Annual Report

Fiscal Year 2017-18 July 1, 2017 - June 30, 2018

Setting standards of excellence in public service

HELIX WATER DISTRICT

Photo: Archimedes Screw at R.M. Levy Water Treatment Plant

BOARD OF DIRECTORS

Joel A. Scalzitti Division 5 Director

Kathleen Coates HedbergDivision 4 Director Board President

Daniel H. McMillan Division 1 DirectorVice President

DeAna R. VerbekeDivision 2 Director

Mark GracykDivision 3 Director

OUR MISSION

Helix Water District is a progressive industry leader, providing high- quality water, through an efficient and reliable system. Our innovative and dedicated employees and board members maximize human and technological resources, while providing superior service to our customersand supporting the environment for a sustainable future.

CONTENTS

2 Board of Directors

3 BoardPresident’sLetter

4 Our Customers

6 General Manager’s Report

10 Our Employees

12 Our Infrastructure

13 Water Supply

14 Water Quality

15 Water Reliability

16 Engineering

17 Administration

18 Financial Statements

Boardmembers with 2017 Transparency Award from the California Special DistrictsAssociation

2

A MESSAGE FROM THE BOARD PRESIDENT

ThisisHelixWaterDistrict’sannualreportforfiscalyear2017-18--July 1, 2017 to June 30, 2018. It has been a year of challenges, growthand achievement for Helix, and this report highlights our performance

and results.

Asalong-timememberoftheboard,Iseethecontinuousimprovementsat the district and I want our customers to see them, too. From new online paymentoptions,toaward-winningcommunicationsandfinancialmanagement,this district works hard to provide our customers with exemplary service, and tobearesourceandagoodneighbor.Gettingitrightisimportantbecauseweareavitalpartofthecommunitiesweserve.It’sabigresponsibility,andHelix employees live up to it everyday, just as they have for decades.

This board takes very seriously our responsibility to the customers we represent, and our responsibility as stewards of the water and infrastructure on which we all depend. I want to thank my fellow board members andevery one of the district’s employees for the role they each played inmaking2017-18anoutstandingyear.

Kathleen Hedberg PE, MPHBoard President

2017-18 Highlights

Fletcher Hills 2 Pump Station project completed

Phase 1 of Munis financial software project launched

20 charging stations for hybrid and electricvehicles installedThrough SDG&E’s Power Your Drive program

$12.5 millioninvested in capitalprojects

15% of water supply from localsuppliesReducing imported water costs by $2.6 million

100% compliancewith water quality standardsU.S. EPA and state of California standards

$88 million budget for operating and capital project costs

Average customerwater use 98 gallonsper person per day

3

Our Customers in 2017-18

500,000Population(est.)servedbyHelix’sR.M. Levy Water Treatment Plant

274,526PopulationservedbyHelix’swaterdistributionsystem

Helix’s water treatment plant is a regional facility upgraded in partnership with the San Diego County Water Authority in 2002 to serve neighboring water agencies in East County.

Helixprovidesdrinkingwaterforthecitiesof El Cajon, La Mesa and Lemon Grove, the community of Spring Valley and parts of Lakeside.

Single-Family Homes / 48%

Multi-Family Homes / 32%

Commercial / 12%

Irrigation/ 6%

Govt / 2%

Helix WD 30,258 AF

Otay WD 8,916 AF

Padre Dam MWD5,155 AF La

kesi

de W

D 2,

842

AF

2017-18 Water DemandBy water districtAF=Acre-Feet

2017-18 Water DemandBy Helix customer type

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Our 2017 Customer SurveyThe district conducted its latest customer survey in October 2017, reaching out to 30,000 customersbyemailandrequestingthattheycompletea10minuteonlinesurvey.Theboardrequested the survey and the district contracted with Probe Research, which worked closelywiththeboardandstafftodevelopthequestions.Thefullresultsofthesurveyareavailableathwd.com/key-documents.

