 Regional Sewerage System Revenue Refunding Bonds* consisting of Serial
bonds with interest rates of 1.845% to refund $35,620,000 of outstanding 2003 Series Bonds consisting of Series bonds with
interest rates from 5.00% to 5.25%. A total of $36,515,156 from the proceeds of the bonds, were deposited into a refunding
escrow account. As of June 30, 2014, $35,620,000 of bonds outstanding is considered defeased.
The refunding resulted in a difference of $596,909 between the reacquisition price and the net carrying amount of the old debt.
This difference, reported in accompanying financial statements as a deferred amount on refunding, is being charged to operations
through the year 2021 using the bonds-outstanding method.
UOSA completed the refunding to reduce its total debt service payments over 8 years by $4,034,931 and to obtain an economic
gain (difference between the present values of the old and new debt service payments) of $4,262,359.
* The 2013B Series Regional Sewerage System Revenue Refunding Bonds are a direct bank loan (note 5c).
(b) Virginia Resources Authority Loans Payable
In July 2011, the Authority entered into a financing agreement with Virginia Resources Authority (VRA) for the purpose of
funding the costs related to the Energy Service (ESCO) Project, including the replacement of an existing blower system and the
installation of a generator and cogeneration unit which uses biogas to produce heat and electricity. The loan was authorized under
the Virginia Water Facilities Revolving Fund (VWFRF) for $6.1 million, at 2.93% per annum for a term of twenty years. The loan
is secured by a pledge of revenues from the Authority’s sewer system. Interest and principal are payable on a semi-annual basis
each June 1 and December 1, beginning with interest only payable in June 2013. The outstanding loan balance at June 30, 2014
was $4,952,324. At June 30, 2014, approximately $0.9 million remains available to be borrowed on this loan.
In December 2011, the Authority entered into a second financing agreement with VRA for the purpose of funding Phase 1 of
the Nutrient Compliance Improvement Project (P1NR), together with related project expenses. The loan was authorized under
the VWFRF for $13.9 million, at 2.35% per annum for a term of twenty years. The loan is secured by a pledge of revenues from
the Authority’s sewer system. Interest and principal are payable on a semi-annual basis each March 1 and September 1, beginning
with interest only payable in March 2014. The outstanding loan balance at June 30, 2014 was $12,679,671. At June 30, 2014,
approximately $1.3 million remains available to be borrowed on this loan.
Future debt service requirements for principal and interest are as follows:
2011A Loan*
Fiscal Year
Principal
2015
$
2016
2017
2018
2019
2020-2024
2025-2029
2030-2034
2035-2039
Total
235,860
242,821
249,988
257,366
264,962
1,446,833
1,673,328
1,728,842
-
Interest
$
$ 6,100,000 2011B Loan**
$
177,014
170,053
162,886
155,508
147,912
617,537
391,042
129,100
-
Principal Interest
$
1,951,052 570,774
584,266
598,077
612,215
3,285,111
3,692,175
4,149,678
442,256
$
$ 13,934,552 $
716,189
324,128
310,636
296,825
282,688
1,189,402
782,339
324,837
5,196
Total
$
4,232,240 1,129,063
1,307,776
1,307,776
1,307,776
1,307,777
6,538,883
6,538,884
6,332,457
447,452
$ 26,217,844
* Future debt service requirements for the 2011A financing agreement are based on the projected financing cost of the project.
As of June 30, 2014, funds were not fully drawn, thus the current outstanding balance reported on the Statement of Net Position
and in Note 5 (d) to the financial statements is lower than the future debt service requirements noted above.
** Future debt service requirements for the 2011B financing agreement are based on the projected financing cost of the project.
As of June 30, 2014, funds were not fully drawn, thus the current outstanding balance reported on the Statement of Net Position
and in Note 5 (d) to the financial statements is lower than the future debt service requirements noted above.
47
June 30, 2014 and 2013
(c) Loan Payable
In November 2013, the Authority issued the 2013B Series Regional Sewerage System Revenue Refunding Bonds for the purpose
of refunding the 2003 Series Regional Sewerage System Revenue Refunding Bonds. The 2013B Series issuance is a direct
bank loan for $37.7 million at 1.85% per annum for a term of eight years. The loan is secured by a pledge of revenues from
the Authority’s sewer system. Interest is payable on a semi-annual basis each January 1 and July 1, beginning July 1, 2014 and
principal is payable on an annual basis each July 1, beginning July 1, 2014. The outstanding loan balance at June 30, 2014 was
$37,735,000.
