1 FY 2023-24 Budget Process and Priorities
Nancy L. Hom
CFO and AGM Business Services
December 13, 2022
Services of the San Francisco Public Utilities Commission Agenda
1. Overview
2. Budget Process
3. Challenges and context
4. Priorities
5. Focus of this year’s process: Capital Planning
6. Budget policy framework
7. Timeline
2 FY 2023-24 Operating Budget
3 Water
$675M
39.9%
Wastewater
$432M
25.5%
Hetch Hetchy
Water and Power
$304M
18.0%
CleanPowerSF
$280M
16.6%
$1,691 Million FTE: 2,750
859
586
406
53 845 Bureaus
CleanPowerSF
Hetch Hetchy Water
and Power
Wastewater
Water
4 Budget Process
• Fixed, two-y ear budget
Commission adopted FY 2022-23 and 2023-24 biennial operating budget, and FY 2022-23 capital budget in February 2022
• Planning for the budget process began in Spring 2022
Work has focused on 10-year capital plan and capital budget • January 30, 2023: Special meeting
Provide background on capital budgets and 10-year capital plans • February 14, 2023: Regular meeting
FY 2023-24 Capital Budget
10-Year Capital Plan (will include written report)
Midcycle changes to FY2023-24 operating budget
10- Year Financial Plan
Challenges and factors influencing
budget development
• Ongoing drought
• Economic uncertainty, potential recession
• Inflation, cost increases for operating and capital
budget
s. Challenging bid environment for
construction
• Rate study for Water and Wastewater happening
now
, increased scrutiny on rate trajectory
• Capital deliverability, historic underspending of
capi
tal budgets
5 Budget Priorities
We are developing a Balanced 10-Year Capital plan
and FY 23-24 operating and capital budgets that
address the following key agency priorities
• Responsible Management
• Access and Affordability
• Environmental Stewardship
• People and Communities
6 Capital Planning Goals
Goal for this season:
Develop a balanced FY 2023-24 capital budget and a balanced 10-Year Capital Plan that meets agency’s needs, informed by deliverability and ratepayer affordability factors
7 10-Year
Capital Plan
FYE 2023-
2032 Uses
FYE 2023-
2032 Sources
Unfunded
amount
Unfunded
%
Wastewater 6,127 5,152 (975) 15%
Water 2,118 1,908 (210) 10%
Hetch
Hetchy Water 974 974 - -
Hetch
Hetchy Power
611 507 (104) 17%
CleanPowerSF 62 62 - -
Total 9,893 8,603 1,290 13%
Last year’s capital plan was partially unfunded, and only a one-year FY 2022-23 Capital Budget was adopted:
Last year’s 10-Year Plan ($M):
Capital Planning Process
• Spring 2022: “ Capital Planning and Delivery Improvement Program” project kick off
• Phase 1: Discovery and planning (May-J uly 2022)
• Phase 2: Budget development & near-ter m improvements (July-Dec 2022) • August 2022: B udget instructions issued
• Enterprises were instructed to focus on developing capital pr
oposals, focusing on their ability to deliver the programs • September 2022: S teering committee meetings of the Executive Team to review and deliberate the proposals
• Current: B ased on deliverability and affordability factors, now working on the final plans for Commission review in January 2023. • Work continues on improving our Capital Planning, multi-y ear project 8 Budget Policy Framework
• City budget policies and legislation
• Ratepayer Assurance Policy
• Financial and Debt Policies
• Asset Management Policy
• Environmental Justice Policy
• Racial Equity Action Plan
• Racial Justice Resolution
• Technology Policy
9 Calendar
10 When Milestone
Spring 2022 Capital planning process began
August 2022 Budget instructions issued to AGMs
September-
December 2022
Weekly budget steering committee meetings, reviewing and finalizing capital plans
December 13, 2022 Commission update on budget progress and priorities December 14 -
January 20, 2023
Finalize capital plans, develop 10 written report and other Commission materials, develop ordinances
January 23, 2023 Present capital plans to City’s Capital Planning Committee (CPC) January 30, 2023 Special meeting of the Commission: Capital Plan overviews February 14, 2023 Commission Adoption of FY 2023-24 Operating and Capital Budget, 10-Year CIP and 10-Year Financial Plan
February 21, 2023 Submit budget proposal to Mayor’s Office June 1, 2023 Budget proposed to Board of Supervisors
July 1, 2023 Budget final and adopted