2,366Customers responded

39%Responded on a smartphone

RESPONDENTS

53%Were 55 years or older

90%Owned their home

63%Drink Helix tap water

WATER QUALITY

78%Aresatisfiedtoneutralwith the quality of Helix’s water

74%Felt that Helix water was an excellent or good value

THE VALUE OF WATER

91%Willcontinueconservingwaternow that the drought is over

76%SatisfiedwithHelix’squalityof service

OVERALL SERVICE

84%SatisfiedwithinteractionswithHelixstaff

ENGAGING WITH HELIX

57%Of customers who visited The WaterConservationGardenusedwhat they learned in their own landscape

50%Nearly 50 percent of respondents had visited Lake Jennings

Top 4Customer interests:

1. Water quality2. How water costs are derived3. The water treatment process4.Waterconservationadvice

Top 4 Customerinformationsources:

1. Helix’s website2. Water bill inserts3.Helix’snewsletter4. Water bill envelope messages

68%Already, or would prefer to, receiveatextoremaillettingthem know their water bill is available online

5

Investmentsdefined2017-18atHelixWaterDistrict.Weareadaptingtoachangingclimate,changing technology and a changing workforce,

andevaluatinginvestmentstoensurethesustain-ability of East County’s water supply.

I want to thank Helix’s board, management and employeesfortheirexpertise,theirthoughtfulandrigorousanalysis,andtheirimplementationand project management skills. This, of course, iskeytomaximizingtheopportunitiesandminimizing the risk associated with each invest-ment we consider on behalf of our customers. Thesedecisionscouldnotbeinbetterhands.

Beforediscussingtheinvestmentsthatdefinedthe past year, I also want to thank customers who completed our latest customer survey. I was pleased to see that customers think highly of our service.

The survey provided valuable feedback regarding potentialinvestmentsinautomatedwatermetersandmonthlywaterbills,anditconfirmedthatouroutreach program is on the right track. We are

Carlos V. Lugo, General Manager General Manager’s Report

providingtheinformationthatcustomerswant,andtheyarefindingitinpersonatdistrictevents,onthedistrict’snewwebsite,andinnewslettersandenvelope messages.

Investing in Water SuppliesIn April 2018, the board of Metropolitan Water District of Southern California approved a $10.4 billion investment in the California WaterFix, a $16.7 billion plan to construct two tunnels under the Delta to deliver water from the Sacramento River to Central and Southern California.

The goal of the project is to capture water when California experiences a wet winter. Climate studies predict that we will experience long, dry periods in the future, interrupted by short, wet periods. Thelastfewyearsmayhaveofferedapreview:theSierrasnowpackin2016-17was159percentof average and ended one of the most severe droughtsinCalifornia’shistory,butdryconditionsreturnedin2017-18.

MWD will allocate the project costs across South-ern California households, and Helix customers, through their water rates. They expect the project to begin delivering water in 2033.

It’s important to note that Helix already invests in a sustainable future through the wholesale water rates we pay to the San Diego County Water Authority. Helix and the Water Authority’s other memberagenciesactivelyadviseandmanagetheseinvestments,andthebenefitsareclear.Throughoutfiveyearsofdrought,SanDiegoCounty had the water it needed to meet the region’s demand.

Investing in InfrastructureHelix’s engineering department designed and bid 32,150 feet of infrastructure projects last year, andcompletedconstructionon10projects.Ourcontinuedinvestmentinthedistrict’swatertreatmentanddistributionsystemsisaninvest-ment in a safe and reliable water supply.

6

Left:LoweringnewaluminumroofontotheSouth Rim Tank.

Right:OfficialsfromLemonGrove,LaMesa andEl Cajon join President Hedberg and Directors Gracyk and McMillan to recognize Helix’s new chargingstations.

Investing in Energy EfficiencyWe spent $2.2 million on electricity in 2017-18,primarilytopumpwaterthroughoutourdistributionsystemtothe275,000peoplewe serve.

Controlling our energy costs is a priority. We maintainoperationsanddesignstandardsthat reduce energy demand during peak periods when SDG&E’s charges are higher, andwecontinuallyevaluateopportunitiestoreplaceinfrastructurewithenergyefficientsolutions.

