1 status of the used oil recycling program (allocation for fy 04/05)
TRANSCRIPT
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Status of the Used Oil Recycling Program
(Allocation for FY 04/05)
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Objectives of Agenda Item Overview of Used Oil Recycling Overview of Used Oil Recycling
Program (UOP)Program (UOP) Theory and Impact of the UOP FundTheory and Impact of the UOP Fund New Direction of UOP based on Cal New Direction of UOP based on Cal
Poly AssessmentPoly Assessment Allocation for Statewide Education Allocation for Statewide Education
and Outreach ($752,000)and Outreach ($752,000) Proposal to Increase Available Proposal to Increase Available
ResourcesResources
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Goals of the California Oil Recycling Enhancement
(CORE) Act Implement Recycling Incentive Implement Recycling Incentive ProgramProgram Establish a network of Collection Establish a network of Collection Centers for Used OilCenters for Used Oil Implement Grant Programs (5)Implement Grant Programs (5) Promote Statewide Education and Promote Statewide Education and Outreach activitiesOutreach activities
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Revenue & Total Resources
Available resources for expenditure from the Used Oil Available resources for expenditure from the Used Oil fund are generated from:fund are generated from: Oil manufacturer feesOil manufacturer fees Interest earned on cash in the fundInterest earned on cash in the fund Unexpended funds from prior years (fund balance)Unexpended funds from prior years (fund balance)
PRC §48653 authorizes resources available to the IWMB PRC §48653 authorizes resources available to the IWMB to be continuously appropriatedto be continuously appropriated Adjust spending authority annually for certain Oil Adjust spending authority annually for certain Oil
programs to meet the statutory prescribed funding programs to meet the statutory prescribed funding formulaformula
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The Statutory “Formula”
Prescribed in statute and establishes for Oil programs:Prescribed in statute and establishes for Oil programs: Funding order Funding order Amount availableAmount available
The statutory formula trends Used Oil fund allocations to a The statutory formula trends Used Oil fund allocations to a point where annual expenditures equal annual revenuepoint where annual expenditures equal annual revenue
Attachment 3 describes the formula based on 5 categories of Attachment 3 describes the formula based on 5 categories of expenditure:expenditure: Category 1-3:Category 1-3: Primary ExpendituresPrimary Expenditures Category 4-5:Category 4-5: Competitive grant and Competitive grant and
Education/Outreach programsEducation/Outreach programs
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UOP Fund Allocation Priorities According to Statute
First Category First Category $.16/gal recycling incentive$.16/gal recycling incentiveDTSC investigationDTSC investigationProgram/Board AdministrationProgram/Board AdministrationReserveReserve
$3.3M$3.3M
$343,000$343,000
$3M$3M
$1M$1M
Second CategorySecond Category Block Grants Block Grants $$10M10M
Third Category Third Category
Budget ActBudget Act
Farm and Ranch Farm and Ranch DTSC enforcementDTSC enforcementContaminated Oil PaymentsContaminated Oil PaymentsProgram/Board AdministrationProgram/Board AdministrationOEHHA directOEHHA directCalEPA DirectCalEPA Direct
$333,000$333,000
$250,000$250,000
$ 10,000$ 10,000
$1.27M$1.27M
$487,000$487,000
$ 30,000$ 30,000
Fourth CategoryFourth Category Competitive Grants Competitive Grants
(60% annually-two year cycle)(60% annually-two year cycle)Non-profitNon-profitResearch, Testing and DemonstrationResearch, Testing and Demonstration
$1.13M$1.13M
$1.13M$1.13M
Fifth Category Fifth Category Statewide education and outreachStatewide education and outreach $752,000$752,000
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Example: Expenditures = Revenue(dollars in thousands)
Resources:Resources:
Beginning BalanceBeginning Balance 1,2501,250
RevenueRevenue 20,00020,000
Total ResourcesTotal Resources 21,25021,250
Expenditures:Expenditures:
Primary Costs (Cat. 1-3)Primary Costs (Cat. 1-3) 15,00015,000
Net ResourcesNet Resources 6,2506,250
80% Competitive Grant/Ed 80% Competitive Grant/Ed Programs (Cat. 4-5)Programs (Cat. 4-5)
5,0005,000
Total ExpendituresTotal Expenditures 20,00020,000
20% Ending Fund Balance20% Ending Fund Balance 1,2501,250
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Example: Expenditures Exceed Revenue(dollars in thousands)
Resources:Resources: Year 1Year 1 Year 2Year 2
Beginning BalanceBeginning Balance 10,00010,000 3,0003,000
RevenueRevenue 20,00020,000 20,00020,000
Total ResourcesTotal Resources 30,00030,000 23,00023,000
