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Member Update (MU06-03)

Member Pipeline - Member Services & Information - Update (MU06-03)

To: Members & Affiliates
From: National Office
Date: February 8, 2006
Subject: RELEASE OF 2005 NACWA FINANCIAL SURVEY
Reference: MU 06-03

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NACWA is delighted to provide members with a complimentary copy of its 2005 Financial Survey – A National Survey of Municipal Wastewater Management Trends as a benefit of membership.

Since 1981, the Association has conducted a financial survey of its membership every three years. The triennial survey is designed to provide NACWA members, government officials, and the public, insight into the financing and management of clean water utilities and to track industry trends. There were 141 agencies in 38 states and the District of Columbia that completed the 2005 Financial Survey.

The distributed CD-ROM includes a hyper-linked PDF version of the survey report, which allows users to navigate to any report section from the Table of Contents. The CD-ROM also features Excel spreadsheet files allowing users to analyze survey data in a variety of ways to meet their unique needs. All of the information from the 2005 Financial Survey and from previous surveys is also available in a searchable format on the Association’s CleanWater Central™ database, www.cleanwatercentral.org. NACWA members can access the CleanWater Central™ database with their NACWA website username and password.

Special thanks are extended to the members of the Financial Survey Workgroup who provided guidance and comments to ensure the quality of this year’s Survey: Jon Schellpfeffer, Director, Madison Metropolitan Sewerage District, Wisconsin; Brian Crewdson, Assistant to the General Manager, Anchorage Water and Wastewater Utility, Alaska; Tim Houghton, Executive Assistant, City and County of Honolulu, Department of Environmental Services, Hawaii; W. Malcolm Steeves, Director, Mobile Area Water and Sewer System, Alabama; and Ralph Charlton, Director of Fiscal Services, Alexandria Sanitation Authority, Virginia.

2005 Financial Survey – Most Comprehensive to Date
The 2005 Survey is the most comprehensive financing and management survey ever undertaken by NACWA. Like previous surveys, the 2005 Survey presents industry statistics and trend data on utility revenues, expenses, debt financing, capital needs, sewer service charges, residential and industrial rates and rate structures, staffing levels, and salaries. In addition, the 2005 Survey expands on this baseline of data and presents new information on the status of asset management programs, financial statement data, the status of security-related programs, staff licensing requirements, and energy use and costs.

Overall, the 2005 Survey data indicate that NACWA clean water agencies continue to be challenged by sustained increases in capital and O&M costs, long-term debt, and capital needs. While it is expected that expenses will naturally increase due to inflationary pressures, the Survey data reveal that clean water utilities have experienced cost increases at levels two times or more than the rate of inflation over the past several years. These cost increases have translated into higher sewer bills for utility customers, clearly outpacing inflation rates.

The rapid increase in long-term debt over the past several years, coupled with increasing capital needs may be especially a cause for concern, as it will become increasingly costly for utilities to meet future needs requirements through debt financing mechanisms if interest rates continue to rise. The Survey data indicate that long-term debt financing has been aided by historically low interest rates over the past several years, which has minimized the impact to debt service payments and ratepayers. Debt service has already increased from 22 percent to 25 percent of total expenditures in the past three years.

In the face of such budgetary challenges, the Survey shows that clean water utilities are testing the boundaries of innovation and efficiency through cost-saving energy recovery initiatives, implementation of asset management programs, increased provision of reclaimed water services, implementation of utility management/excellence programs, and enhanced treatment.

Additional Copies Available for Purchase Online
Additional copies of the 2005Financial Survey may be purchased online at NACWA’s Bookstore, http://www.nacwa.org/pubs/. Please contact Chris Hornback, NACWA’s Director of Regulatory Affairs with any comments or questions on the 2005 Financial Survey, 202/833-9106, or chornback@nacwa.org.