Local water districts used to be classified into six (6) categories, namely: SMALL, AVERAGE, MEDIUM, BIG, LARGE, and VERY LARGE water districts. This was from 1997 to 2011. Classification was based on the Local Water District Manual on Categorization/Re-Categorization which provided a general framework in determining the Organizational Structure, Staffing Pattern and Position Classification for every category of water district. It took into consideration the resources owned and managed by each water district like human resources (personnel), physical resources (fixed assets), and financial resources (revenues, investments). The criteria included size of the resources, financial capability in terms of satisfying operating requirements, revenue generation, and scope/complexity of operations. The establishment of a standard Organizational Structure and Staffing Pattern (OSSP) was based on the size of the LWD as determined largely by the amount of revenues, fixed assets and net income.
In 2011, the Oversight Committee on Local Water Districts composed of the Local Water Utilities Administration (LWUA), Civil Service Commission (CSC), Department of Budget and Management (DBM) and the Philippine Association of Water Districts (PAWD) proposed the revision of the Manual to streamline and rationalize the categorization process.
Among others, the revision included the reduction in the number of categories from six to four in order to clearly distinguish each category from the other.
In that revision, the number of service connections became a significant factor in categorization in line with the water district's key service objective of reaching as many clients as possible.
Water districts from thereon were categorized into four, namely: A, B, C, and D. Categorization was based on their service connections and point rating (please refer to the Revised Manual on Local Water District Categorization for details).
Meanwhile, in terms of credit qualifications, water districts are classified into Creditworthy (CW), Semi-Creditworthy (SCW), Pre-Creditworthy (PCW) and Non-Creditworthy (NCW)