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Metropolitan Wastewater Management Commission Reserves <br />OPERATING RESERVE <br />The Operating Reserve is used to account for accumulated operating revenues net of operating <br />expenditures (including other reserves). The Commission’s adopted policy is to budget the Operating <br />Reserve at approximately 10% of the adopted operating budget. For FY 11-12, the Operating Reserve is <br />budgeted at $1,571,289,which is 10% of total Personal Services, Materials and Services, and Capital <br />Outlay in accordance with Commission policy. <br />EXHIBIT 7 <br />CAPITAL RESERVES <br />The MWMC Capital Budget includes five reserves: the Equipment Replacement Reserve, SDC Reserves <br />(i.e. Reimbursement and Improvement), the Capital Reserve and the Bond Reserve. These reserves <br />accumulate revenue to help fund capital projects including equipment replacement and major <br />rehabilitation. They are funded by annual contributions from user rates, SDCs, bond proceeds, and SRF <br />loans. Each reserve is explained in detail below. <br />EQUIPMENT REPLACEMENT RESERVE <br />The Equipment Replacement Reserve accumulates replacement funding for three types of equipment: 1) <br />major/stationary equipment items costing less than $200,000 with useful lives of 20 years or less; 2) fleet <br />vehicles maintained by the Eugene Wastewater Division; and 3) computers that serve the Eugene <br />Page 21 DRAFT FY 11-12 BUDGET AND CIP <br />