$0Cost to install 20 charging stations

POWER YOUR DRIVE PROGRAM

$29,000Rebates received onvehicles in two years

75Avg. miles per gallonfor each Toyota Prius

$1,000Annual fuel savingsfor each Toyota Prius

Wepurchase90percentofourelectricitythrough the state of California’s Direct Access program, allowing us to partner with an electric service provider that can purchase energy on theopenmarketandsecurelowertariffsthanSDG&Eoffers.In 2017-18,wesaved18percentonenergycosts,andby2020,one-thirdoftheenergy we purchase through the program will be renewable.

In2017-18,HelixalsopartneredwithSDG&E’sPower Your Drive program, which funded the installationof20electricvehiclechargingstationsatthedistrict’soperationscenterinElCajonandadministrationofficeinLaMesa.Wepurchasedsix hybrid electric vehicles over the past two yearsandawaittheavailabilityofhybridlight-duty trucks.

“Each new electric vehicle reduces operational expenses, creating cost savings for our ratepayers.”Kevin D. MillerDirectorofOperations

7

Investing in TechnologyTwenty-oneemployeeswereinvolvedinthedevelopmentandimplementationofHelix’sfinancialsoftwaresystemsandGISprojectsin2017-18--Phase2ofathree-phasesystemsupgradetoimprovecustomerservice,reliabilityandemployeeproductivity.

Jul 2018Go Live: Tyler Munis Phase 1FinancialsGeneral BillingBudgetingCAFR BuilderPurchasing(PurchaseOrders)InventoryAccounts PayableseProcurementProjects(WorkOrders)Bid ManagementContract Management

Apr 2019Go Live: Tyler Munis Phase 2Human ResourcesPayrollGIS

Dec 2020Go Live: Asset Management

23%2017-18 increase in customers payingtheir water bill by text message or email

FINANCIAL SOFTWARE SYSTEMS UPGRADE

“Our vendors tell us that projects of this size always include delays and mistakes. But not at Helix. I could not be more proud of our project team.”Quince S. Lunde Project Manager

8

Investing in Our CustomersAs this district prepares for the future, we want our customers to prepare, too. This is whyweinvestincommunity,conservationandeducation.HelixWaterTalks,forexample,are an opportunity for Helix customers and employeestomeet,askquestionsandexplore what we do.

Aprimarythemeinourpost-eventsurveysisthat customers are surprised and impressed by the scale and complexity of our water treatmentanddistributionsystems,andtheknowledge and passion of our employees.

Not surprisingly, our employees enjoy meetingcustomers,aswell,andthedistrictisnowhostingopenhouseswhencapitalprojects are completed, to meet neighbors and give them a project tour.

This is how our customers and their water utilitygettoknoweachother,shareconcernsand discuss the future. From where I stand, nothing is more important than this.

Carlos V. Lugo General Manager

2Helix Water Talks eventsin 2017-18

464 Blog and social media posts in 2017-18

131Home water use evaluationsin 2017-18

274Residential rebates in 2017-18

2,593Students toured our treatment plant in 2017-18

3,475Students attended a Ms. Smarty Plants assembly in 2017-18

CONSERVATION and COMMUNITY

Top: Helix Water Talks tour group in the chemistry lab at the R.M. LevyWater Treatment Plant.Bottom:LandscapedesignedandbuiltbyCareyHultgrenandPaulGeldbachof La Mesa won Helix’s 2018 WaterSmart Landscape Contest.

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10 YEARS OF CUSTOMER WATER USEIngallonsperpersonperday(GPCD)

1272008-09

1062009-10

1112010-11

1092011-12

1142012-13

1172013-14

1032014-15

892015-16

942016-17

982017-18

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Our Employees in 2017-18

Jerry AndradeSonya AndrewsLorriAnnettAneld AnubMarquettaAytesNadir BaigDan BakerManny BarronJesseBartlett-MayChris Beauchamp Michelle BerensMorgan BlakeAshley BondJeremy BooneEddie BrisendineRusty BrownJeffBrownJennifer BryantDevon BullockCheree BurtonCasey CableJoe CampbellRobyn ChambersJohn CidJim ConderDebbie CopherCindy CovarrubiasCarlos CruzMichelleCurtisVince DambroseMadalyn DartAngela DeeganLonny DillSam DillmanSusen DoubravaRasheda EatmonDoug Emery

