San Diego Water District audit wins clean opinion; board hears year-end budget, CIP and water-supply updates

The San Diego Water District board on Jan. 22 received an unmodified ("clean") opinion on the district’s financial statements for the fiscal year ended June 30, 2024, and voted unanimously to accept the auditor’s report.

Corley Delaney, engagement partner with the district’s independent auditors, told the board the auditors found no material misstatements, no disagreements with management and no material weaknesses in internal controls. “We issued an unmodified opinion on the district’s financial statements,” Delaney said, adding that the financial statements “are fairly presented in all material respects.”

The audit’s clean opinion was the lead item in a longer finance presentation by Finance Manager Mary Kazungu and Delaney. The board heard a summary showing the district’s net position increased about $1.9 million in 2024 and heard comparisons with 2023 in areas such as accounts receivable, capital assets and pension-related lines.

Kazungu then summarized the district’s year-end budget results. The district reported roughly $21.6 million in total revenues for the year, about 2% over projections. Staff said several revenue categories exceeded estimates — notably property taxes and recycled-water revenue — while some expenses, including water treatment, were higher because the district treated more local water from Lake Hodges than expected. Kazungu told the board the district ended the year with an available net position of roughly $18.8 million and that rate stabilization and operating reserves were fully funded per board reserve policy.

Board members asked for additional detail on year-to-year variances. Board Member O’Hara pressed staff on a roughly $2 million difference in payments to suppliers; Kazungu replied staff would follow up with a line-item explanation. “We will definitely get an explanation,” Delaney said when asked by the board.

The board also heard a capital improvement program update and staff discussion of the FY25 CIP execution rate. Senior engineer Elmer Alex said the district encumbered about 95% of FY25 appropriations and expected roughly a 75% execution rate by fiscal year end given project schedules and supply-chain delays. Alex identified projects in the FY25 CIP, including joint-facility work at Badger and Sandy Gator Reservoirs and a set‑aside for Lake Hodges capital repairs tied to the city of San Diego’s dam work. He told the board work on the Encinitas and Cardiff water-looping projects is expected to start in April, with about 30% of expenditures anticipated by the end of the fiscal year.

A separate presentation by Water Resource Specialist Kelly Ogawa reviewed water supply conditions heading into the 2025 water year (Oct. 1–Sept. 30). Ogawa said Southern California had a dry start to the rainy season but that statewide reservoir levels remained near or above historic averages for the date. She said San Diego had sufficient supplies and that the district encouraged voluntary conservation; no emergency restrictions were in place.

Formal actions recorded in the meeting minutes included acceptance of the independent audit and annual financial report and approval of the associated staff recommendation to file the audit report. The board’s motion to accept the audit passed unanimously.

With the audit accepted, staff said they will proceed with normal close‑out and follow‑up items, provide the board with the requested variance detail on supplier payments, and continue quarterly CIP and budget reporting.

Ending: Staff will circulate any additional backup requested by the board and bring further budget and CIP details to the board’s next regular meeting, including the supplier‑payments breakdown O’Hara requested.