Future debt service requirements for principal and interest are as follows:
Fiscal Year
2013B Loan
Principal
Interest
2015
$1,795,000 $
20164,345,000 2017
4,430,000 2018
4,510,000 2019
4,595,000
2020-2024 18,060,000 Total
$ 37,735,000 $
Total
437,066 $2,232,066
663,0935,008,093
582,928 5,012,928
501,194 5,011,194
417,985 5,012,985
808,571 18,868,571
3,410,837 $
41,145,837
(d) Changes in long-term liabilities
The following is a summary of changes in long-term liabilities for the years ended June 30, 2014 and 2013:
2014
Balance
Balance
Due Within
June 30, 2013
Additions
Reductions
June 30, 2014
One Year
Bonds Payable 1995A Series $
47,215,000 $
- $
- $ 47,215,000 $
2003 Series 39,185,000 - 39,185,000 -
2004 Series 22,725,000 - 7,235,000 15,490,000 7,555,000
2007A Series 90,315,000 - - 90,315,000 2007B Series 119,715,000 - - 119,715,000 2010A Series 5,205,000 - - 5,205,000 1,660,000
2010B Series 79,975,000 - - 79,975,000 2013A Series 101,615,000 - - 101,615,000 840,000
Premium (discount)
on bonds payable (net) 505,950,000 - 46,420,000 245,527 - 1,003,687 Net Bonds Payable 506,195,527 - 47,423,687 -
37,735,000 1,795,000
281,292 17,631,996 789,400
Loans Payable:
Loan Payable (2013B Series)
-
37,735,000
VRA Loans Payable
(2011A & 2011B Series)
15,801,854 2,111,434
Landfill Closure
and Postclosure Obligation
3,812,149 61,417
Contract Retainage Payable
2,197,959 172,008
Compensated Absences Payable 1,878,233 1,677,226
Net Other Postemployment
benefit obligation 1,093,462 236,107
Total 48
$
530,979,184 $
41,993,192 $
-
1,252,367 1,524,110 -
50,481,456 459,530,000 (758,160) 458,771,840 3,873,566 1,117,600
2,031,349 1,329,569 $ 522,490,920 $
10,055,000
(52,025)
10,002,975
1,097,316
1,684,072 15,368,763
FINANCIAL SECTION
June 30, 2014 and 2013
2013
Balance
Balance
June 30, 2012
Additions
Reductions
June 30, 2013
Bonds Payable 1995A Series $
47,215,000 $
- $
- $ 47,215,000 2003 Series 42,595,000 - 3,410,000 39,185,000 2004 Series 29,615,000 - 6,890,000 22,725,000 2005 Series 82,465,000 - 82,465,000 - 2007A Series 90,315,000 - - 90,315,000 2007B Series 119,715,000 - - 119,715,000 2010A Series 5,205,000 - - 5,205,000 2010B Series 79,975,000 - - 79,975,000 2013A Series - 101,615,000 - 101,615,000 Premium (discount)
on bonds payable (net) 497,100,000 4,794,626 Net Bonds Payable 501,894,626 101,615,000 Due Within
One Year
$
3,565,000
7,235,000
10,800,000 92,765,000 505,950,000 - 4,549,099 245,527 317,281
101,615,000 97,314,099 506,195,527 11,117,281
Loans Payable:
VRA Loans Payable
8,599,273 7,202,581 -
15,801,854 235,860
Landfill closure and
postclosure obligation
3,644,458 167,691 -
3,812,149 Contract retainage payable
4,343,377 1,330,796 3,476,214 2,197,959 1,752,679
1,861,955 1,537,376 1,521,098 1,878,233 1,561,801
Net other postemployment benefit obligation 858,061 235,401 -
1,093,462 Total $
521,201,750 $
112,088,845 $
102,311,411 $ 530,979,184 $
14,667,621
6. OPERATING REVENUES:
Operating revenues consist of billings to the Political Subdivisions for treatment of sewage. Revenues earned for the fiscal year ended
June 30, 2014 and 2013 were as follows:
2014
2013
Fairfax County $
10,967,333
$
10,686,168
10,096,919 9,376,374
City of Manassas
5,582,150 5,410,249
1,188,402 1,084,151
Other
306,147 361,829
Total
$
28,140,951 $
26,918,771
7. OPERATING EXPENSES:
Operating expenses include reimbursable septage receiving facility and pump station/meter station charges. Operating expenses for the
fiscal year ended June 30, 2014 and 2013 were as follows:
2014
2013
Personnel
$ 17,890,568
$
16,872,777
Electrical Power 2,643,539 2,799,685
Chemicals
2,073,878 1,860,699
Facilities Operations
930,846 974,686
Facilities Maintenance
1,982,630 1,588,756
Contract Services
1,722,742 1,795,315
Administration
411,197 334,241
Insurance
424,739 426,111
Miscellaneous
99,697 91,913
Depreciation
24,512,910 23,101,920
$
52,692,746 $
49,846,103
49
June 30, 2014 and 2013
8. REVENUES AND EXPENSES FROM RESTRICTED ASSET ACCOUNTS:
The following is a schedule of revenues and expenses from restricted asset accounts for the fiscal years ended June 30, 2014 and 2013:
2014
2013
Revenues
Bond interest billings
$
19,979,328 $
22,284,980
Bond principal billings
14,043,156 10,686,363
Grant revenues
796,864 1,683,394
Interest earned
815,021 (726,506)
Reserve maintenance billings 3,685,433 3,976,422
39,319,802 37,904,653
Expenses - Restricted Assets Accounts
Bond interest 19,564,135 19,452,987
Reserve maintenance
301,695
758,763
Capital Improvement Projects 171,000 Landfill closure and postclosure expense
61,417 167,691
Revenues in Excess of Expenses From Restricted Asset Accounts
20,098,247 20,379,441
$
19,221,555 $
17,525,212 Financial Statement Presentation: Revenue from restricted accounts
Capital contributions
$
$
4,381,535 14,840,020 $
$
5,155,455
12,369,757
In FY14, UOSA capitalized 15.71% of the total interest expense using the effective interest rate. For the year ending June 30, 2014
and 2013 respectively, the total cost of interest on debt service borrowings was $21,435,222 and $23,696,247 of which $3,367,546
and $4,695,613 was capitalized, net of investment earnings.
