Is the Sewer Fund's cashflow healthy?
The short answer
The Sewer Fund is operating-but-leaning. Operating rate revenue covers 104% of operating costs in the adopted FY 26/27 budget — the gap is filled by a General Fund interfund transfer. Cash position is the tighter constraint: under the more conservative repayment scenario for the $206K budget note, the fund is projected to dip to −$146K by 2028-05-31. Long-term debt service (EFC bond, $205K/yr through 2056) is currently on schedule and matched by Capital Charge revenue by adoption design.
This page consolidates three diagnostic readings: operating-cost coverage, cash solvency, and reserve adequacy. For the underlying simulation see the cash position section below; for the Board-policy framing of the budget-note repayment see reserves & repayment policy.
Cash solvency
Day-by-day cash position under both real repayment paths for the $206K budget note. The EFC bond payment of $205K is due March 18, 2027.
Daily cash balance — both repayment scenarios
Red = pay off in FY 26-27 (one year). Blue = renew + pay off in FY 27-28 (two years, FY 27-28 budget proxied from FY 26-27). Quarterly billings as gray dashes; EFC bond payments and budget-note repayments as red marker lines; zero line in red.
Scenario comparison
Same starting point ($76,472 opening cash, adopted FY 26-27 budget). The Board chooses between paying the note in one year or stretching it across two. The rate-increase math assumes the village raises the additional dollars through the Capital Charge, which currently bills 286.19 EDUs at $179/quarter ($204,912 per year).
| Dimension | Pay off in FY 26-27 | Renew to FY 27-28 | Notes |
|---|---|---|---|
| Lifetime cost | $213,952 | $221,903 | Renew costs $7,952 more (second year of interest) |
| FY 26-27 cash hit | $213,952 | $7,952 | Principal + interest vs. interest only |
| FY 27-28 cash hit | — | $213,952 | Principal + year-2 interest (renew only) |
| FY 26-27 min balance | −$137,480 | $9,049 | Daily-low cash position |
| FY 27-28 min balance | −$205,576 | −$146,105 | Proxied FY 27-28 budget; payoff side is post-note continuation |
| Rate hike per EDU per quarter (level) | +$186.90 | +$96.92 | $179 → $366 vs. $179 → $276 / quarter |
Rate-increase math
Capital Charge billing base. 286.19 EDUs × $179/quarter × 4 quarters = $204,912 of annual debt-service revenue. Source: data/extracts/sewer_rates.json.
Pay off in FY 26-27. Raise $213,952 in one year = $213,952 ÷ 286.19 EDUs ÷ 4 quarters = +$186.90 per EDU per quarter (≈ $748/year per EDU on top of the current $716).
Renew + pay off in FY 27-28. Raise $221,903 across two years = $221,903 ÷ 2 ÷ 286.19 EDUs ÷ 4 quarters = +$96.92 per EDU per quarter (level for two fiscal years).
These figures assume the additional dollars are collected entirely through the Capital Charge structure (per-EDU) rather than O&M (per-BU). A blended increase that also touches the O&M rate or that pulls from new fund balance is feasible but not modeled here.
Required opening cash to stay above each floor (FY 26-27)
For each floor, the inverter answers: what opening cash would the sewer fund need on June 1, 2026 to keep its FY 26-27 minimum daily balance above this floor, under each scenario? Both columns compare to the actual $76,472 starting balance.
| Floor | Floor value | Required · payoff | Required · renew | Rationale |
|---|---|---|---|---|
| Solvent | $0 | $213,989+$137,517 | $67,444 | Lowest possible target — fund doesn't run negative and avoids needing an emergency advance |
| GFOA 45d | $30,336(45d) | $244,324+$167,852 | $97,778+$21,306 | GFOA recommended minimum working-capital reserve for enterprise funds |
| 90 days | $60,672(90d) | $274,658+$198,186 | $128,113+$51,641 | Common target for small water/sewer utilities; clears one full billing cycle |
| 120 days | $80,896(120d) | $294,861+$218,389 | $148,376+$71,904 | Upper-end for small utilities without diversified revenue or stable industrial base |
The renew column is smaller for FY 26-27 because only the $8K of interest hits — but the principal load shifts into FY 27-28, where the fund would still need additional opening cash to absorb a −$146,105 low. See the FY 27-28 column on the issue page for that side of the picture.
Reserve adequacy
What opening cash the fund would need on June 1 of the current FY to stay above each policy floor through the year. Compare against the actual opening balance of $76K.
| Floor | Floor value | Required opening cash | Gap vs current | Why this floor |
|---|---|---|---|---|
| Solvent | $0 | $67K | — | Lowest possible target — fund doesn't run negative and avoids needing an emergency advance |
| GFOA 45d | $30K(45d) | $98K | +$21K | GFOA recommended minimum working-capital reserve for enterprise funds |
| 90 days | $61K(90d) | $128K | +$52K | Common target for small water/sewer utilities; clears one full billing cycle |
| 120 days | $81K(120d) | $148K | +$72K | Upper-end for small utilities without diversified revenue or stable industrial base |
What the Board has and hasn't decided
- Reserve target: not formally adopted. The fund operates without a documented minimum-balance commitment.
- Rate-setting methodology:the per-BU rate is set by the Board; the input cost number it chooses to recover and the bad-debt buffer it applies aren't documented in the budget narrative. See the rates page for the arithmetic the page derives from publicly available figures.
- Budget-note repayment: pending. The Board has $206K of notes outstanding due May 2027 with a one-year renewal option. The renew-scenario cashflow above shows what happens if that decision is deferred.
Sources
- recordSewer cash-flow simulator output— Day-by-day cash position under both $206K budget-note repayment paths, including the EFC bond payment due March 2027
- recordRate-coverage analysis— Operating rate revenue vs operating cost, by FY; the per-BU rate arithmetic
- recordReserves & repayment policy (sewer-reserve-ambiguity)— Board-policy framing of the budget-note repayment and reserve-target question