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MetropolitanWastewaterManagementCommissionReserves <br />OPERATINGRESERVE <br />TheOperatingReserveisusedtoaccountforaccumulatedoperatingrevenuesnetofoperating <br />expenditures(includingotherreserves).TheCommission’sadoptedpolicyistobudgetthe <br />OperatingReserveatapproximately10%oftheadoptedoperatingbudget.ForFY12-13,the <br />OperatingReserveisbudgetedat$1,643,386,whichis10%oftotalPersonalServices,Materials <br />andServices,andCapitalOutlayinaccordancewithCommissionpolicy. <br />EXHIBIT7 <br />CAPITALRESERVES <br />TheMWMCCapitalBudgetincludesfivereserves:theEquipmentReplacementReserve,SDC <br />ReimbursementReserves,SDCImprovementReserves,theCapitalReserveandtheBond <br />Reserve.Thesereservesaccumulaterevenuetohelpfundcapitalprojectsincludingequipment <br />replacementandmajorrehabilitation.Theyarefundedbyannualcontributionsfromuserrates, <br />SDCs,bondproceeds,andSRFloans.Eachreserveisexplainedindetailbelow. <br />Page21PreliminaryFY12-13BUDGETANDCIP <br />