San Diego Water District board accepts clean audit, reviews year-end budget and CIP work; staff says water supply OK

The San Diego Water District board on Jan. 22 received an unmodified ("clean") audit opinion for the fiscal year ended June 30, 2024, and accepted staff's year‑end budget report showing higher‑than‑expected revenues and increased available reserves.

District auditors reported that the financial statements were fairly presented in all material respects and that they found no disagreements with management, no material weaknesses in internal control and no evidence of fraud. Finance manager Kazungu introduced Corley Delaney of the auditing firm, who told the board the firm issued an unmodified opinion after completing required audit procedures.

The audit presentation and related materials also highlighted several year‑over‑year shifts: the district reported an increase in net position for the year of about $1.9 million and an available–net‑position balance of roughly $18.8 million. Revenues for the year totaled about $21.6 million, about 2 percent over projection; operating expenditures were about $18.0 million, or 89.5 percent of the adopted operating budget. Staff attributed higher revenues to stronger property‑tax receipts and increased recycled‑water sales, and noted that the district received roughly 1,100 acre‑feet from Lake Hodges in the year — above the 750‑acre‑foot figure used in the budget — which raised local‑water receipts but also increased treatment costs.

On capital work, senior engineer Elmer Alex updated the board on the fiscal‑year 2024–25 capital improvement program and execution rate. Current appropriations for FY25 total roughly $2.93 million for newly appropriated projects; staff said about $2.8 million has been encumbered. Projects highlighted included joint‑facility work with Santa Fe Irrigation District at Badger Water Treatment Plant, transmission‑main maintenance, asbestos cement pipe condition assessment and the Encinitas–Cardiff water‑looping project (CW‑25H), for which staff requested board authorization to proceed; work was expected to begin in spring and staff projected about 30 percent of invoices to be paid by fiscal‑year end.

Board members asked follow‑up questions on several items, including year‑to‑year changes in net operating income, an approximately $2 million discrepancy on the cash‑flow line item "payments to suppliers for goods and services," and the district’s pension funding policy. Finance staff confirmed the district has an annual plan to pay down unfunded pension liability and that the board in 2017 adopted a policy to make annual additional payments on a 15‑year schedule; staff said the district is about six years into that schedule. After discussion, a motion to accept the audit and file the financial report carried unanimously.

Public comment included a resident request that the district communicate more directly with residents about Lake Hodges conditions and evacuation planning during local wildfires; staff acknowledged the inquiry and said the district provides press materials but will consider more direct outreach in emergency situations.

Why it matters: The audit and year‑end report give the board an independent, consolidated view of financial condition as the district executes an expanded CIP and faces hydrology and treatment‑cost variability tied to Lake Hodges and imported supplies.

Looking ahead: Staff will continue to track execution rates on major projects, return with detailed explanations for expenditure variances requested by board members, and proceed with project authorizations already described to the board.