9. LANDFILL CLOSURE AND POSTCLOSURE COST:
State and Federal laws and regulations require UOSA to place a final cover on its landfill when it stops accepting waste and to perform
certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post closure care costs
will be paid only near or after the date that the landfill stops accepting waste, UOSA reports a portion of these closure and post
closure care costs as an expense chargeable to restricted asset accounts in each period based on landfill capacity used as of each balance
sheet date. A review of the estimated landfill closure and post closure care costs was performed by SCS Engineers in June 2014. The
review incorporated an aerial survey and calculated the volume consumed and volume remaining. The $3,873,566 and $3,812,149
reported as landfill closure and post closure care liability at June 30, 2014 and June 30, 2013, respectively, represents the cumulative
amount reported to date based on the use of 56% and 57%, respectively, of the estimated capacity of Phase I of the landfill. UOSA will
recognize the remaining estimated cost of closure and post closure care of $3,002,728 for Phase I as the remaining estimated capacity
is filled. These amounts are based on what it would cost to perform all closure and post closure care in 2014. Based on engineer’s
estimates, UOSA expects to close Phase 1 of the landfill in the year 2033. Actual cost may be higher due to inflation, changes in
technology, or changes in regulations. The subsequent phases of the landfill will be constructed as required in the future.
10. ARBITRAGE REBATE:
The U.S. Treasury has issued regulations on calculating the rebate due the Federal Government on arbitrage earnings and determining
compliance with the arbitrage rebate provisions of the Tax Reform Act of 1986. Arbitrage earnings arise when UOSA temporarily invests
the proceeds of tax exempt debt in securities with yields higher than the arbitrage rate. An estimated rebate receivable increases interest
income from restricted assets and is recorded as an asset on the Statement of Net Position. All estimated rebates are recorded net.
Pursuant to Section 148 of the Internal Revenue Code of 1986, UOSA was required to make an interim rebate payment, if a liability
existed, within 60 days of the end of its fifth bond year. Accordingly, UOSA issued a rebate payment in the amount of $1,800,000 in
August 2000 in order to satisfy minimum requirements to reduce its rebate liability. Effective March 2001, bond proceeds were invested
in securities with yields lower than the arbitrage rate. As a result, a rebate receivable of $1,800,000 and $1,800,000 has been recorded
for the years ended June 30, 2014 and June 30, 2013, respectively.
50
FINANCIAL SECTION
June 30, 2014 and 2013
11. GRANT REVENUE:
The ESCO Project financing agreement with VRA contained principal forgiveness proceeds equaling 11.6% or $800,000 of the total
project funds. The Energy Service Project grant is for expansion and upgrades to an existing blower system. As of June 30, 2014, grant
funds have not been fully drawn yet.
The P1NR Project financing agreement with VRA contained a Water Quality Improvement Fund Grant for $4,907,000 to fund costs
attributable to Nutrient Removal Technology. The Grant award is from the Virginia Clean Water Revolving Loan Fund assistance
program. The Nutrient Removal Project grant funds were not fully drawn as of June 30, 2014.
12. COMMITMENTS AND CONTINGENCIES:
(a)Construction
(b)Litigation
The Authority has a major Capital improvement and expansion program funded by fixed rate revenue bonds. As of June 30, 2014
the Authority has outstanding commitments for contracts in progress of approximately $21,894,423.
The Authority is contingently liable with respect to lawsuits and other claims that arise in the normal course of its operations.