Al EndozoJoseph FenickEric FocklerSue FoxNancy GarciaJoe GarubaBilly GastonRichard GilroyDon GingrichEddie GonzalezJesus GonzalezTim GrayScottGroggKolton GustafsonMichaelGutierrezSandy GutkowskiKira HaleyCliffHallScottHamrenCourtney HernandezMike HerreraTy HoranEric HughesGarrettHurstRob JacquotKyle JamesSandy JanzenGreg JonesJessica KadingKarah KingsburyJoy KleberStan KrutePaul LaFalceMary LammBrian LawlerDoug LeMastersSlade Livermore

Carlos LugoQuince LundeDebbie LundyLarry LyfordAlicia MaciasJeffMacMasterDana MaganaOliver MalkinCharles MarshburnGaryMartinezRobert MastersonMike MaynardChris McRaeGeoffMentaJonathan MenzieKevin MillerRobert MineoRita MooneyDave MooreJason MooreMiguel MorenoSeth MrowkaMelvin MurrayShaunNaffzigerIvanNaputiJohn NerioJaime OkewoleBrian OlneyJames PaceSam PachecoHenry PalechekTommy PearceMike PepinCarlos PerdomoIsrael PerezAlicia PetersonJeffPhillips

Junior PilarEllen PiscatelliTracy PowellTravis PowellJeffRauhDavid ReaganByron RichardsonGary RichardsonMike Ringelspaugh Christy RinkDavis RobbinsMarcusRobertiEmily RogersJohn RomeroVictor RomeroChris RosenboomTim RossGabriel RuizGavin RunyonJim RussellMike RussellPat RutanLouie SalasPhil SampleSarah SampleJoelScalzittiMilica SchipperMikeSchuffCameronScottDamon SilvaMark SlagleMike SloanRyan SmithAnne SolanoCristinaSotoGlenn SpanglerPete Spangler

Thomas SpeerKevin SullivanDarrin TeisherFrancine Thompson Richard ThompsonErik TolhurstJim TomasuloMike UhrhammerRebecca VanegasTony VielguthEarl VoogdChris WalterChris WatkinsMelissaWattBryanWatteJohn WilsonMattYantosJoe YoungMarlene YoungCindy Ziernicki

30 YearsSue FoxRichard Gilroy

20 YearsBilly GastonLarry Lyford

15 YearsGreg Jones Charles Marshburn Gary Richardson Jason Moore Phil Sample John Nerio Lonny Dill Damon SilvaKevin Miller

10 YearsRebecca VanegasTim Ross Mike Herrera Davis Robbins Miguel Moreno

5 YearsJennifer BryantJoelScalzittiChristy Rink

SERVICE AWARDS

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Our Infrastructure in 2017-18

106Million gallons per day of watertreatment capacity at the R.M. Levy Water Treatment Plant

2Reservoirs and dams

274,526 Serviceareapopulation

728Miles of pipeline

56,184Meters

16,903Valves

6,442Hydrants

25Storage tanks

25Pumpstations

12

Water Supply Conditions in 2017-18

20173rdhottestyearonrecord(NOAA)

20184thhottestyearonrecord

(NOAA)(est.)

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64%Colorado River Basin (ofaverage)

PRECIPITATION 2017-2018Water Year

58%State Water Project (ofaverage)

33%San Diego County (ofaverage)

WATER SUPPLY

FISCAL YEAR20182017201620152014201320122011201020092008200720062005200420032002200120001999199819971996199519941993

ACRE-FEET*30,25828,71727,11731,14535,06834,32732,79431,81233,21137,65740,44342,08840,20238,78542,20639,70042,23040,04942,81339,81637,13340,87141,19335,66836,76437.026

