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This 2002 aerial shot of construction of the Metropolitan Syracuse Wastewater Treatment Plant shows ready-mix trucks lined up to pour concrete for the advanced phosphorous removal facility. Photos: Onondaga County Department of Water Environment Protection
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Situated just next to Onondaga Lake, the Metropolitan Syracuse Wastewater Treatment Plant provides advanced treatment, which reduces the levels of ammonia and phosphorus that is released into the lake.

If known, the borrowing schedule is reflected in the model. If not, the model assumes that borrowing will occur in the year that expenses are incurred. Energy costs are considered independently due to their magnitude and complexity. To calculate energy costs, the model considers the effect of energy conservation projects and the projected consumption increase due to new facilities that soon will become operational.

The model also permits users to manipulate revenue from the sewer charges separately from all other revenues. Once the model calculates “all other revenues,” it can calculate the revenue needed from the sewer charges to cover costs. Subsequently, the model calculates the sewer unit charge based on the total sewer charges and the number of rate paying units (residential and industrial users of the system).

The model's objective is to keep constant the increments of the sewer unit charges, and reduce them as much as possible by applying the available reserves. For instance, it allows users to enter a desired percentage increase of sewer unit charge, and for that value calculate and apply the amount of fund balance and reserves for bonded debt necessary to reduce the unit charge to the minimum possible percentage increase. The model then allows the user to continue to reduce the percentage increase until the available fund balance and reserves for bonded debt are exhausted over a specified period of time.

Budgeting Success

The forecast model has become indispensable for annual budget and capital planning. It was used to prepare the 2006 and 2007 operating budgets, and currently is being used to prepare the 2008 budget.

Although models of varying degrees of sophistication are familiar to financial planners everywhere, the interactive flexibility of this particular model sets it apart and magnifies its value. Policymakers can enter “what if” assumptions about inflation, interest costs, bonding terms, timing, aid levels, the amount of reserves available, and project costs into the model and immediately compare how long-term rates will be affected.

The model has enhanced both the result and the process of fiscal deliberations. For example, it provided the basis for the general policy agreement governing application of accumulated reserves, virtually eliminating disputes that had become highly contentious over time.

Onondaga Lake has been transformed from the most polluted body of water in the United States to a wonderful recreational amenity that meets the high standards of the Clean Water Act. Given the dependence of technology on the means to pay for it, however, it is obvious that if financing of very expensive projects are not handled as carefully and strategically as the technology, the benefits of the environmental improvements can be (and frequently are) diluted by shocks to the local economy.

Onondaga County's forecast model has been key to the development of a financial strategy that is realizing the advantages of environmental improvements while avoiding abrupt, unsettling increases in sewer rates.

Although the forecast model was developed to help manage the lake project, it's easily adaptable to all complex public infrastructure projects. It would work well, for example, for water infrastructure, transportation, or building projects that are eligible for state and federal aid, can be bonded over various lengths of time, and occur over multiple years. In providing a hands-on tool to understand the financial consequences of various assumptions, the model creates an important opportunity to build consensus on financial strategies for complex, costly projects.

— Petrela is senior management analyst with Onondaga County, N.Y.

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Related Links
  • To see examples of Onandoga County's forecasting spreadsheets, click here