Although the outcome of these matters is not presently determinable, in the opinion of the Authority’s management, the
resolution of these matters will not have a material, adverse effect on the financial conditions of the Authority.
(c) Letter of Credit
As of June 30, 2014, the Authority had a letter of credit outstanding in the amount of $3,374,300 for landfill closure and
$894,903 for 2011B Bond Series Debt Service Reserve.
51
REQUIRED SUPPLEMENTARY INFORMATION
FINANCIAL SECTION
REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2014 and 2013
A schedule of funding progress for the Virginia Retirement System is provided below:
Actuarial
Actuarial
Value of Valuation
Assets
Date
(1)
June 30, 2011 $ 33,223,082 June 30, 2012
33,775,741 June 30, 2013
35,542,753 Schedule of Funding Progress
(Unaudited)
ActuarialUnfunded
Accrued
Actuarial Liability –
Accrued Liability
Funded
Entry Age
(UAAL)
Ratio
(2)
(2-1)
(1/2)
$ 42,468,347 44,775,777 46,653,625
$ 9,245,265 11,000,036 11,110,872 78.2%
75.4
76.2
Annual
Covered
Payroll
(3)
UAAL as
% of
Payroll
[(2-1)/3]
$ 11,611,497 11,901,392 12,374,810 79.6%
92.4
89.8
A schedule of funding progress for Other Postemployment Benefits (OPEB) is provided below:
(Unaudited)
Unfunded
Actuarial
Actuarial
Actuarial Annual
UAAL as
Actuarial
Value of Accrued
Accrued Liability
Funded
Covered
% of
Valuation
AssetsLiability (UAAL)
RatioPayrollPayroll
Date
(1)
(2)
(2-1)
(1/2)
(3)
[(2-1)/3]
July 1, 2011
July 1, 2012
July 1, 2013
$ - -
-
$ 3,168,000 3,357,000 3,713,000 $ 3,168,000 3,357,000 3,713,000 0.0%
0.0
0.0
$ 11,929,925 12,555,371 13,364,110 26.6%
26.7
27.8
53
S T AT I S T I C A L SE C TIO N
RESTORE
Growing up in Sweden, Nina Andgren took
for granted that the water coming from the
tap would always be safe and plentiful. That
changed when a school friend moved to a
developing country and sent back letters
peppered with stories of contaminated water
supplies and large-scale shortages. “That really
opened my eyes,” she remembers.
Now, Andgren spends her days as a
maintenance engineer at UOSA and
volunteers with students in her spare
time. “I’m a firm believer that if you can
get young people interested and engaged
in water issues, you can have a ripple
effect on the whole community. Students
talk to their parents, then parents talk to
their co-workers, and before you know it,
everyone’s paying more attention.”
Andgren and other professionals she recruits
help judge water-related projects at local
high school science fairs, as well as papers
submitted by students competing for the
Stockholm Junior Water Prize (SJWP) – a
prestigious international youth award for
water-related science projects. “I think it’s
really important for those of us working in the
water industry to share our experiences with
the next generation. Bright, technically-inclined
young people need to know they have options
beyond programming computer games.”
Andgren’s efforts appear to be paying off.
Case in point: Valentina Lohr, winner of the
Virginia state SJWP competition two years
running, called not long ago to request a
tour of UOSA. She wanted help exploring
topic ideas for her next SJWP paper – and,
as she begins to think about college, wanted
to know what it might take to build a career
in the water industry.
I’m a firm believer that if you can get
young people interested and engaged
in water issues, you can have a ripple
effect on the whole community.
STATISTICAL SECTION
This section of the Authority’s CAFR presents detailed information as a context for understanding what the information in the financial
statements, note disclosures, and required supplementary information say about the Authority’s overall financial health. This information has
not been audited by the independent auditor.
Financial Trends
These schedules contain trend information to help the reader understand how the Authority’s financial performance and well-being
changed over time.