Expenditures:Expenditures:
Primary Costs (Cat 1-3)Primary Costs (Cat 1-3) 15,00015,000 15,00015,000
Net ResourcesNet Resources 15,00015,000 8,0008,000
80% Competitive Grant/Ed 80% Competitive Grant/Ed Programs (Cat. 4-5)Programs (Cat. 4-5)
12,00012,000 6,4006,400
Total ExpendituresTotal Expenditures 27,00027,000 21,40021,400
20% Ending Fund Balance20% Ending Fund Balance 3,0003,000 1,6001,600
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Current Fund Status(dollars in thousands)
Resources:Resources: 2004/052004/05
Beginning BalanceBeginning Balance 2,1122,11211
RevenueRevenue 20,67220,672
Total ResourcesTotal Resources 22,78422,784
Expenditures:Expenditures:
Primary Costs (Cat 1-3)Primary Costs (Cat 1-3) 19,02319,02311
Net ResourcesNet Resources 3,7613,761
80% Competitive Grant/Ed 80% Competitive Grant/Ed Programs (Cat. 4-5)Programs (Cat. 4-5)
3,0093,009
Total ExpendituresTotal Expenditures 22,03222,032
20% Ending Fund Balance20% Ending Fund Balance 75275211
11does not include $1m reserve for contingenciesdoes not include $1m reserve for contingencies
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The Statutory Formula: Annual Expenditures = Annual Revenue UOP must operate within the amount of annual revenue collectedUOP must operate within the amount of annual revenue collected When allocations for expenditures equal annual revenue, the following When allocations for expenditures equal annual revenue, the following
is true:is true: Projected Annual Revenue – Primary Expenditures (Category Projected Annual Revenue – Primary Expenditures (Category
1-3) = Allocations for competitive grant/education programs 1-3) = Allocations for competitive grant/education programs (Categories 4-5)(Categories 4-5)
($20.6M - $19.0M = $1.6M)($20.6M - $19.0M = $1.6M) Two important factors have affected allocations for Competitive grants Two important factors have affected allocations for Competitive grants
and Education/Outreach programs:and Education/Outreach programs: Fund balance has diminished per the statutory formula; Fund balance has diminished per the statutory formula;
supplemental funding by the fund balance is temporary and should supplemental funding by the fund balance is temporary and should not be considered available on-goingnot be considered available on-going
Over time, the difference between annual revenue and primary Over time, the difference between annual revenue and primary costs has decreased, leaving less available for Competitive grant costs has decreased, leaving less available for Competitive grant and Education/Outreach programsand Education/Outreach programs
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Factors Impacting Revenue and Expenditure
Revenue:Revenue: Decrease in interest rate and earningsDecrease in interest rate and earnings Projected flat oil revenueProjected flat oil revenue Refund and exemption claims to Refund and exemption claims to
manufacturersmanufacturers
Expenditure:Expenditure: Increase in Administrative costIncrease in Administrative cost Direct appropriations to other agenciesDirect appropriations to other agencies
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19981999
20002001
20022003
Total Exemptions Claimed
Taxable Gallons
Total Lubrication Oil Sold0
50,000
100,000
150,000
200,000
250,000
300,000O
il b
y T
ype
(Gal
lon
s)
Oil Trends(in thousands of gallons)
Total Exemptions Claimed Taxable Gallons Total Lubrication Oil Sold
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Direction for Second Decade
Cal Poly Assessment (July ’03) Cal Poly Assessment (July ’03) Transition from “getting the Transition from “getting the money out” to money out” to “Promoting Program “Promoting Program Improvements”Improvements” Analysis of recommendations led Analysis of recommendations led to 7 strategiesto 7 strategies
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Proposed Implementation Plan for Used Oil Program: Strategies1.1. Maximize Effectiveness of Used Oil Maximize Effectiveness of Used Oil
Collection InfrastructureCollection Infrastructure2.2. Promote Source Reduction & P2Promote Source Reduction & P23.3. Promote Highest & Best Use of Used Oil Promote Highest & Best Use of Used Oil 4.4. Enhance UOP Visibility & ImageEnhance UOP Visibility & Image5.5. Improve Effectiveness & Efficiency of Improve Effectiveness & Efficiency of
Program (streamlining)Program (streamlining)6.6. Seek Public/Private PartnershipsSeek Public/Private Partnerships7.7. Promote Program Improvements thru Promote Program Improvements thru
Transfer of Best Management PracticesTransfer of Best Management Practices
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Strategy 1: Maximize Effectiveness of Used Oil Collection Center Infrastructure
