Is the sewer fund self-supporting?
Recommendation
The sewer fund is not currently self-supporting. The capital charge covers debt service (that side works), but operating costs have been subsidized every recent year by a $30K/yr Water Fund transfer plus implicit General Fund admin costs the sewer fund doesn’t pay for. The FY 26–27 adopted budget continues both subsidies.
To bring the fund into compliance with Village Code §145-128(B) and OSC enterprise-fund guidance, the Board should either (a) raise the O&M rate to a level that covers operating costs without inter-fund transfers, or (b) formalize the cross-fund subsidy as a deliberate, documented Board decision rather than an inherited default. The self-supporting scenario tool below shows what each path requires numerically.
Operating costs vs. subsidy received vs. reserves built (or drawn down) for each closed fiscal year. A year with subsidized status received a transfer from another fund; below target means reserves dropped below the village’s safety threshold.
| Fiscal Year | Operating | Subsidy | Reserves | |
|---|---|---|---|---|
| FY 2022-23 | $57K | $44K | $-34K | Below target |
| FY 2023-24 | $100K | $25K | $-57K | Below target |
| FY 2024-25 | $221K | $50K | $-14K | Below target |
From the village’s own law and the Board’s own recent action:
Village Code §145-128(B):“In conjunction with the audit, there shall be an annual review of the sewer charge system to determine if it is adequate to meet expenditures for all programs for the coming year.”
Resolution 5-2026 (Feb 2026 rate increase): “...necessary and in the public interest to increase sewer service charges to ensure adequate revenues for operation and maintenance (O&M) of the sewerage system.”
“Adequate for all programs” means the rate must cover not just direct operating costs but also debt service, contingency for unplanned events (capped at 10% per VL §5-506), reserve contributions, administrative cost sharing with the General Fund, and a fund balance sufficient for cash-flow timing. Any subsidy from another fund must be a deliberate, documented Board decision, not a default that evolved through budget line rearrangement.
Three rate scenarios are modeled side-by-side on the dedicated analysis page: the Mayor’s adopted rates, Trustee Uku’s alternative, and a hold-rates scenario that defers any rate increase and lets the General Fund cover the gap. Each runs under both the FY 26–27 adopted budget AND a baseline that strips out one-time assumptions.
Open the scenario tool →Sources
- recordSewer Fund FY 26-27 adopted budget— expense $451K, balanced via $30K Water transfer + GF advance
- recordSewer fund borrowing — EFC bond ~$3.1M outstanding— single instrument; debt service is on top of operating costs
- recordSewer self-supporting scenarios (interactive)— Mayor / Uku / Hold-Rates side-by-side, plus computer-evaluated legal review
- docFrances Uku oversight memo (Apr 27, 2026)— Sewer Financials Oversight: FY 26-27 Budget & GF Advance
- docResolution 5-2026 (Feb 2026 sewer rate increase)— Board recital: rates set to ensure 'adequate revenues for O&M'
- lawVillage Code §145-128(B)— Annual review required: 'adequate to meet expenditures for all programs'
- lawGML §453— Sewer rent revenues restricted: O&M first, then debt service, then capital