SCHEDULE 1
NET POSITION BY COMPONENT
LAST 10 FISCAL YEARS (UNAUDITED)
For the Fiscal Years Ended June 30
20142013
20122011
2010
$ 30,369,861 $
40,722,834 $ 56,169,422 $ 59,932,774 $ 74,958,114
Restricted
53,939,075 48,554,724 Unrestricted
932,395 Total net position
911,546 $ 85,220,482 $
90,209,953
39,704,788 35,311,765 29,302,170
26,500
881,426 $ 96,755,636
941,360 $ 96,185,899
$ 104,286,784
20092008
20072006
2005
$ 75,653,733 $ 84,298,010
$103,148,813
Restricted
28,376,495 24,495,187 16,376,536 13,464,528 1,894,112
Unrestricted
(5,923,142)
Total net position
310,555
(1,892,653)
$104,340,783 $ 106,900,544
(2,052,169)
$117,473,180
$ 108,755,924 $ 124,407,754
2,245,867 $ 124,466,319 $ 120,378,724
SCHEDULE 2
CHANGES IN NET POSITION
Fiscal Operating
Operating
Operating
Year
Revenue
Expenses Income/(Loss)
2014
$28,140,951
$52,692,746
$ (24,551,795)
Total
Nonoperating Income/(Loss)
Change
Revenues/
before Capital
Capital
in Net
(Expenses)
Contributions Contributions
Position
$ 4,722,304
$(19,829,491)
$14,840,020
$ (4,989,471)
2013
26,918,771 49,846,103 (22,927,332) 4,011,892 (18,915,440) 12,369,757 (6,545,683)
2012
26,284,637 47,732,629 (21,447,992)
8,953,289 (12,494,703)
13,064,440 2011
26,550,922 46,964,634 (20,413,712)
2,576,240 (17,837,472)
9,736,587 (8,100,885)
2010
26,184,993 45,484,400 (19,299,407)
9,977,724 (9,321,683)
9,267,684 2009
25,736,882 48,139,820 (22,402,938)
11,027,772 (11,375,166)
8,815,405 (2,559,761)
2008
24,774,140 47,749,375 (22,975,235)
3,941,553 (19,033,682)
8,461,046 (10,572,636)
2007
23,815,408 45,981,365 (22,165,957)
7,067,666 (15,098,291)
8,105,152 (6,993,139)
2006
20,892,701 40,369,933 (19,477,232)
15,909,451 (3,567,781)
7,655,376 4,087,595
2005
19,490,853 30,111,988 (10,621,135)
15,384,045 4,762,910 7,222,024 11,984,934
569,737
(53,999)
57
SCHEDULE 3
OPERATING EXPENSES
201420132012 20112010
Personnel Services
Electrical Power
$ 17,890,568 $ 16,872,777 $ 15,868,094 $ 15,891,902 $ 15,650,309
2,643,539 2,799,685 3,017,320 3,259,211 3,283,934
Chemicals
2,073,878 1,860,699 1,885,644 1,804,369 1,851,984
930,846 974,686 1,207,874 1,246,139 1,154,530
1,982,630 1,588,756 1,585,748 1,584,499 1,503,285
Contract Services
1,722,742 1,795,315 1,628,911 1,605,501 1,587,288
Administration
411,197 334,241 359,296 342,285 363,617
Insurance
424,739 426,111 406,264 425,115 452,829
Miscellaneous
99,697 91,913 140,856 95,532 184,988
Subtotal 28,179,836 26,744,183 26,100,007 26,254,553 26,032,764
Depreciation
24,512,910 23,101,920 21,632,622 20,710,081 19,451,636
$ 52,692,746 $ 49,846,103 $ 47,732,629 $ 46,964,634 $ 45,484,400 Total Operating Expenses
2009 2008 2007 2006 2005
Personnel Services
Electrical Power
$ 15,223,338 $ 14,412,816 $ 13,488,440 $ 12,248,307 $ 10,657,152
3,561,917 3,548,919 3,492,057 3,013,802 Chemicals
1,716,600 1,758,209 1,650,892 1,448,503 1,410,680
1,271,616 1,276,952 945,241 1,060,375 757,401
1,483,443 1,462,086 1,751,978 1,487,064 1,366,202
Contract Services
1,618,702 1,611,823 1,686,548 1,928,752 1,900,903
Administration
395,767 388,227 378,709 357,251 292,663
Insurance
537,650 545,964 525,983 444,598 406,453
Miscellaneous
146,280 147,039 260,156 156,348 62,127
Subtotal 25,955,313 25,152,035 24,180,004 22,145,000 19,345,047
Depreciation
22,184,507 22,597,340 21,801,361 18,224,933 10,766,941
$ 48,139,820 $ 47,749,375 $ 45,981,365 $ 40,369,933 58
Total Operating Expenses 2,491,466
$ 30,111,988
STATISTICAL SECTION
SCHEDULE 4
NONOPERATING REVENUES AND EXPENSES
Revenue in excess
Federal Build Amortization
Gain (Loss)
of expenses
Fiscal
Interest America Bonds
of bond
on sale
from restricted
Year
income
Subsidy
issuance costs
of assets
accounts
2014
Other
$
(890)
Total
$
37,389 $ 1,419,476 $ (146,377)
$ (968,829)
$
4,381,535 $ 4,722,304
2013
42,067 1,463,069 (1,168,995)
(1,470,689)
5,155,455 (9,015)
4,011,892
2012
38,238 2,328,402 (124,557)
(151,628)
6,854,735 8,099 8,953,289
2011
41,404 - (3,553,003)
(97,101)
6,154,984 29,956 2,576,240
2010
29,154 -
(200,432)
(32,985)
10,177,028 4,959 9,977,724
2009
59,297 -
(210,431)
(14,447)
11,188,544 4,809 11,027,772
2008 232,339
- (219,958)
8,693 3,859,19661,283 3,941,553
2007287,830
- (227,518)
255 7,005,779 1,320 7,067,666
2006229,291
- (201,410)
1,232 15,878,545 1,79315,909,451
2005 131,792
-
6,225
(191,978)
15,437,241
765 15,384,045
SCHEDULE 5
EXPENSES BY FUNCTION (A) (B)
Fiscal Year
2014
Operating
Reserve
Expansion
Debt
Expenses (C)MaintenanceRelated Service (D)Total
$ 28,179,836 $ 301,695 2013 26,744,183 758,762 2012
26,100,007 2011
$ 171,000
$ 60,880,261
-
30,488,848 57,991,793
726,002 -
30,439,603 57,265,612
26,254,553 491,018 -
27,335,070 54,080,641
2010 26,032,764 598,901
2009
$32,227,730 25,955,313 670,869 -23,450,190 50,081,855
64,905 23,288,299 49,979,386
2008 25,152,035 747,516
-23,994,456 49,894,007
2007 24,180,004 415,992
-22,506,297 47,102,293
2006 22,145,000 314,086
-11,376,243 33,835,329
2005 19,345,047 274,258 245,42912,302,373 32,167,107
(A) Includes general operations and restricted assets activity.
