San Dieguito Water District adopts midyear budget adjustments, projects nearly $13.2M net position

The San Dieguito Water District Board of Directors on Feb. — during its regular meeting approved a staff-recommended midyear amendment to the fiscal year 2024–25 budget, adopting Resolution 2025-3 to implement six operating adjustments and two capital improvements program (CIP) adjustments.

The action followed a staff presentation summarizing district revenues and expenditures through the second quarter (December 2024) and a brief period of board questions and clarification. Staff said the district had recognized about $12,000,000 in revenues through the midpoint of the fiscal year and expended about $12,800,000, or roughly 56.8% of the projected operating budget. "The district projects to finish the year with close to $13,200,000 in available net position," the staff member said in presenting the report and recommended adopting Resolution 2025-3 to approve the adjustments.

Why it matters: The midyear adjustments realign appropriations to reflect actual activity to date, free up savings from completed projects, and cover higher-than-expected costs in several categories — most notably recycled water purchases and contract services. The board's approval preserves the district's planned programing and maintains its scheduled capital work while recognizing variances tied to seasonal usage and timing of tax disbursements.

Key figures and drivers - Revenues through Dec. 2024: about $12,000,000 (approximately 52.6% of the fiscal-year projection, per staff). Recycled water sales were noted as seasonally higher in the first half of the fiscal year due to dry conditions. - Expenditures through Dec. 2024: about $12,800,000 (about 56.8% of projected operating budget). Over-budget categories included benefits (due to full annual pension/retirement funding paid in Q1), contracts and services (multiple purchase orders and an early prepayment of 2025 fixed charges to the San Diego County Water Authority to capture a discount), and recycled water purchases (elevated by extended dry weather). - Projected available net position at fiscal year-end (unaudited): about $13,200,000; final figures will be determined after year-end close and audit.

Adjustments approved and notable budget moves - Personnel: staff requested reclassification of a program assistant to program coordinator to reflect additional duties; the annual cost at full-year budget would be about $7,500, but no midyear appropriation was requested because salary savings from vacancies cover the change this year. The number of district positions remains unchanged. - Operating reclass and transfers: $100,000 of capital appropriations tied to the meter replacement/automation project were moved back to the operating budget to cover maintenance and inventory items that belong in operations rather than CIP. - Increases in appropriations: roughly $80,000 for recycled water purchases (driven by extended dry weather and greater demand), a $5,000 increase for additional county health inspections related to the recycled water program, and a requested increase to pay the city's fleet division for services provided to the district. - Reductions/returns to fund balance: savings from two completed CIP projects — the water rate study (completed April 2024) and the Encinitas valve replacement project (67 valves replaced) — were returned to the CIP fund balance.

Board discussion and clarifications Board members asked clarifying questions on why certain revenue lines, such as engineering fees and capacity fees, appeared together in the report. Staff explained that engineering fees are tied to development activity and permit reviews, while capacity fees are collected when a new connection or a buy-in to the system occurs; the two are related to development but do not directly offset one another.

The board also sought clarity on the nature of savings from completed CIP projects; staff confirmed those projects finished under budget and leftover funds were being returned to fund balance. Directors discussed a joint-powers authority review of proposed recycled-water rate increases for 2025–2029, noting the authority had proposed rate-increase scenarios ranging from roughly 10%–14% over multiple years and that staff will review those figures as part of the FY 2025–26 budgeting work.

Formal action The board moved to adopt Resolution 2025-3, "Resolution of the Board of Directors of the San Dieguito Water District amending the fiscal year 2024–25 budget" (attachment provided with the agenda). The motion carried unanimously with President Lyons absent.

What’s next Staff indicated three CIP projects will start in April and that the district expects to receive requests for proposals for an advanced metering infrastructure (AMI) system from three vendors by April 4, with an award targeted for May or, at the latest, June. Staff also noted an ongoing customer outreach item — the Water Smart Landscape Contest — with submissions due May 9 and prize presentations to follow at a board meeting.

The board's adopted adjustments will be reflected in updated budget documents and the district will finalize its year-end position after closing the books and completing an audit.