Status of the Used Oil Recycling Program (Allocation for FY 04/05)

1. Status of the Used Oil Recycling Program (Allocation for FY 04/05)

2. Overview of Used Oil Recycling Program (UOP) Theory and Impact of the UOP Fund New Direction of UOP based on Cal Poly Assessment Allocation for Statewide Education and Outreach ($752,000) Proposal to Increase Available Resources Objectives of Agenda Item

3. Goals of the California Oil Recycling Enhancement (CORE) Act Implement Recycling Incentive Program Establish a network of Collection Centers for Used Oil Implement Grant Programs (5) Promote Statewide Education and Outreach activities

4. Revenue & Total Resources • Available resources for expenditure from the Used Oil fund are generated from: • Oil manufacturer fees • Interest earned on cash in the fund • Unexpended funds from prior years (fund balance) • PRC §48653 authorizes resources available to the IWMB to be continuously appropriated • Adjust spending authority annually for certain Oil programs to meet the statutory prescribed funding formula

5. The Statutory “Formula” • Prescribed in statute and establishes for Oil programs: • Funding order • Amount available • The statutory formula trends Used Oil fund allocations to a point where annual expenditures equal annual revenue • Attachment 3 describes the formula based on 5 categories of expenditure: • Category 1-3: Primary Expenditures • Category 4-5: Competitive grant and Education/Outreach programs

6. UOP Fund Allocation Priorities According to Statute

7. Example: Expenditures = Revenue(dollars in thousands)

8. Example: Expenditures Exceed Revenue(dollars in thousands)

9. Current Fund Status(dollars in thousands)

10. The Statutory Formula: Annual Expenditures = Annual Revenue • UOP must operate within the amount of annual revenue collected • When allocations for expenditures equal annual revenue, the following is true: • Projected Annual Revenue – Primary Expenditures (Category 1-3) = Allocations for competitive grant/education programs (Categories 4-5) • ($20.6M - $19.0M = $1.6M) • Two important factors have affected allocations for Competitive grants and Education/Outreach programs: • Fund balance has diminished per the statutory formula; supplemental funding by the fund balance is temporary and should not be considered available on-going • Over time, the difference between annual revenue and primary costs has decreased, leaving less available for Competitive grant and Education/Outreach programs

11. Factors Impacting Revenue and Expenditure Revenue: • Decrease in interest rate and earnings • Projected flat oil revenue • Refund and exemption claims to manufacturers Expenditure: • Increase in Administrative cost • Direct appropriations to other agencies

13. Direction for Second Decade Cal Poly Assessment (July ’03) Transition from “getting the money out” to “Promoting Program Improvements” Analysis of recommendations led to 7 strategies

14. Proposed Implementation Plan for Used Oil Program: Strategies Maximize Effectiveness of Used Oil Collection Infrastructure Promote Source Reduction & P2 Promote Highest & Best Use of Used Oil Enhance UOP Visibility & Image Improve Effectiveness & Efficiency of Program (streamlining) Seek Public/Private Partnerships Promote Program Improvements thru Transfer of Best Management Practices

15. Strategy 1: Maximize Effectiveness of Used Oil Collection Center Infrastructure • Expand Certified Collection Center Program • Expand Used Oil Filter Collection Strategy 2: Promote Source Reduction and Pollution Prevention • Generate List of Policy Options for Source Reduction (oil change intervals, etc) • Education re: used oil impact on stormwater

16. Strategy 3: Promote Highest & Best Use of Used Oil • Encourage blending of used oil, re-refining or use as asphalt flux • Re-refined Oil Use by Fleets Strategy 4: Enhance UOP Visibility • Evaluate effectiveness of existing local & statewide used oil recycling message • Spotlight programs on CIWMB website

17. Strategy 5: Continuously Improve Effectiveness & Efficiency of Program (grant process streamlining)Strategy 6: Seek Opportunities for Public/Private PartnershipsStrategy 7: Promote Program Improvements Thru Transfer of Best Practices (conference)

18. Statewide Education and Outreach (Category 5)

21. Contract Concepts (Category 5) Extended Oil change: examine the feasibility of an outreach campaign as a source reduction promotion. Publication and Education Analysis: identify “best practices” and determine if regional or statewide oil recycling message is recognizable. Blending Used Oil: determine if the blending of used oil back into the crude oil refining process is marketable, environmentally friendly and economical.

22. Statewide Education and Outreach (Category 5) Other Board Activities • Student Assistance (non UOP) • Recycled Product Trade Show

23. Proposal to Increase Revenue Increase Revenue: • Eliminate advances on Block Grants • Verify revenue and exemption claims from oil manufacturers Decrease Expenditure: • Reevaluate the DOF audit contract • Reassess support to: • CalMax/WRAP program • Recycled Product Trade Show • Farm and Ranch grant

24. Proposal to Increase Available Resources for the UOP (Worksheet)

25. Request Board Approval Staff Recommends: Approval of the proposed Allocation and Contract Concepts for FY 2004/05 and direction on the proposals to increase resources for the Fund for FY 2005/06 and beyond and adopt Resolution number 2004-314.