Financial Sustainability

Financial Sustainability and Viability of Service Providers

Revenues for utilities must cover expenses for operations and capital. Without an adequate balance of revenues to expenses, over time, infrastructure condition will deteriorate and levels of service will decline, endangering public and environmental health. Managers and governing boards must plan for long-term and short-term financial needs to ensure the viability of their utilities.

There are many challenges to the financial viability of the water, wastewater, and stormwater utilities. Small communities often cannot generate sufficient revenues to cover the high capital costs and fixed operational expenses associated with the infrastructure and service provision. In many states, a significant number of communities face conditions that make providing services too costly and need assistance. The EFC provides training, advising and direct assistance, tools, and resources to guide local decision-makers in assessing, understanding, and planning for the long-term viability of their utilities. Most of these services are offered at no charge to small, local communities. The EFC has developed benchmarking tools, guidance documents, informational fact sheets on funding sources, and case studies of utilities’ experiences that are available for local utility managers and decision-makers to use. In this way, the EFC focuses on capacity building at the local level. The EFC also advises state governments, federal agencies, professional associations, credit rating agencies, consulting firms, and other groups that work on assessing and developing policies and best practices to address sector viability in a state, region, or the country as a whole. For instance, the EFC is advising the State of North Carolina in the development of a program to identify distressed local government water/wastewater utilities, under the Viable Utility Reserve program, to provide resources to those systems. The EFC has also tested and advised on assessment criteria and analytics to help states, the U.S. Environmental Protection Agency, and other organizations determine the managerial or financial capacity of utilities’ ability to receive assistance through funding programs, such as the State Revolving Funds. The EFC’s provides in-depth analysis and research through these assessments to provide quality assistance with all financial programs and services there are to offer.