(B) Excludes landfill closure expense.
(C) Excludes depreciation expense.
(D) Includes bond principal expense and bond interest less capitalized interest portion.
59
Revenue Capacity
These schedules contain information to help the reader assess the Authority’s significant local operating revenues.
SCHEDULE 6
OPERATING REVENUES BY SOURCE (A)
Fiscal
Year
2014
Fairfax
County
Prince William
County
City of
Manassas
City of
Manassas Park
$10,967,333 $10,096,919 $ 5,582,150
$ 1,188,402 Other
$
306,147 Total
$ 28,140,951
2013 10,686,168 9,376,374 5,410,249 1,084,151 361,829 26,918,771
2012 10,229,584 9,373,199 5,067,356 1,193,119 421,379 26,284,637
2011 10,630,513 9,214,947 5,124,093 1,109,184 472,185 26,550,922
2010 10,632,369 8,926,834 5,032,485 1,136,632
456,673 26,184,993
2009 10,505,561 8,748,442 4,938,754 1,062,266 481,859 25,736,882
200810,566,974 8,384,845 4,704,001
228,821 24,774,140
889,499
2007 9,946,958 7,855,280 4,531,232 891,409 590,52923,815,408
2006 8,520,428 7,049,212 3,683,281 761,566 878,21420,892,701
2005 8,274,327 6,368,962 3,376,227 721,471 749,86619,490,853
(A) Includes operating revenues and unrestricted interest income.
SCHEDULE 7
SOURCES OF WASTEWATER FLOW (MGD)(B)
AVERAGE DAILY FLOW (ADF)(A)
Total
Fiscal Fairfax
Prince William
City of
City of
Total ADF(A)Operating
Year
County
County
Manassas
Manassas Park
(MGD)(B)Expenses(C)
2014
13.533
12.545
6.807
1.457
34.342$ 28,179,836
2013
12.411
10.944
6.326
1.298
30.979 26,744,183
2012
12.608
11.167
6.206
1.374
31.355
26,100,007
2011
12.654
10.976
6.099
1.319
31.047
26,254,553
2010
13.081
10.985
6.194
1.402
31.662
26,632,764
2009
12.444
10.200
5.629
1.152
29.425
25,955,313
2008
12.559
10.128
5.763
1.141
29.59125,152,035
2007
12.819
10.131
5.992
1.161
30.10324,180,004
2006
12.394
9.943
5.241
1.042
28.620 22,145,000
2005
12.188
9.576
5.281
1.165
28.21019,345,047
(A) (ADF) = Average Daily Flow
(B) (MGD) = Million gallons per day
(C) = Excludes depreciation expense
Source: UOSA Internal Documents
60
STATISTICAL SECTION
SCHEDULE 8
ANNUAL CAPITAL CONTRIBUTIONS BY SOURCE
Fiscal
Fairfax
Prince William
City of
City of
Year
County
County
Manassas
Manassas Park
2014
$ 8,536,226 2013
6,853,730 $ 4,009,476 $
2,850,123 858,124 $
639,330
Other
$
796,864
Total
$ 14,840,020
502,219 480,291 1,683,394 12,369,757
479,059 458,072 2,872,631 13,064,440
2011 6,244,628 2,596,805 457,553 437,601 - 9,736,587
2010 5,366,183 2,582,191 725,957 593,353 - 9,267,684
2009
5,105,171 2,456,006 690,102 564,126 - 8,815,405
2008
4,903,474 2,356,602 660,559 540,411 - 8,461,046
2007
4,708,162 2,255,391 627,282 514,317 - 8,105,152
2006
4,002,623 2,214,991 810,004 627,758 - 7,655,376
2005
3,776,562 2,089,507 763,933 592,022 - 7,222,024
2012 6,536,431 2,718,247 61
Debt Capacity
These schedules present information to help the reader assess the affordability of the Authority’s current levels of outstanding debt, and the
Authority’s ability to issue additional debt in the future.