IMPORTED85%87%93%99%98%84%73%65%91%97%92%91%74%84%95%96%95%93%90%72%79%89%72%72%64%76%

LOCAL15%13%

7%1%2%

16%27%35%9%3%8%9%

26%16%

5%4%5%7%

10%29%21%11%28%28%37%24%

LOCAL RUNOFF

FISCAL YEAR20182017201620152014201320122011201020092008

EL CAPITANWATERSHED

141 AF5,427 AF

604 AF134 AF212 AF665 AF

2,618 AF7,995AF6,157 AF2,454 AF3,931AF

LAKECUYAMACA

175 AF5,822 AF

586 AF101 AF117 AF265 AF

1,330 AF5,251 AF4,111 AF1,590AF2,252AF

*ACRE-FEET=DEMAND

AF=ACRE-FEET

Water Quality in 2017-18

100%Compliance with U.S. EPA Health Standards

100%Compliance with State ofCalifornia Health Standards

OUR TREATED WATER

100%Compliance with the U.S. EPALead and Copper Rule

WATER SUPPLY MIX

43%From the Colorado River

42%From the State Water Project

15%From Lake Cuyamaca andother local supplies AWARDS

Operator Meritorious Award givento two plant operators by American WaterWorksAssociation

Membership Award given to Water Treatment Plant Manager Larry Lyford by AmericanWaterWorksAssociation

SPEAKING

31Treatmentplantanddistributionsystemstaffgave31presentationsatwater industry and data management events

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Water Reliability in 2017-18

457Water meters maintained

3,133Hydrants maintained

8,921Valvesturned(18-22 monthturningcycle)

346Valves maintained

89Small gate valves replaced

PREVENTIVE MAINTENANCE

689Blow-offsmaintained

4Pressure system interconnects upgraded

3,172Water meters replaced

76Plasticwaterservicelaterals replaced with copper

33Blow-offsupgraded

2Pipelines abandoned

CUSTOMER SERVICE

53Emergency repairs

100%Completionofemergencyoperationsexercises

OPTIMIZING TECHNOLOGY

100%CompletionofAMIpilot project

80%Districtwideintegrationofbuilding management systems

FISCAL INTEGRITY & SUSTAINABILITY

100%Large water meters tested

100%Completionofrandomtestingof3001-inchorsmallerwatermeters

100%Completionofelectricvehiclechargingstations

100%Completionofresearchofinsurancecoverageoptionsandpremiums

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35Water services installed

3Hydrants installed

11Fire services installed

183Planned shutdowns

1,063Field dispatches

1,199After-hourscustomerservice dispatches

60Private development projects reviewed

32,150Feet of infrastructure designed and bid

34,000Feet of topographic survey completed

10Constructionprojectscompleted

–FletcherHills2PumpStationReplacement

–Fuerte/AlzedaPipelineRelocation

–ElCajon–Cast-IronReplacement

– Aqueduct 2 Pipeline Repair

–VistaPumpStationMCCReplacement

– La Mesa – Small Valve Replacement

–AdministrationOfficeParkingDeck

–SedimentationBasinHandrailModification

– La Mesa Boys and Girls Club

–ElectricVehicleChargingStations

18,000Feetofconstructionstakingcompleted

Engineering in 2017-18

8,000Utilitylocation(DigAlert)requestscompleted

7Reservoirtankinspectionscompleted

16

Administration in 2017-18

Converted all contracts, agreements, leases and MOUs into new Tyler/Munis softwareandelectroniccontentmanagementsystem(ECMS)

Convertedfiveyearsofcapitalimprovement project work orders and board documents into ECMS

Developed a mobile app for daily reportingforconstructioninspectors

Built system infrastructure and deployedfinancialcomponentsforenterpriseresourceplanning(ERP)softwareimplementation

Upgradedsoftwareinfrastructurefordistrict’s phone system

Built system infrastructure and deployedmappingsolutionsformigrationtoESRIArcGIS

Restructured network cabling in administrationofficedatacenter

INFORMATION SERVICES HUMAN RESOURCES

Designed and conducted leadership team training program for all super-visors, managers, directors and the general manager

Formally introduced leadership team to servant leadership philosophy

Sixteen employees completed the district’s career development program

Solicitedvendorproposals(RFPs)for2018compensationandbenefitsstudy

Conducted the Helix Bucks employee recognitionprogramfromSeptember2017 through January 2018

Awarded second $2,000 grant from AssociationofCaliforniaWaterAgenciesfor employee wellness programs

FINANCE

Recipientsof2018CertificateofAchievement for Excellence in Financial ReportingfromtheGovernmentFinanceOfficersAssociation

