City of Sacramento
Budget and Audit Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01861 12/6/2022 Discussion Item 4.
Sacramento Utility Rate Assistance Program Recommendation File ID: 2022-01861
Location: Citywide
Recommendation: Pass a Motion forwarding to the City Council for consideration the Budget and Audit Committee’s recommended funding option for the SURA Program.
Contact: William O. Busath, Director of Utilities, (916) 808-1434, [email protected]; Chuong (Ryan) Pham, Business Services Manager, (916) 808-8995, [email protected]; Fadi Geagea, Program Manager, (916) 808-4928, [email protected]; Kristy Lai, Administrative Analyst, (916) 808-1403, [email protected], Department of Utilities Presenter: William O. Busath, Director of Utilities, (916) 808-1434, [email protected], Department of Utilities
Attachments:
1-Description/Analysis
2-SURA Options
Description/Analysis
Issue Detail: The Department of Utilities (DOU) manages the Sacramento Utility Rate Assistance Program (SURA), a rate assistance program for City residents who are income-eligible and meet program requirements. SURA is funded, at the direction of City Council, with the Measure U Fund (fund 2401) with a new FY 23 annual budget of $4.8 million. The program provides a discount on the monthly flat fee of Water, Wastewater, Recycling & Solid Waste (RSW), and Storm Drainage (SD) services to eligible customers. Under its current structure, there are no program limits which requires DOU to return to council for budget adjustments if the program participant level increases. Under the current structure, budget adjustments will be required in Fiscal Year (FY) 2023/24 and FY 2024/25 to support the approved RSW rate increases and due to an increase in participants from 8,500 to 9,121.
Currently, there are approximately 895 legacy customers in the SURA Program. City Council requested DOU staff to present sustainable funding options to the Budget and Audit Committee.
File ID: 2022-01861 12/6/2022 Discussion Item 4.
Policy Considerations: Modifications to this program must be approved by City Council.
Economic Impacts: Not applicable.
Environmental Considerations: Not applicable.
Sustainability: Not applicable.
Commission/Committee Action: SURA Program structural changes were presented to the Water Committee, who recommended that proposed changes be brought to the City Council for discussion.
The City Council then recommended this be brought to Budget and Audit Committee for review and recommendation.
Rationale for Recommendation: The SURA Program is currently approved by the City Council to offset rate adjustments for the monthly flat fee of Water, Wastewater, RSW, and Storm Drainage service fees. These discounts equal rate adjustments that have occurred for most participants since 2016 and rate adjustments that have occurred since 2013 for legacy participants. As the program is currently structured, it is projected that by FY 2024/25 the SURA Program budget need will total $5.6M with approximately 9,121 participants. However, the participant level can fluctuate and without a participation cap the budget need can also fluctuate requiring the Department to return to Council for budget adjustments. Per Budget & Audit Committee’s advisement, options presented below have no change to all participant’s current monthly discounts and can provide a sustainable program.
DOU staff recommends the Budget & Audit Committee review the following funding options (Attachment 2) for consideration. Each option shows the anticipated expenses at the current participant levels.
1. Continue the program at its current budget level of $4,780,000. This would require capping the current level of participants at 9,121, however the benefit would need to be reduced by approximately 6% (this option is not included in the attachment).
2. Continue the program at its current level of participation and benefit. This would cap the existing participation and benefit at their current levels and would likely require a budget augmentation of about $300,000 before the end of FY 2023.
3. Continue to fully offset future rate increases and budget current participants by service. This budgeting practice does not allow for additional participants and will require the Department to return to City Council for budget adjustments.
4. Change discount structure for current non-legacy participants to a flat 37%, which equals the average current discount. This allows for a change in the structure without participants losing current discounts. Legacy customers will continue with full current discounts.
File ID: 2022-01861 12/6/2022 Discussion Item 4.
5. Change discount structure for current non-legacy participants to a flat 40%, which equals the average discount once all RSW rate adjustments go into effect. This allows for a change in the structure without participants losing current discounts. Legacy customers will continue with full current discounts.
Option FY 2023 FY 2024 FY 2025
One $4,780,000 $4,780,000 $4,780,000
Two $5,012,151 $5,012,151 $5,012,151
Three $5,012,151 $5,418,576 $5,621,257
Four $4,976,008 $5,179,179 $5,239,174
Five $5,092,777 $5,312,422 $5,372,416
Staff also recommends changing budgeting practices to a 10,000-participant level and return unused funding to the Measure U fund balance at yearend. Anticipated budget requests for FY 2023/24 and FY 2024/25 are shown below for each option.
Option FY 2024 FY 2025
Three Budgeted @ 10,000 Participant Level $6,671,283 $6,920,997 Four Budgeted @ 10,000 Participant Level $6,274,930 $6,347,247 Five Budgeted @ 10,000 Participant Level $6,388,669 $6,500,863 Financial Considerations: Staff will monitor the FY 2023 program, if it is projected to exceed the current available budget a recommendation to augment the program will be made through the FY2022/23 Third Quarter Financial Report.
