Laserfiche WebLink
2. Revenue Sufficiency Analysis <br />• ■ Budget Stabilization: 5.0% of the annual budget, and <br />■ Emergency and Disaster Relief Reserves: 5.0% of the annual budget <br />This reserve policies equates to approximately seven months of IRCDUS' projected O&M expenses in FY <br />2024. During the Study, Stantec evaluated IRCDUS' reserve levels for consistency with industry guidance <br />published by the American Water Works Association (AWWA)14, credit rating agencies (Fitch, Moody's, and <br />S&P), and experience working with utility systems across the Country. As a result, the RSA includes a <br />reserve target for purposes of this Study equal to nine months of O&M in each fiscal year. Having adequate <br />reserves provides financial sustainability and rate stability, maintain adequate funding sources for future <br />capital needs, and support the overall creditworthiness of IRCDUS as potential future debt may be <br />necessary. <br />2.4 RESULTS <br />To evaluate the sufficiency of existing rates, fees, and charges to fund IRCDUS' revenue requirements over <br />the planning period, a projection of revenue requirements and revenues at current rates was developed as <br />described herein. Fundamentally, the objectives of the RSA were to determine if the current rates for FY <br />2024 are sufficient to fund IRCDUS' cost requirements beginning in FY 2025, and to identify the level of <br />future rate increase requirements that would be necessary for the remainder of a ten-year projection period <br />extending through FY 2034. The supporting financial schedules for the RSA are presented in Appendix A <br />• of this report. <br />2.4.1 Financial Management Plan <br />Based upon the data, assumptions, and policies provided and discussed herein, IRCDUS' current rates will <br />not provide sufficient revenue to meet its ongoing debt service, capital, and operating cost requirements <br />over a multi-year projection period. As such, Stantec developed a financial management plan and <br />corresponding plan of water and sewer rate increases that will meet IRCDUS' current and projected cost <br />requirements. The recommended five-year water and sewer rate adjustment plan is presented in Table 8. <br />14 American Water Works Association (2018). Cash Reserve Policy Guidelines [White Paper]. <br />40 <br />a <br />17 <br />