Deanna’s Input for Question 3: As Chief Financial Management Officer of Riverside County, water resources are a top priority to ensure public needs are adequately being met for all county communities. The sources of drinking water (both tap water and bottled water) include rivers, lakes, streams, ponds, springs, and wells. It is extremely important to eliminate as many contaminants in drinking water for the public health. As such high demands in the county for clean drinking water, there is a need to create a new water management policy, which includes the development of a new drinking water treatment plant to respond to this critical need. The proposed drinking water treatment plant could produce close to 3 million gallons of drinking water per day diminishing the water crises. In addition, the county could potentially sell water to neighboring counties and the agricultural sector to help increase local revenue to the county. The policy requires an initial outlay of $20M and subsequent annual outlays of $5M for the foreseeable future. How would I approach this task? The first step would be to convene an interdepartmental capital allocation committee to examine the proposed policy in combining existing capital improvement projects and the overall county master plan for land use. If committee members agree to the feasibility of moving forward the next step would be to update the existing capital improvement plan (CIP), which spans multiple years to ensure adequate resources are available for the proposed water management policy and new facility. Edits to the existing CIP would include the follow: 1. Capital budget manual – contains a calendar or flowchart of the process, instructions, and forms for departments to use when completing requests 2. Cost projections – determining exact costs of each project 3. Revenue estimations – detailed estimate and availability of revenue, both reoccurring and from bond sales 4. Debt planning – outlining debt needs; scheduling voter referendum to authorize debt funding; obtaining voter approval on bond sales 5. Public hearing – schedule public hearing, prior to capital budget approval 6. Prepare final executive budget request Information, I would need to know: · Goals, timeliness and identification of various funding sources · Financial analysis to include: 1) Cost-Benefit analysis – cost v. overall net benefit; · Financial Condition Analysis I. Existing long-term debt commitments/obligations II. Population Growth Trends (e.g., housing, business) · History of existing and recent user and property taxes – provides insight into existing taxes currently being levied on the community; property sales and tax info would be instrumental in helping to determine trends in sales and ability to generate revenue through levies (impose, “a tax, fee, or fine) and regional commerce activity. · Fiscal S.

1. Deanna’s Input for Question 3:
As Chief Financial Management Officer of Riverside County,
water resources are a top priority to ensure public needs are
adequately being met for all county communities. The sources
of drinking water (both tap water and bottled water) include
rivers, lakes, streams, ponds, springs, and wells. It is extremely
important to eliminate as many contaminants in drinking water
for the public health. As such high demands in the county for
clean drinking water, there is a need to create a new water
management policy, which includes the development of a new
drinking water treatment plant to respond to this critical need.
The proposed drinking water treatment plant could produce
close to 3 million gallons of drinking water per day diminishing
the water crises. In addition, the county could potentially sell
water to neighboring counties and the agricultural sector to help
increase local revenue to the county. The policy requires an
initial outlay of $20M and subsequent annual outlays of $5M for
the foreseeable future.
How would I approach this task?
The first step would be to convene an interdepartmental capital
allocation committee to examine the proposed policy in
combining existing capital improvement projects and the overall
county master plan for land use. If committee members agree to
the feasibility of moving forward the next step would be to
update the existing capital improvement plan (CIP), which
spans multiple years to ensure adequate resources are available
for the proposed water management policy and new facility.
Edits to the existing CIP would include the follow:
1. Capital budget manual – contains a calendar or flowchart
of the process, instructions, and forms for departments to use
when completing requests
2. Cost projections – determining exact costs of each project
3. Revenue estimations – detailed estimate and availability

2. of revenue, both reoccurring and from bond sales
4. Debt planning – outlining debt needs; scheduling voter
referendum to authorize debt funding; obtaining voter approval
on bond sales
5. Public hearing – schedule public hearing, prior to capital
budget approval
6. Prepare final executive budget request
Information, I would need to know:
· Goals, timeliness and identification of various funding
sources
· Financial analysis to include: 1) Cost-Benefit analysis –
cost v. overall net benefit;
· Financial Condition Analysis
I. Existing long-term debt
commitments/obligations
II. Population Growth Trends (e.g., housing,
business)
· History of existing and recent user and property taxes –
provides insight into existing taxes currently being levied on
the community; property sales and tax info would be
instrumental in helping to determine trends in sales and ability
to generate revenue through levies (impose, “a tax, fee, or fine)
and regional commerce activity.
· Fiscal Stability
I. 7 Structural drivers and political facilitators
of municipal bankruptcy
- Tax revenue loss, fiscal imbalances, financial shock, poor
financial management, ineffective state government oversight,
lack of transparency, and fiscal policy
competence/incompetence
· Potential legal liabilities
· Economic impact on county
· Insight into public opinion
o Public awareness campaign
-Transparent
o Public forums/Town Halls