Recipients of 2018 Public CommunicationsAchievementAwardfrom the American Water Works Association

Recipients of the District Transparency CertificateofExcellencefromtheSpecialDistrictLeadershipFoundation

PUBLIC AFFAIRS

ADMINISTRATIVE SUPPORT

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2018 2017ASSETSCurrent AssetsCash and cash equivalents $29,953,243 $32,895,195Water receivables Billed 3,957,464 3,319,037 Unbilled 7,044,373 6,886,763Other receivables 462,819 140,824Water inventory 16,581,306 22,254,594Supplies inventory and prepaid expenses 768,658 775,686 Total Current Assets 58,767,863 66,272,099

Non-Current AssetsRestricted-debtservice Cash and cash equivalents 1,913,356 1,904,993Investments 10,302,670 6,140,210Capital assets Land 5,067,807 5,067,807 Reservoirs and pipelines 347,250,441 339,615,788 Automobiles and trucks 3,012,300 3,093,945 Buildings and equipment 54,141,322 49,112,961Less:accumulateddepreciation (171,345,958) (162,814,699)Constructioninprogress 9,704,002 8,652,802 TotalNon-CurrentAssets 260,045,940 250,773,807 Total Assets 318,813,803 317,045,906

DEFERRED OUTFLOWS OF RESOURCESDeferred amount related to pensions 9,707,753 7,994,407Deferredamountrelatedtootherpost-employmentbenefits 2,801,176 -

TotalDeferredOutflowsofResources 12,508,929 7,994,407TotalAssetsandDeferredOutflowsofResources $ 331,322,732 $ 325,040,313

Financial Statements for 2017-18

Statement of Net PositionJune 30, 2018

Audited by Vavrinek, Trine, Day & Co. LLC,an independent, licensedauditfirm

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2018 2017LIABILITIESCurrent LiabilitiesAccounts payable $ 4,505,362 $ 7,888,808Accrued expenses 2,830,439 4,158,787Compensated absences 318,613 300,690Currentportionofbondspayable 1,480,000 1,435,000 TotalCurrentLiabilities 9,134,414 13,783,285

Non-Current LiabilitiesCompensated absences 2,699,306 2,549,369Bondspayableafteroneyear 8,230,000 9,710,000Net pension liability 43,517,747 38,637,527 Netotherpost-employmentbenefitsliability 28,598,306 -TotalNon-CurrentLiabilities 83,045,359 50,896,896TotalLiabilities 92,179,773 64,680,181

DEFERRED OUTFLOWS OF RESOURCESDeferred amount on refunding of debt 220,732 257,518Deferred amount related to pensions 879,121 1,107,502Deferredamountrelatedtootherpost-employmentbenefits 264,022 -

TotalDeferredInflowsofResources 1,363,875 1,365,020

Net PositionNet investment in capital assets 237,899,182 231,326,086Restricted debt service 1,913,356 1,904,993Unrestricted (2,033,454) 25,764,033

TotalNetPosition 237,779,084 258,995,112

TotalLiabilities,DeferredInflowsofResourcesandNetPosition

$ 331,322,732 $ 325,040,313

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2018 2017OPERATING REVENUESWater sales $ 85,212,560 $ 75,332,588Localwaterrunoff - 16,828,525Other charges 604,167 612,542 TotalOperatingRevenues 85,816,727 92,773,655

OPERATING EXPENSESWater purchases 43,956,171 25,293,132Localwaterrunoff - 16,828,525Administrativeandgeneral 22,617,634 20,273,722Depreciation 8,983,961 9,093,269Transmissionanddistribution 3,024,696 2,914,809Water treatment 3,416,564 3,304,543Pumping 2,348,009 2,113,134Operationscenter 2,161,604 2,209,212Customer services 1,162,085 1,133,143 TotalOperatingExpenses 87,670,724 83,163,489OPERATING INCOME (LOSS) (1,853,997) 9,610,166

