1 525 Golden Gate Avenue, 13th Floo
San Francisco, CA 9410
T 415.934.570
F 415.554.187
Date: September 27, 2022
To: Commissioner Anson Moran, President
Commissioner Newsha Ajami, Vice President
Commissioner Sophie Maxwell
Commissioner Tim Paulson
Through: Dennis J. Herrera, General Manager
From: Nancy L. Hom, Chief Financial Officer and AGM Business Services Subject: Final Changes to FY 2022-23 and FY 2023-24 Operating and Capital Budgets since Commission Adoption
This memo provides an overview of the final changes to the San Francisco Public Utilities Commission (SFPUC) FY 2022-23 and FY 2023-24 Operating Budget since Commission Adoption on February 8, 2022. The final budget adoption by the Mayor occurred on July 27, 2022.
After Commission approval, the budget went through both the Mayor’s and Board of Supervisors’ phases of budget review and several changes were made, as described below.
FY 2022-23 and FY 202 3-24 SFPUC Operating Budget Changes Commission Approved Adopted Budget Variance
FY2022-23 FY2023-24 FY2022-23 FY2023-24 FY2022-23 FY2023-24 1,709,896,130 1,755,749,816 1,752,295,050 1,792,731,515 42,398,920 36,981,699 As noted above, the total operating budget adopted by the Commission was $1,709,896,130 for FY 2022-23 and $1,755,749,816 for FY 2023-24. The final Board adopted budget is $1,752,295,050 for FY 2022-23 and $1,792,731,515 for FY 2023-
24.1 The net change from the Commission adopted budget is $42,398,920 for FY 2022-23 and $36,981,699 for FY 2023-24, or approximately 2% more in each year. This is mainly driven by increases in general reserve contributions in the power enterprise as well as labor cost increases, and changes to workorders with other city departments that occurred during Mayor phase.
1 The total budget amount differs from the AAO (Annual Appropriation Ordinance) due to the inclusion here of the costs for the Infrastructure Bureau (FY 2022-23 $100.8M & FY 2023-24 $102.0M). The Infrastructure Bureau is fully recovered from capital projects and is, as such, not represented in the AAO.
2 Summary of SFPUC operating budget changes:
Change driver Note FY 2022-23 FY 2023-24
General Reserve contribution for
Power due to final adopted rates 1 18,624,879 22,312,199 Labor cost changes related to final
negotiated MOUs 2 7,653,968 2,346,266
Changes to workorders and
COWCAP 3 6,975,195 11,055,865
Technical change in infrastructure
budget to better reflect fringe costs for
personnel in budget
4 6,732,947 7,124,069
Changes to DPW workorders and
staffing in Wastewater 5 3,366,463 3,399,729 Purchase of power and natural gas &
steam 6 2,697,099 (3,220,189)
Board cuts 7 (4,142,104) (4,184,264)
Addbacks and other programmatic
project changes 8 2,210,594 1,540,000
All other changes 9 992,844 140,265
Total 42,398,920 36,981,699
Notes:
1. I ncreases to the general reserve contribution in Power as a result of changes to power rates as adopted by the Commission in May 2022.
2. Labor cost increases due to MOUs agreed between the unions and the City after the budget went to the Commission, as well as changes in health and pension costs to reflect updated cost assumptions. Final negotiated raises were 5.25% on July 1, 2022, 2.5% on July 1, 2023 and 2.25% on January 1, 2024 vs. approximately 3% assumed in each year in the Commission adopted budget.
3. Workorder increases made during Mayor phase including Department of Technology, Central Shops, Department of Human Resources and the Controller’s Office, including a COWCAP (County Wide Cost Allocation Plan) expense of $4.5M which had not been assumed in the Commission adopted budget
4. A technical change in Infrastructure’s budget to correctly reflect the full cost of fringe benefits in the budget for Infrastructure staff. These costs are billed on an actual basis to capital projects.
5. I ncreases to DPW workorders of $1.7M and the transfer of 11 DPW staff to the Wastewater enterprise, as part of the final agreement negotiated with the Mayor’s Office and DPW, to end the DPW sewer spot repair workorder that was included in the Commission adopted budget. This agreement will save the SFPUC significant costs in the long run.
6. Changes to purchase of power and natural gas & steam to reflect updated cost estimates.
7. Board of Supervisor budgetary cuts, which included 14 position cuts totaling approximately $2.6M in each year and $1.5M in non-labor cuts.
8. Board of Supervisors one-time budgetary addbacks funded from the above cuts, included youth employment, racial equity initiatives and the Customer Affordability and Arrearage Management Pilot Program. A detailed list is included in the table below. Any ongoing funds needed for these add back items will be considered in the next budget process.
3 9. Other changes which included updated debt and revenue funded capital assumptions and other minor technical changes.
FY 2022-23 S FPUC Capital Budget Changes
The Water Enterprise capital budget for FY 2022-23 increased by $10M (and a further $10M is planned to be added to FY 2023-24’s capital budget) to replace $20M in funding temporarily borrowed from the main replacement project which was used for the emergency declaration funding associated with the Stern Grove restoration project.
List of Board of Supervisors Budget Addbacks
Addback Name FY 2022-23 FY 2023-24
Youth Employment 500,000 500,000 Racial Equity Outreach and Development 350,000 350,000 Expansion of Customer Affordability and Arrearage
Management Pilot Program 300,000 300,000 Health clinic on Onondaga 140,594 - Southeast Community Center Programming 155,000 120,000 Laundromat Conservation Pilot 350,000 - Drought Outreach 115,000 - High school to career pipeline 125,000 125,000 Culturally competent community outreach regarding
affordability 100,000 145,000
2,135,594 1,540,000