Operating and CIP Budget Fiscal Year 2015-16

Revenue and Cost Fixed vs. Variable

100%

32%

84%

50%

Variable Fixed

68%

16%

0%

Revenue

Expenditure

Conversely, the majority of the water operation costs for delivering high quality drinking water in the City are fixed costs, which only vary slightly based on actual water consumption. Variable costs fluctuate on the amount of water used and they include the groundwater production charge paid to the Santa Clara Valley Water District (District), electricity used to pump water from wells, and chemical costs used to treat water at the source.

% of Total Cost

Fixed Cost: Personnel

23.8% 10.8%

Supplies

Capital (Meters, Machinery, Equipment )

7.3%

Debt Service

14.9%

Internal Services (Building, Fleet, IT, General Administration) Transfers Out (to General Fund, Environmental Programs, General Plan Update)

5.3% 5.5%

Total Fixed Cost

67.6%

Variable Cost: Electricity

7.2%

Groundwater Production Supplies (11% of total)

24.9%

0.3%

Total Variable Cost

32.4%

Total Cost

100.0%

The groundwater production charge (water extraction fee) the City pays to the District is one of the largest expenses for the Water Operation Fund. As shown on the graph below, the charges have significantly increased over the last ten years.

City of Morgan Hill Comprehensive Water Report

Page D8