VIII - CALCULATING SOLID WASTE RATESItem VIII
Before determining the annual solid waste charge per resident in CMSD, staff needs to
determine the total cost it will take to operate the solid waste program. To do that staff
looks at five (5) key expenses, which are described in more details below.
2012 -13 EXPENSES
1. Hauler Rate
The hauler rate of $9.1554 was established when the contract was executed with
CR &R in 2006. The hauler rate of $9.1554 has remained unchanged since 2006.
To determine the annual cost for the hauler, the rate is multiplied by the total
CMSD household served, which is estimated at 21,557. The annual hauler cost
is calculated below.
Household Rate Monthly Cost Annual Cost
21,557 X 9.1554 $197,363 X 12 = $2,368,356
2. Recycling /Disposal Rate
The recycling /disposal rate consist of a transfer station fee for recycling, which is
set at $41.22 per ton, and half of the landfill tipping fee due to CMSD's 50%
diversion requirement. In 2006, the landfill tipping fee was $22.00 a ton so
CR &R's disposal fee is $11.00. When you add the recycling and disposal fees
together you get a rate of $52.22 a ton. This rate has remained unchanged since
2006.
Note: The current tipping fee is $31.37 a ton, so half of this fee is $15.68, which
means the actual recycling /disposal rate should be $56.90.
To determine the annual recycling /disposal cost, the rate is multiplied by the
estimated total tonnage, which is 40,215 tons (the actual tonnage in 2011 -12 was
39,717 tons). The annual recycling /disposal cost is calculated below.
Tonnage Rate Annual Cost
40,215 X 52.22 $2,100,027
3. Salaries and Benefits
The projected expenses for salaries and benefits is $469,520
4. Operations and Maintenance
O &M consist of professional services, legal services, election costs, tools and
equipment, building maintenance, postage, etc. The projected expense for O &M
is $284,550.
5. Programs
This expense consists of CMSD special programs such as sharps, HHW,
scavenging, education, pharmaceutical and telephone book recycling. The
projected expense for Programs is $95,000.
When you add these five (5) expenses together you get a total of $5,317,453, as shown
below.
Hauler 2,368,356
Recycling /Disposal 2,100,027
Salaries & Benefits 469,520
O &M 284,550
Programs 95,000
TOTAL: $5,317,453
2012 -13 REVENUES
Before calculating the annual charge, staff looks at other revenue sources to help offset
the expenses identified above. Other revenue sources include additional container
charge, property taxes, investment earnings and CR &R contributions such as education
programs and scavenging. The estimated revenue from these sources is identified
below.
Additional Container Charge 96,000
Property Taxes 150,000
Investment Earnings 50,000
CR &R Contributions 25,000
TOTAL: $321,000
When these revenues are used to offset the total expenses the net cost is $4,996,453
as shown below.
5,317,453 — 321,000 = 4,996,453
CMSD needs to calculate a rate that will generate enough revenue to cover the net
expense of $4,996,453. To do that you simply divide the net rate with the total
household as shown below.
4,996,453 - 21,557 = 231.78 - 12 = $19.31
The monthly rate of $19.31 needs to be established to cover all the expenses in the
solid waste program. However, the Board approved a rate of $19.00 a month. When
you multiply the $19.00 rate with the total household of 21,557, the District will generate
4,914,996 in revenues, but this will not be enough to cover the projected net expenses
of 4,996,453 as shown below.
4,914,996 — 4,996,453 = (81,457)
As you know, this loss will be made up by using the District's Solid Waste Fund
Balance.
CONCLUSION
The rate of 19.95 a month was established because at the time of contract negotiations
between staff and CR &R in 2005 -06, the economy was strong, which means people
were buying more products that would result in large volume of trash generation. At the
time the contract was executed, staff and CR &R were projecting to collect 46,340 tons
of refuse in 2006 -07. They were also projecting 21,945 households will be serviced in
2006.
It is safe to say that the projections were way off. The actual tonnage collected in 2006-
07 was 42,585.75 and the tonnage has been decreasing ever since, with the exception
of a small spike in 2010 -11 as shown below.
Actual Tonnaae
2006 -07
42,585.75
2007 -08
42,268.82
2008 -09
40,908.11
2009 -10
40,374.03
2010 -11
40,865.63
2011 -12
39,717.00
The less tonnage means the actual cost will be less than originally forecasted. When
staff and CR &R were projecting 46,340 tons in 2006 it also meant the District will be
spending $2,419,876 in recycling /disposal costs. However the actual costs are shown
below.
Actual Tonnaae
2006 -07
$2,223,828
2007 -08
2,207,278
2008 -09
2,136,221
2009 -10
2,108,332
2010 -11
2,134,003
2011 -12
2,074,022
Even though the actual tonnage and expenditures were less than originally forecasted,
the District never made adjustments in the solid waste rate. For the past six years, the
rate remained at $19.95 a month, which meant a surplus in the solid waste budget at
the end of the fiscal year and the surplus is the contributing factor to the substantial
amount in the Solid Waste Fund Balance.
Earlier in this report it was mentioned that the tipping at the landfill is now $31.37 per
ton. When the contract was executed with CR &R in 2006, the tipping fee was $22.00
per ton. CR &R has not requested a pass through in the rate to recoup their costs from
the landfill tipping fee increasing. If the Board had approved such a pass through the
recycling /disposal cost will be $56.90 per ton. If this rate is applied to the 2012 -13
expenditure plan, assuming all other expenditures remain the same, the District would
have to establish a rate of $20.04 a month to generate enough revenue for the
expenditures. With the $19.00 a month rate just approved by the Board, the projected
loss would be ($269,663) if the recycling /disposal rate was set at $56.90.