Board Members present: Dorothy Anderson, Susie Smith, Mike Dyer, and Sandra Bishop Commissioner Osanka arrived after 12:05 p.m.
Others present: Randy Berggren, Tom Buckhouse, Dick Helgeson, Jim Origliosso, Garry Kunkel, Gale Banry, Alan Roachell, Sherry Schumacher, Eve Hoth, Janet McClennen, Nancy Burbank, Marty Douglass, Ken Beeson, Marty Douglass, John Mitchell, Manda Bednarczyk, and Krista Hince of the EWEB staff; members of the public; and Kim Kunkel, Minutes Recorder.
President Anderson called the meeting to order.
BOARD DISCUSSION OF THE 1997/1998 WORK PLAN AND BUDGET
General Manager Randy Berggren prefaced the presentation and discussion by summarizing the topics that would be addressed:
A. Rate Rebate
With regard to reflecting in the 1997/1998 Budget a rate rebate in an amount totaling the surplus cash position of the Electric Utility, Mr. Berggren said doing so would have no impact on revenue, but rather would result in a modification of EWEB's 1998 cash position.
Noting that she did not want to raise the expectations of citizens prior to having a formal discussion, President Anderson expressed support for deferring a decision regarding a rate rebate. Mr. Berggren said the Board could delay its decision until January. Vice President Smith and Commissioners Bishop and Dyer expressed support for delaying the Board's decision. Commissioner Dyer stressed that his goal with regard to the rebate is to provide rate relief during the winter.
In response to Board/Staff discussion regarding whether a January or February decision by the Board would allow sufficient time to administer the rebate via the Customer Information Services system, Mr. Berggren said staff would address issues of timing and report its findings to the Board in December.
Treasurer Jim Origliosso solicited suggestions regarding the means by which to determine the rebate amount due EWEB customers. Vice President Smith suggested identifying and allocating an amount or percentage of last year's revenue. Commissioner Dyer suggested allocating a flat percentage based on the amount billed last year.
Noting that she was not convinced a rate rebate is a good idea, Commissioner Bishop requested information regarding the history of EWEB's cash reserves. She said that if a rate rebate is implemented, the Board must determine the amount of resources to disperse. Mr. Berggren agreed to provide Commissioner Bishop with the information.
B. Cost Allocations
Mr. Berggren prefaced the discussion by noting there have been some questions raised about the cost allocation formulas used to account for common costs between utilities, for administrative allocation to capital, and for billable work. Noting that the current methodologies are at least 20 years old and have been subject to no significant analysis for at least 15 years, Mr. Berggren said he was not prepared to propose an alternative methodology for inclusion in the 1997/1998 Budget. He said staff could, however, identify as a 1998 Work Plan priority the completion of a detailed analysis and report its findings to the Board in February or March. Mr. Berggren said a Board decision to change the cost allocation methodology could then be included in the 1999 Budget.
Referring to a November 24 memorandum distributed to Commissioners, Mr. Berggren reviewed the following cost allocation methodologies:
(Commissioner Osanka joined the meeting at 12:05 p.m.)
C. Clarification of A&G Costs
Fiscal Services Supervisor Dick Varner reviewed a document entitled Analysis of A&G Costs that was distributed to Commissioners. With regard to the increase in both labor and non-labor A&G costs reflected in the budget, Mr. Varner noted that over the past several years staff has been encouraged to charge directly to the operation responsible for the cost rather than simply charging to Administration.
Noting that the analysis illustrates that major program areas and their associated projects account for all but about $94,000 of A&G costs, Mr. Berggren said the remaining budgeted funds raise questions regarding whether adequate priorities are being established and appropriate cost management is occurring. He said his response to these questions is that more frequent Staff/Board dialogue regarding EWEB's major program areas is needed so that the Board has adequate opportunities to raise issues prior to the budget process. Mr. Berggren said that such discussions will be included on EWEB Board Meeting agendas for January or February.
Commissioner Bishop and President Anderson requested deferring consideration of this matter in order to provide the Board with sufficient time to review the A&G Cost Analysis. President Anderson inquired as to whether Vice President Smith and Commissioner Dyer would be comfortable deferring consideration of this matter and including any changes in next year's budget. Vice President Smith explained that she and Commissioner Dyer are frustrated regarding the "drivers" of the budget and the fact that the A&G budget continually meets the revenue projection. She said she would like to see the budget driven by a prioritized cost management approach so that it is not cut to revenue level, but rather supports necessary programs and is justifiable. Noting that the majority of the aforementioned $94,000 is related to non-labor A&G, Vice President Smith said she is curious as to the impact of holding the non-labor A&G budget flat.
Commissioner Osanka suggested directing EWEB Divisions to base their budgets on a "no increase" philosophy and to prioritize those items they would want funded in the event an increase were to occur. Mr. Berggren responded that the Public Affairs report issued by Marty Douglass and distributed to the Board was a beginning point for such a discussion.
Noting that an emphasis has been placed on budget increases at the administrative and management levels, Commissioner Bishop said she wonders about the message employees are receiving in light of position cuts and an overall environment of corporate frugality.
In response to Vice President Smith's claim that the budget is revenue projection driven as opposed to cost management driven, Mr. Berggren acknowledged a correlation between revenue goals and expenses. He said a shift toward a cost management approach is imminent as part of the newly established Corporate Goals.
Commissioner Dyer said he would like staff to evaluate and assess the necessity of expenditures.
Commissioner Osanka expressed discomfort with adopting a budget that assumes a water rate increase, given the Electric Division's cash surplus. He said the public may not understand such reasoning.
Referring to the aforementioned Public Affairs document that was distributed to Commissioners during a previous meeting, Acting Public Affairs Manager Marty Douglass reviewed a list of proposed budget cuts.
Commissioner Osanka expressed opposition to the proposed elimination of the EWEB Oasis Booth at the Eugene Celebration, noting that it provides inexpensive publicity and is a great service in providing much appreciated water. President Anderson disagreed, in that drinking water is less important at the Celebration than at the County Fair and that the present location of the booth is not satisfactory.
With regard to the proposed cut in EWEB displays, Vice President Smith suggested that rather than reducing the number of displays created, the utility utilize its internal ingenuity in order to construct displays at a lesser cost.
Clarifying that the proposed adjustments to the Public Affairs budget represent reductions in increases rather than cuts, Vice President Smith requested that at its December 2 meeting, the Board consider implementing a $24,800 reduction, based on decreasing/eliminating the following:
President Anderson expressed support for Vice President Smith's proposal, with the exception that she would add to the list cutting the Oasis booth.
The meeting adjourned at 1:35 p.m.