Local Business Enterprise (LBE): Not applicable.
Current Participants Monthly Rate % Discount Monthly Discount Current Participants Annual Budget Water $35.72 59% 21.22$ 7,887 2,008,345.68$
Wastewater $31.65 29% 9.23$ 3,739 414,131.64$
Solid Waste $48.34 26% 12.73$ 7,972 1,217,802.72$ Storm Drainage $17.25 34% 5.94$ 8,849 630,756.72$ 4,271,036.76$
Legacy Customers Monthly Rate Monthly Discount Current Participants Annual Budget Water $35.72 91% 32.60$ 870 340,344.00$
Wastewater $31.65 53% 16.91$ 525 106,533.00$
Solid Waste $48.34 29% 13.80$ 871 144,237.60$
591,114.60$
FY 2023 Estimated Participant Discounts 4,862,151.36$
FY 2023 Adminstrative Costs 150,000.00
Option #3 for FY23 5,012,151.36$
FY24 & FY25 Solid Waste Rate Increases
Current Participants Rate Increase Percentage Monthly Discount Current Participants Budget Augmentation FY24 Budget Augmentation Request $3.83 3.83$ 366,393.12$ FY25 Budget Augmentation Request $1.91 1.91$ 182,718.24$ 549,111.36$
Legacy Participants
FY24 Budget Augmentation Request $3.83 3.83$ 40,031.16$ FY25 Budget Augmentation Request $1.91 1.91$ 19,963.32$ 59,994.48$
Option #3 includes RSW Rate Increases 5,621,257.20$
Notes:
FY 2023 Approved SURA Budget is $4,770,725.
Staff will monitor the FY 2023 program and request a budget augmentation via the 3rd Quarter Financial Report as needed.
Budget cannot support additional participants without a budget augmentation.
Current Participants Monthly Rate Proposed Monthly Discount Current Participants Annual Budget Water $35.72 $13.22 7,887 1,250,852.96$
Wastewater $31.65 $11.71 3,739 525,426.71$
Solid Waste $48.34 $17.89 7,972 1,711,027.17$
Storm Drainage $17.25 $6.38 8,849 677,744.91$
4,165,051.76$
Legacy Customers Monthly Rate Monthly Discount Current Participants Annual Budget Water 35.72$ 91% 32.60$ 870 340,344.00$
Wastewater 31.65$ 53% 16.91$ 525 176,540.40$
Solid Waste $48.34 29% 13.80$ 871 144,072.00$
660,956.40$
Administrative Costs 150,000.00$
Total Program Costs 4,976,008.16$
Current Participants Rate Increase Percentage Monthly Discount Current Participants Budget Augmentation FY24 Budget Augmentation Request $3.83 1.42$ 135,565.45$ FY25 Budget Augmentation Request $1.91 0.71$ 67,605.75$ 203,171.20$
Legacy Participants
FY24 Budget Augmentation Request $3.83 3.83$ 40,031.16$ FY25 Budget Augmentation Request $1.91 1.91$ 19,963.32$ 59,994.48$
SURA Program Budget 5,239,173.84$
Current Participants Monthly Rate Proposed Monthly Discount Current Participants Annual Budget Water $35.72 $13.22 7,887 1,250,852.96$
Wastewater $31.65 $11.71 3,739 525,426.71$
Solid Waste $54.08 $18.48 7,972 1,767,870.72$
Storm Drainage $17.25 $6.38 8,849 677,744.91$
4,221,895.31$
Legacy Customers Monthly Rate Proposed Monthly Discount Current Participants Annual Budget Water 35.72$ 91% 32.60$ 870 340,344.00$
Wastewater 31.65$ 53% 16.91$ 525 176,540.40$
Solid Waste 54.08 36% 19.54$ 871 203,997.60$ 720,882.00$
Administrative Costs 150,000.00$
Total Program Costs 5,092,777.31$
Current Participants Rate Increase Percentage Monthly Discount Current Participants Budget Augmentation FY24 Budget Augmentation Request $3.83 1.53$ 146,557.25$ FY25 Budget Augmentation Request $1.91 0.76$ 73,087.30$ 219,644.54$
Legacy Participants
FY24 Budget Augmentation Request $3.83 3.83$ 40,031.16$ FY25 Budget Augmentation Request $1.91 1.91$ 19,963.32$ 59,994.48$
SURA Program Budget 5,372,416.33$
Notes for Option 2 & 3
Per B&A Legacy Customers current discounts will not decrease.
Legacy Customers participant level cannot increase.
Storm Drain discounts are the same for all participants.
SURA Funding Options
37%
Option 4
Change Discount Structure for Current Participants and Future Rate Increases to 37% @ Current Participant Level Option 3
Budget at Current Participants by Service and Return to Council for Budget Augmentation if Participants Increase 100% 871
100% 7,972
100% 871
37% 7,972
Option 5
Change Discount Structure for Current Participants and Future Rate Increases to 40% & Budget at Current Participant Level 40%
FY24 & FY25 will require a budget augmentation to support final Solid Waste Increases. 100%
7,972
871
40%