3. o Explore multigenerational impacts
Possible alternatives to capital projects with pro and cons
· Equity (retained earnings, issuance of stock, taxation and
capital campaigns) vs
o Don’t have to pay back
· Long-term debt financing (long-term notes, mortgages,
bonds)
o Must be reimbursed with interest
o Capital Appreciation Bonds (CABs)
- Pros
o Can defer payments over much longer periods of time
o Provides immediate funding for capital facilities without the
associated increase in tax rates.
- Cons
o When bond hits maturity, payments are extremely high
o Requires robust/growing tax base to cover cost
o Detriment to future generations (social equity concern)
o High interest rates – 10x original costs
o Expose a city to greater potential for bankruptcy
o Current Interest Bonds (CIBs)
- Pros
o Typically, callable (refinance) after 10 years
o Cost ratio is typically 2, or 2.5 to 1
o Repayments count against property tax rate
- Cons
o Repayment begins in the first year
o The term of the bond is usually 10 to 25 years
· Pay as you go
o Increased user and property taxes
· Phased approach
o Focus on issues of safety and legal compliance
Make a recommendation
· For $20M = Federal and state grants and Current Interest
Bonds. Back in December of 2019, the U.S. Environmental
Protection Agency (EPA) awarded more than $187.3 million to
California for drinking water and wastewater infrastructure

4. improvements. As the County CFO it is critical to outlay the
plan on how the grant will be used towards drinking water
infrastructure improvements. The fund will be used towards a
drinking water treatment plant to improve service to
disadvantaged communities in our county, such as residents in
Indio by providing them clean drinking water.
· For $5M = Pay as you go
· Increased population growth and property sales indicating
that the county could support repayment of CIB. Also, review
of existing pay as you go taxes show that the city has not levied
any new taxes in several years. As a result, the community is
not currently overwhelmed with excess taxes making proposals
more acceptable.
Supported by evidence and reasoning
Above all when making decisions and setting up
plans, an effective leader needs to ensure that choices are
rational and based on facts to the highest extent possible. This
will help to reduce the tendency for decisions to be driven by
individual and/or groups who may be motivated by personal and
political interests. One way to go about this is to use a rational
choice framework to help guide the process.
· Rational Choice Theory
o Concept that administrators should base their decisions on
economic principles which factor opportunity cost between
choices.
o Public managers can, and should, rely on findings from
scientifically based studies which can then be used to shape
equitable, informed, cost-effective and operationalizable
decisions.
o Rational-choice theory may also be used to help mitigate the
impact of the politics-administration dichotomy as the approach
reduces the level of personal bias and ensures decisions are
made through an informed and cost-savings lens.
o Reality that there is never enough time and resources to
review all possible options, as a result the actual becomes more
of a Bounded Rational approach, which administrators factor in

5. as much information as possible prior to making decisions.
Question #3. Competency: to analyze, synthesize, think
critically, solve problems and make decisions
You are the Chief Financial Management Officer of a California
county (Riverside county). The CAO has tasked you with
proposing a funding plan for a proposed Water Management
Policy that will require an initial outlay of $20 million dollars
and subsequent annual outlays of $5 million for the foreseeable
future. How will you approach this task? What information do
you need to know? What possible alternatives are there? What
are their pros and cons?
Make a recommendation supported by evidence and reasoning.
How will you approach this task?
Developing a comprehensive strategic financial and operational
plan that addresses the Water Management Policy and details
the policy goals.
1. Stakeholder Analysis
2. Information (E.E.F.F.) -
a. Fiscal Analysis - To analyze health
3. Alternatives
a. Pros
b. Cons
4. Recommendation & reasoning
Stakeholder Analysis
What information do you need to know?
The Current Water Management Uses of the County!
(E.E.F.F)
1. Evaluate Community Water Conditions
a. Current water management uses
b. Historical data
-Is there already a current user fee in place and if so what is the

6. typical revenue on that?
2. Establish goals to guide government decision making
a. Community needs
b. Challenges
c. Priorities
d. Opportunities
3. Fiscal analysis of the county
a. Asses current water management system
b. Asses fiscal health (what conditions are we at w/ money)
(what money do we have coming in and out)
c. Financial policies
d. Cost benefit analysis
4. Funding
a. Accessing needs
b. Identify potential funding sources ( Federal & State Grants)
3 Alternatives: Pros and Cons
Alternative #1: Secure one time funding for the initial
$20million cost from a traditional revenue bond and create a
user fee to fund the $5million annual cost,
· Utilizing bond financing for the $20 million is a type of long-
term borrowing that will help us raise money for this purpose.
· However, this option would require the bond to be voted on by
the public and added to the ballot by the legislature or through a
petition from Riverside residents.
· To cover the $5 million annual cost we would raise water
usage fees to pay off the bond as well as provide funding for the
$5million annual cost.
· Water users would pay a fee per month, based on usage.
PROS
· The revenue bond is a long-term debt that will be paid back
over several years.
· Creating a user fee will create a funding source.

