Optimizing Capital Project Funding Source Selection – Making the “Right” Decisions for Your Utility

For more than 20 years, the Fairfax County, Va. Department of Public Works and Environmental Services has maintained a formal financial planning and management program designed to support the operation and maintenance of the County's Integrated Sewer System (the System). This financial management program was initially designed to meet the System's basic financial needs. However, over the years, the System has experienced tremendous growth in its customer base and faced increasingly stringent effluent requirements. Faced by these events, the County has engaged in intricate interjurisdictional treatment agreements and executed a series of treatment system expansions and upgrades to provide affordable treatment capacity. These factors have compounded to make the System's financial management program, generally speaking, more and more complex over the years.From its inception, the financial management program has focused on providing managers with the information necessary to optimize financial decisions and on maintaining significant cash reserves to provide the flexibility to optimize capital project funding source selection. The County is able to accomplish this through careful financial planning and management. Central to these efforts are the County's financial model and annual financial management reports. These reports present both the County's anticipated revenue and capacity requirements. The reports provide detailed support for the County's rates and charges and Capital Improvements Program (CIP). Recently, working with its financial consultant, the County has begun to update its financial strategies and goals. To ensure that updated financial strategies and goals are fully supported, the County is revising the System's financial policies and procedures and establishing financial performance indicators along with target ranges.