Fish & wildlife BPA's financial crisis

Letter to BPA regarding project funding adjustments for FY 2003 accrual limits

Related link: Spreadsheet of adjustments (90k PDF)

June 20, 2003

Ms. Sarah McNary
Manager, Fish and Wildlife
Bonneville Power Administration
P.O. Box 3621; KEW
Portland, Oregon 97208

Dear Ms. McNary:

The purpose of this letter is to advise you of the Council's decision with regard to project funding adjustments for fiscal year 2003 accrual limits. The details of this decision and the events leading to it are described below.

A secondary purpose of this letter is to assist in informing the project sponsors and other interested parties of the status of Council actions on this request. The following explains the action taken at the June 2003 meeting.

In December 2002, the Council agreed to help the Bonneville reduce or defer its fish and wildlife spending in fiscal year 2003 in response to the agency's financial crisis. The Council employed the dual objectives of containing costs within $139 million and maintaining support for the project work it approved in past provincial review decisions. This was achieved by establishing a 2003 accrual based budget plan, based on project accrual estimates that totaled $139 million. The Fiscal Year Accrual Budget Estimate by Project and Contract Report was submitted to Bonneville by the Council on February 21, 2003. In developing this plan, Council staff, Bonneville and CBFWA agreed that a project spending tracking system and a reallocation system were needed to evaluate projects that are likely not to accrue their planned budget amounts and make these funds available to projects that were severely impacted by the 2003 decisions and need additional funds.

Staffs from Bonneville, CBFWA and the Council, utilizing previous and newly developed worksheets, identified many projects that needed funding adjustments for Fiscal Year 2003 accrual limits, and presented this information to the Council at their meeting in June.

Council Action

The Council recommended that budget adjustments, totaling $4,432,210 be implemented for 2003. The project adjustments, and the amount recommended by the Council are detailed in Table 1 (attached).

Projects in Table 1 are organized into several categories. The Council took specific action with regards to two of these categories. For category ?3? Bonneville has estimated a lower accrual estimate than the Council's estimate. The Council requests that Bonneville confirm with all project sponsors that they are in agreement with the reductions. The Council recommends adopting these adjustments only if project sponsors agree that the adjustment is appropriate.

Projects in category ?4? are those where a ?within year reallocation? or scope change and funding increase are proposed. The Council recommends that Bonneville only approve the requests that stay within the original provincial allocated budget.

Categories of projects for budget adjustments:

1. FY 2002 accrual (spending limit) impact to 2003 (increases). $7,683,909

This category of project is by far the largest. Examples of how FY 2002 may have impacted FY 2003 include projects where the end-of-year accrual estimates were inaccurate or not completed, , bills came in late from subcontractors, or bills from sponsors were late in getting to Bonneville. In particular, invoices from federal agencies are often submitted to Bonneville as late as one year after the work occurs. This situation has not been an issue in past years when carry-over was allowed.

2. FY 2003 contracted amount different than Council spending limit (increases or reductions). $238,535

For these projects, Bonneville has issued contracts with a different spending limit from the Council's estimate. In some instances, objectives and tasks have been transferred between contracts or projects by Bonneville COTRs. Realignment of funds associated with these objectives and tasks are necessary. .

3. FY 2003 accrual correction (reduction). $3,655,799).

Projects in this category are those where Bonneville has estimated a lower accrual estimate than the Council's estimate, and has provided justification. Council has not yet been able to confirm with all project sponsors that they are in agreement with the reductions. The Council recommends adopting these adjustments only if project sponsors agree that the adjustments are appropriate.

4. Within year reallocation/scope change (increase). $54,529.

These are projects where either a change in scope has been identified with and increase in funding requested or where an increase is requested in order to meet the existing scope of work. The Council recommends only approving requests that stay within the original provincial allocated budget.

5. Capital. $1,086,460

There are five projects in this category that we propose to change the capital designation (4 from capital to expense, and 1 from expense to capital).

6. Close outs. $90,926.

There are five projects in this category that have accrued actual costs and are designated for closure.

7. Other. $701,038.

This category includes three projects that are considered BiOp critical, and Bonneville estimates a larger accrual from the Council's February table.

8. Phase 3. ($1,767,388) 

Phase 3 includes projects that were originally recommended by the Council for funding during the provincial review but implementation has been deferred due to the 2003 fiscal crisis.

General FY 2003 budget information

The FY 2003 budget was developed using several placeholders. They are outlined below.

2003 Budget placeholders

Budget adjustments approved by the Council at their June meeting total $4,432,210. The Council recommends that Bonneville consider capitalizing Projects #1996-043-00 ($1,002,360) and #1983-319-00 ($1,197,098) for a total of $2,742,500. The remaining placeholder for RM&E is $2,742,500. Assuming capitalization of the above projects the overall total FY 2003 budget is within the $139 million spending limit.

From an initial look at the Bonneville accrual tracking report (05/21/03) it appears that many (103) projects have billed less than 30% of their allocated budgets, even though, at the time the report was prepared, we were 64% of the way through FY 2003. At the Council meeting it was explained by Bonneville that slow sponsor billing may account for the difference. The Council is very concerned that slow billing in fiscal year FY 2003 will cause a fiscal burden on 2004, similar to the situation that occurred in FY 2002 and 2003. In addition, the Council understood that in order to manage the Fish and Wildlife Program budget to $139 million, tools would be available to identify slow moving projects and reallocate funds to other projects, in order to maximize the work accomplished in FY 2003. The Council requests that Bonneville investigate projects that appear to be moving slowly and identify the cause. Along similar lines, the Council requests that Bonneville also investigate projects that are nearing their accrual limit for 2003, and ensure that these projects do not spend more than their allocated accrual limit identified in the Council's February, 21, 2003 decision. The Council looks forward to an update on this issue at the July Council meeting in Warm Springs, Oregon.

Sincerely,

Doug Marker
Director
Fish and Wildlife Division

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