7. · This alternative will not have a great impact on our current
budget.
CONS
· Must be voted in, therefore not guaranteed type of funding.
· Requires buy-in from all stakeholders. Everyone needs to be
onboard, and this is not easily achieved.
· HP: For example: In CA 2018 Prop 3 is a good example of a
water bond gone wrong - it was the first rejected water bond
since 1990. Although supporters argued that the bond would fix
crumbling infrastructure, bring clean drinking water to
disadvantaged communities and kick-start badly needed
environmental restoration projects, the measure did not pass.
The reason being the Environmental groups like The Sierra Club
spent millions to campaign against the measure. (goes to show
how important stakeholders are) Video
https://www.youtube.com/watch?v=HF3Rprl6_EE
· HP- The challenges faced in this alternative, will create a
lengthy process, which may result in push back from
stakeholders internal and external.
Alternative #2: Secure funding for the initial $20 million cost
through federal and state grants. The annual $5million cost will
be secured by making budget cuts throughout the organization.
· Based on our research there are grants offered through federal
and state.
· For example the Environmental Protection Agency (EPA)
offers Drinking Water Grants to promote public health and the
protection of the environment.
· Through our fiscal analysis of Riverside County we can
identify which departments may have a surplus within their
budget. This surplus will determine the budget cuts and will
then be used to fund the $5 million.

8. PROS
· Assuming that we are being awarded the grant. This will
minimize our expenditures.
· Low impact on our current budget.
· No debt
· This option will not financially impact Riverside residents and
users.
CONS
· Grant does not guarantee that we will get awarded.
· There will be pushback from various departments that may be
impacted.
· There is not enough surplus to cover the $5 million.
· Grant: restricted funds, competitive proposal process
Alternative #3: Finance $10 million debt through a bond and the
remaining $10 million through the use of the reserves. Create a
user fee to fund the $5 million annual cost.
· Utilizing bond financing for the $10 million is a type of long-
term borrowing that will help us raise money for this purpose.
· In addition, the remaining $10 million will be funded through
Riverside County reserves.
· The annual costs of $5 million will be funded by a new user
fee.
PROS
· Not a significant impact.
· Lower debt because we are only financing $10 million.
· Do not have to make any service cuts.
· This is a long-term debt which will be paid back over several
years.
· Creating a user fee will create a funding source.
· This hybrid financing model will allow the county to keep
most of its reserves and only finance a portion of the project.
CONS

9. · Utilizing county reserves can be risky, if forecasts show
potential for budget shortfall or future recession.
· The user fee & bond must be voted in, therefore not
guaranteed.
· HP- The challenges faced in this alternative, will create a
lengthy process, which may result in push back from
stakeholders internal and external.
Recommendation / Conclusion
“I would recommend Alternative 1 to the Riverside County
board of supervisors because: It secures one time funding for
the initial $20million cost from a traditional revenue bond and
creates a user fee to fund the $5 million annual cost.
· First, this is a traditional revenue bond; it would be one
legislative process and so resources can be focused on lobbying
on this plan alone. Therefore, increasing the likelihood of its
passage and decreasing the use of resources. Secondly, the user
fee creates a funding source which will allow the county to
maintain its reserves, not requiring budget cuts. Third, since the
bond and the annual cost will be paid through an increase in
user fees it simplifies the cost on the user end, therefore there is
only one fee that the users would need to pay. Spread across all
users the fee would be minimal and not prohibitive, ensuring
equity and access. Finally, based on the aforementioned this
alternative will have a minimal impact on Riverside’s current
county budget.
Question #3. Competency: to analyze, synthesize, think
critically, solve problems and make decisions
You are the Chief Financial Management Officer of a California
county (Riverside County). The CAO has tasked you with
proposing a funding plan for a proposed Water Management
Policy that will require an initial outlay of $20 million dollars

10. and subsequent annual outlays of $5 million for the foreseeable
future.
1) How will you approach this task?
2) What information do you need to know?
3) What possible alternatives are there?
4) What are their pros and cons?
Make a recommendation supported by evidence and reasoning.
3 pages single space