SCHEDULE 9
REVENUE BOND COVERAGE
Fiscal Gross
Operating
YearRevenue(A)Expenses(B)
Net Revenue
Total Debt
Available for
Service
Debt
Debt Service Requirements
Coverage
2014
$ 40,737,782
$ 68,917,618 $ 28,179,836 $ 35,082,430 1.16
2013 66,328,560 26,744,183 39,584,377 34,540,736 1.15
2012 70,108,090 26,100,007 44,008,083 34,604,619 1.27
2011 61,246,069 26,254,553 34,991,516 29,907,379 1.17
2010 60,901,779 26,032,764 34,869,015 29,909,254 1.17
2009 58,598,313 25,955,313 32,643,000 30,128,185 1.08
2008 54,104,448 25,152,035 28,952,413 23,462,987 1.23
2007 54,768,388 24,180,004 30,588,384 24,458,811 1.25
2006 49,379,028 22,145,000 27,234,028 24,784,505 1.10
2005 48,483,593 19,345,047 29,138,546 23,714,642 1.23
(A) Gross revenues includes operating, non-operating, and restricted revenue, except CIP revenue.
(B) Operating expenses includes Operations and Maintenance expenses, except depreciation.
62
STATISTICAL SECTION
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the Authority’s
financial activities take place.
SCHEDULE 10
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO (UNAUDITED)
Fiscal Year 2013 (1)
Number of
Employer
Employees (2)
Rank
Federal Government
Fiscal Year 2004 (1)
Percentage of
Total County
Number of
Employment (3) Employees (2)
Rank
Percentage of
Total County
Employment (3)
24,421
1
4.14%
17,259
3
3.17%
Fairfax County Public Schools
24,232
2
4.11
21,069
1
3.87
Fairfax County Government 12,302
3
2.08
11,443
2
2.10
Booz Allen Hamilton
7,000-10,000
4
1.44
9,000-10,000
6
1.19
Inova Health System
7,000-10,000
5
1.44
9,000-10,000
4
1.75
Federal Home Loan Mortgage
4,000-6,999
6
0.93
3,000-4,000
8
0.64
Lockheed Martin Corporation
4,000-6,999
7
0.93
6,000-7,000
7
1.19
Northrup Grumman
4,000-6,999
8
0.93
6,000-7,000
5
1.19
Science Applications
International Corporation
4,000-6,999
9
0.93
-
-
-
Administaff1,000-3,999
-
-
Computer Science Corporation
-
-
-
3,000-4,000
9
0.64
Navy Federal Credit Union -
-
-
3,000-4,000
10
Totals
10
0.42
17.35% -
0.64 16.38% Source: Fairfax County Economic Development Authority (using Virginia Employment Commission data); Fairfax County Public Schools; Fairfax County Department of Management and Budget
Notes:
(1) Employment information for fiscal year 2013 excluding data for Fairfax County Government and Fairfax County Public Schools, is
from the 1st quarter of calendar year 2013 VEC. Employment information for fiscal year 2004 is from 2004 CAFR.
(2) Employment estimates for separate facilities of the same firm have been combined to create company totals. Employment ranges for
the private sector are given to ensure confidentiality.
(3) Percentages are based on the midpoint of the employment range. Average total County employment for fiscal year 2013 is
estimated at 590,282, based on VEC’s report for first quarter 2013. Average total County employment for fiscal year 2004 was
estimated at 544,171.
