PROJ00283

• Contract/PO #: FS0009X
• Contractor Name: Swink, Town of
• Contract Type: Loan
• Water District: 0
• County: Otero
• Loan Projects - Doc Type: Feasibility Study

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6. 5 OPERATION, MAINTENANCE AND REPLACEMENT COSTS

In reviewing the annual audit reports for the years 1973 and 1974 and excluding
capital improvements, the expenditures for operating the municipal water system
fall into four primary catagories: (1) salaries and wages, (2) electric power,
(3) supplies, repairs and miscellaneous items, and (4) depreciation.

The following tabulations show the average monthly expenditure for each primary
catagory for the years 1973 and 1974.

1973 1974
Annual Monthly Annual Monthly % Change
Expense Item Cost Cost Cost Cost 1973-1974
Salaries & Wages $ 4,712 $ 392.67 $ 5,324 $ 443.67 +13.0%
Utilities 2,663 221. 91 2,299 191.58 -13.7%
Supplies, Repairs &
Misc. . :"~'" 5_6"~ 464.00 5,77! 480.91 + 3.6%'
...,.. -~---
'. !2'~264 "
Depreciation 188.67 2,264 .- 188.67 .' 0.0%
Total $15,207 $1,267.25 $15,658 $1,304.83 + 3.0%

An examination of the audit report shows "a relatively stable water system operation
with the increase in expenditures being closely parallel to the increases in
revenue and population. Revenue and population showed increases of approximately
4% from 1973 to 1974 while water system expenditures increased at 3% for the
same period.

With due consideration to the type of system in the Town and the existing method
of water treatment, it is apparent that an excessive amount of money is being
expended for supplies and repairs. This is believed to be due to the frequent
breaks in the mains which have occurred and':.the need to stock repair items
for such a variety of piping materials. It is also apparent that salary costs
are being shared between various city departments. While this is an acceptable
procedure for operation of small town utility systems, it is believed that with
completion of the proposed improvements, the water system should carry a greater
percentage of the salary burden.

Upon completion of the proposed improvements, operation and maintenance costs
will fall in two general catagories - Fixed and Variable. Fixed costs are divided
between the potable and non-potable water systems. Fixed Costs will occur on
a monthly basis regardless of the quantity of water produced and consumed.
Fixed costs will include most of the salary burden, and? portion of the supplies,
repairs and maintenance, utilities and miscellaneous expenditures. The following
is an estimated budget for fixed expenditures for the year 1977:

Potable Non-Potable Total
Salaries & Wages ' ',~ $3,100 $3,100. $ 6,200.00
Supplies 600 1,600 2,200.00
Repairs & Maintenance 750 1,250 2,000.00
Utilities 360 1,525 1,885.00
Misc. 100 100 100.00
Total Fixed Costs (1977) $4,910 $7,575 $13,485
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