NON-OPERATING REVENUES (EXPENSES)Interest income 577,149 322,092Other income 5,044,918 11,569,143Interest expense (415,258) (477,369)Other expense (766,953) (685,950)TotalNon-OperatingRevenues(Expenses) 4,439,856 10,727,916INCOME (LOSS) BEFORE CONTRIBUTIONS 2,585,859 20,338,082

CONTRIBUTIONS BY CUSTOMERS, DEVELOPERS AND AGENCIES 2,565,650 3,841,950Increaseinnetposition 5,151,509 24,180,032Netposition,beginningofyear 232,627,575 234,815,080

Netposition,endofyear 237,779,084 258,995,112

Statement of Revenues,Expenses and Changes inNet PositionJune 30, 2018

20

Water treatment plant operatorsconductingemergencypreparednesstraining

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2018 2017CASH FLOW FROM OPERATING ACTIVITIESReceipts from customers $84,698,695 $ 74,855,810Payments to suppliers and vendors (62,985,463) (53,275,491)Payments to employees (11,932,810) (11,722,254)Payments to reduce unfunded pension liability - (750,000)Other income 5,044,918 11,569,143Other expenses (766,953) (685,950)Net Cash Provided by Operating Activities 14,058,387 19,991,258

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESPurchaseandconstructionofcapitalassets (12,246,889) (12,312,916)Principal payments on bonds (1,435,000) (1,395,000)Interest paid (452,043) (514,158)Cashcontributionsbycustomersanddevelopers 670,499 1,274,877Cashcontributionsbypublicagencies 56,768 219,794Net Cash (Used) for Capital and Related Financing Activities

(13,406,665) (12,727,403)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of investments (5,523,133) (2,293,343)Sales/maturitiesofinvestments 1,360,673 1,851,668Interest on investments 577,149 322,092

Net Cash Provided by (Used for) Investing Activities (3,585,311) (119,583)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,933,589) 7,144,272CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 34,800,188 27,655,916

CASH AND CASH EQUIVALENTS AT END OF YEAR $31,866,599 $ 34,800,188RECONCILIATION TO THE STATEMENTS NET POSITIONCashandcashequivalents--current $29,953,243 $32,895,195

Cashandcashequivalents--non-current 1,913,356 1,904,993

Total Cash and Cash Equivalents $31,866,599 $ 34,800,188

Statement of Cash FlowsJune 30, 2018

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2018 2017RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIESOperatingincome(loss) $(1,853,997) $9,610,166Adjustments:Depreciation 8,983,961 9,093,269 Other income and expense 4,277,965 10,883,193Changeinoperatingassetsandliabilities:(Increase)decreaseinwaterreceivables (796,037) (1,435,861)(Increase)decreaseinotherreceivables (321,995) 346,541(Increase)decreaseinwaterinventory 5,673,288 (9,778,575)(Increase)decreaseinsuppliesinventory and prepaid expenses 7,028 (49,109)

(Increase)decreaseindeferredoutflowsrelatedto pensions (1,713,346) (4,746,617)

(Increase)decreaseindeferredoutflowsrelatedtootherpostemploymentbenefits(OPEB) (371,411) -

Increase(decrease)inaccountspayable (3,383,446) 389,458Increase(decrease)inaccruedexpenses (1,328,348) 755,085Increase(decrease)incompensatedabsences 167,860 (25,643)Increase(decrease)indeferredinflowsrelated to pensions (228,381) (1,333,989)

Increase(decrease)indeferredinflowsrelatedtoOPEB 264,022 -Increase(decrease)innetpensionliability 4,880,220 6,283,340Increase(decrease)innetOPEBliability (198,996) -Net Cash Provided by Operating Activities $ 14,058,387 $19,991,258

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIESContributionofwatersystemassetsbycustomersand developers $ 1,838,383 $2,347,279Amortizationofdeferredamountonrefundingdebt $ 36,786 $36,790

The boat dock at Lake Jennings.

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Administration Office7811 University AvenueLaMesa,CA91942619-466-0585

Nat L. Eggert Operations Center1233 Vernon WayElCajon,CA92020619-596-3860

R.M. Levy Water Treatment Plant9550LakeJenningsParkRoadLakeside,CA92040619-443-1031

hwd.com

Lake Jennings9535HarrittRoad Lakeside,CA92040619-443-2510