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<br /> <br /> <br />COMMISSION POLICY <br /> <br />Section:Category: <br />Governance Results Policies <br />Policy Reference: Policy Title: <br />G.5a Margins <br />PURPOSE: <br /> <br />Consistent will all Results Policies, the Commission shall establish clear expectations for <br />producing the right results for the right people in the right way. With this policy the Commission <br />affirms their commitment to the Organization Fundamentals Policies prioritizing financial and <br />organization health by setting an annual goal for operational margins. <br /> <br />The annual strategic and business planning, consistent with the Financial Planning and <br />Budgeting Policy, shall be conducted such the organization has appropriate operating margins. By <br />establishing clear expectations for operating margins through policy, the Commission creates <br />clear and consistent direction for the General Manager. <br /> <br />This clear direction provides stability in organizational vision allowing the General Manager, <br />while developing the annual budget and business plan, to more effectively utilize long range tools, <br />such as multiple year capital improvement plans, to produce both short term and long term <br />financial and organizational health. Additionally, this practice helps to avoid inconsistent <br />direction to the General Manager from year to year such as tight margins one year due to rate <br />competitiveness concerns and concerns another year about revenues and desiring higher margins. <br /> <br />POLICY: <br /> <br />To promote financial health and organization stability, the General Manager shall develop the <br />annual business plan and budgets for the following services as follows: <br /> <br />1. Electric – Excluding depreciation, the budget shall be developed with minimum margins <br />that are at 125% bond convenance. If not required by bond convenance, margins shall be <br />1.5% of total revenue and margins shall be developed no greater than 2.5% of total <br />revenue. <br /> <br />2.Water – Excluding depreciation, the budget shall be developed with minimum margins <br />that are at 105% bond convenance. If not required by bond convenance, margins shall be <br />1.5% of total revenue and margins shall be developed no greater than 2.5% of total <br /> <br /> <br />Page 1of 2 <br />43 <br /> <br />