Expand Certified Collection Center ProgramExpand Certified Collection Center Program Expand Used Oil Filter CollectionExpand Used Oil Filter Collection
Strategy 2: Promote Source Reduction and Pollution PreventionGenerate List of Policy Options for Source Reduction (oil change intervals, etc)Education re: used oil impact on stormwater
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Strategy 3: Promote Highest & Best Use of Used Oil
Encourage blending of used oil, re-refining Encourage blending of used oil, re-refining or use as asphalt fluxor use as asphalt flux
Re-refined Oil Use by FleetsRe-refined Oil Use by Fleets
Strategy 4: Enhance UOP Visibility
Evaluate effectiveness of existing local & statewide used oil recycling messageSpotlight programs on CIWMB website
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Strategy 5: Continuously Improve Effectiveness & Efficiency of Program (grant process streamlining)
Strategy 6: Seek Opportunities for Public/Private Partnerships
Strategy 7: Promote Program Improvements Thru Transfer of Best Practices (conference)
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Statewide Education and Outreach (Category 5)DescriptionDescription Proposed $ Proposed $
Annual Used Oil/HHW conferenceAnnual Used Oil/HHW conference $100,000$100,000
Outreach (ads, printing)Outreach (ads, printing) $ 80,000$ 80,000
Certified Collection CenterCertified Collection Center $ 25,000$ 25,000
DMV handbooksDMV handbooks $106,000$106,000
Partnerships/SponsorshipsPartnerships/Sponsorships $ 15,000$ 15,000
Contract ConceptsContract ConceptsExtended oil changeExtended oil changeGrantee publicity and education analysisGrantee publicity and education analysisBlending of used oilBlending of used oil
Other Board ActivitiesOther Board ActivitiesStudent AssistanceStudent AssistanceRecycled Product Trade ShowRecycled Product Trade Show
$ 85,000$ 85,000
$ 90,000$ 90,000
$165,000$165,000
$36,000$36,000
$50,000$50,000
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Contract Concepts (Category 5) Extended Oil change: examine the feasibility Extended Oil change: examine the feasibility of an outreach campaign as a source reduction of an outreach campaign as a source reduction promotion.promotion.Publication and Education Analysis: identify Publication and Education Analysis: identify “best practices” and determine if regional or “best practices” and determine if regional or statewide oil recycling message is recognizable. statewide oil recycling message is recognizable. Blending Used Oil: determine if the blending Blending Used Oil: determine if the blending of used oil back into the crude oil refining of used oil back into the crude oil refining process is marketable, environmentally friendly process is marketable, environmentally friendly and economical.and economical.
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Statewide Education and Outreach (Category 5)
Other Board ActivitiesOther Board Activities Student Assistance (non UOP)Student Assistance (non UOP) Recycled Product Trade ShowRecycled Product Trade Show
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Proposal to Increase RevenueIncrease Revenue:Increase Revenue: Eliminate advances on Block GrantsEliminate advances on Block Grants Verify revenue and exemption claims from Verify revenue and exemption claims from
oil manufacturersoil manufacturers
Decrease Expenditure:Decrease Expenditure: Reevaluate the DOF audit contractReevaluate the DOF audit contract Reassess support to:Reassess support to:
CalMax/WRAP programCalMax/WRAP program Recycled Product Trade ShowRecycled Product Trade Show Farm and Ranch grantFarm and Ranch grant
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Proposal to Increase Available Resources for the UOP (Worksheet)
Proposals Proposals YesYes NoNo Re-Re-evaluateevaluate
DiscussDiscuss
To Increase RevenueTo Increase Revenue
1. Eliminate Advances (Block Grant)1. Eliminate Advances (Block Grant)
2. Verify claims from oil 2. Verify claims from oil manufacturers (audits)manufacturers (audits)
To Decrease ExpendituresTo Decrease Expenditures..3. Re-evaluate DOF contract3. Re-evaluate DOF contract
4.Determine level of funding for on 4.Determine level of funding for on annual basis for:annual basis for:
a. CalMax/Wrapa. CalMax/Wrap
4b.Recycled Trade show4b.Recycled Trade show
4c.Farm and Ranch 4c.Farm and Ranch
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Request Board Approval
Staff Recommends:Staff Recommends:
Approval of the proposed Allocation and Approval of the proposed Allocation and Contract Concepts for FY 2004/05 and Contract Concepts for FY 2004/05 and direction on the proposals to increase direction on the proposals to increase resources for the Fund for FY 2005/06 and resources for the Fund for FY 2005/06 and beyond and adopt Resolution number 2004-beyond and adopt Resolution number 2004-314.314.