63
SCHEDULE 11
DEMOGRAPHIC STATISTICS
UOSA SERVICE AREA POPULATION(A)
LAST 10 YEARS (UNAUDITED)
Fairfax County(B)Prince William County(B)
Calendar
Per Capita
Average
Year Population Income Unemployment(%)
2012
1,118,602
$ 68,647
2013
430,289
*
2011
1,100,692
64,637
4.2
2012
419,006
$ 46,123 4.9
2010
1,081,726
67,094
4.9
2011
406,395
44,986 5.3
2009
1,074,227
71,982
5.2
2010
389,001
43,346 5.7
2008
1,050,315
70,822 3.4
2009
374,776
42,254 5.9
2007
1,041,507
67,691 2.2
2008
368,016
42,960 3.4
2006
1,037,311
64,698 2.2
2007
359,174
41,382 2.6
2005
1,033,646
61,837 2.5
2006
350,612
39,502 2.6
2004
1,022,298
57,547 2.7
2005
337,439
37,577 3.0
2003
1,012,090
54,117 3.1
2004
323,377
35,556 3.1
4.3%
Calendar
Per Capita
Average
4.7%
City of Manassas(C) City of Manassas Park(C)
Fiscal
Per Capita
Average
Fiscal
Per Capita
Average
2013
39,902
*
5.8%
2013
14,838 $ 28,245 2012
39,060
*
5.9
2012
15,332 27,335 4.7
2011
37,821
*
6.9
2011
14,387 31,670 5.2
2010
35,648
*
7.4
2010
12,042 32,534 5.8
2009
35,883
*
6.4
2009
11,410 33,540 6.5
2008
36,666
$ 25,054 4.8
2008
11,533 34,225 3.2
2007
38,066
23,750 2.7
2007
11,527 33,886 2.4
2006
38,066
24,238 2.9
2006
11,652 32,645 2.3
2005
37,000
24,577 2.8
2005
11,369 31,789 2.1
2004
36,500
23,282 3.1
2004
10,930 31,453 2.0
(A) A current population of approximately 296,601 is being served by UOSA’s existing water reclamation system.
(B) Represents the entire population of the Counties. UOSA serves only a portion of the population.
(C) Represents the entire population of the Cities. UOSA serves the entire population.
* Not available
Source: Political Subdivisions
64
5.0%
STATISTICAL SECTION
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the Authority’s financial
report relates to the services the Authority provides and the activities it performs.
SCHEDULE 12
AUTHORIZED FULL-TIME
EQUIVALENTS BY FUNCTION
2014
2013
2012
2011
20102009 2008 20072006 2005
Treatment Process
69696969 696969666361
Finance
17
17
17
17
17
17
17
17
17
17
Operations and Maintenance
54
54
54
54
54
54
54
53
52
50
9
9
9
9
9
9
9
9
9
9
Executive
Technical Services
Totals
32323232 323231313131
181181181181 181181180176172168
Source: UOSA Operating Budget
SCHEDULE 13
OPERATING AND CAPITAL INDICATORS
2014
2013
2012
2011
2010 20092008 20072006 2005
24.5
24.5
24.5
24.5
24.5
24.5
24.5
24.5
24.5
24.5
Number of treatment plants
1
1
1
1
1
1
1
1
1
1
Number of pumping stations
9
9
9
9
9
9
9
9
9
9
Wastewater Treatment Miles of sewers
Treatment capacity (MGD)
Engineering plant capacity (MGD)
54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0
42.0
42.0
42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0
15,330
Annual engineering maximum plant capacity (millions of gallons)
15,330 15,330
15,330 15,330
15,330 15,330 15,330
15,330 15,330
Amount treated annually
(millions of gallons)
11,445 11,332
11,560 10,754 10,849
10,993 10,446 10,297
Unused capacity (millions of gallons)
Percentage of capacity utilized
12,535 11,308
2,795
4,022
3,885
3,998
3,770
4,576
4,481
4,337
4,884
5,033
81.77% 73.77% 74.66% 73.92% 75.41% 70.15% 70.77% 71.71% 68.14% 67.17%
Source: UOSA Internal Documents
65
CO M PLI A N C E S E C TION
COMPLIANCE SECTION
Report of Independent Auditor on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Board of Directors
Centreville, Virginia
We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States and the Specifications for Audit of Authorities, Boards, and
Commissions, issued by the Auditor of Public Accounts of the Commonwealth of Virginia, the financial
statements of the Upper Occoquan Service Authority (the “Authority”) as of and for the years ended June 30,
2014 and 2013, and the related notes to the basic financial statements, and have issued our report thereon
dated November 10, 2014.
Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we do not express an
opinion on the effectiveness of the Authority’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or,
significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal
control that we consider to be material weaknesses. However, material weaknesses may exist that have not
been identified.
Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards and the Specifications for Audit of Authorities, Boards, and Commissions,
issued by the Auditor of Public Accounts of the Commonwealth of Virginia.
69
Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
Richmond, Virginia
November 10, 2014
70

Fiscal Year 2014 - Upper Occoquan Service Authority

Transcription

Similar documents

Suretech Solutions - Enterprise Ireland

COVER SHEET FOR THE CEMALA FOUNDATION GRANT PACKET

Debt Service - Rocky Point High School

Fiscal Year 2015 - Upper Occoquan Service Authority

(Harrisburg Area Community College Project), Series of 2016 Sta

슬라이드 0 - City of Tecumseh

A Guide to Financial Fitness

IRS Code Section 213(d) Eligible Medical Expenses - NECA-IBEW

Information can be found here

Bank Locations - Dairy State Bank