we hire local people. local people spend their money at our businesses and those local people will spend their money as well. i hope people shop locally. [ ♪♪♪ ] >> i'd like to call the special meeting of the san francisco public utilities commission to order. please call the roll. [ roll call ]. >> clerk: you have a quorum. due to ongoing covid public health emergency issued by the san francisco public health, any

issues concerning social distancing and lifting this on teleconference. this is being televised and shown on stg tv. i would like to thank staff for their assistance during this meeting. if you would like to make comments, call 415-655-0001, meeting i.d. 2492 717 2413. please be respectful and address your comments to the commission

and not staff. >> we are on the unceded lands of the mowekwa. [land acknowledgement].

>> chair: members, thinking about the way we have conducted budget hearings in the past and also dealing with something that's been on my mind for a while which is making sure that there was a meaningful role of the vice president in our proceedings. i've asked vice president ajami to chair these budget meetings. without further ado, i hand the virtual gavel to you, newsha. >> thanks, anson, i appreciate that. i am looking forward to this because my first budget hearing. i joined a year ago and i hope to contribute. madam secretary, please read the

first item. >> clerk: the first item is public hearing and discussion of the proposed budget priorities, administrative code section 3.3(b), staff presentation and overview. >> thank you. good morning, commissioners. happy new year. i hope 2022 is off to a happy and healthy start with you and your families. it is my privilege to present you with our proposed budget this morning. commissioner ajami, similar to you, this is the first time i had the first time to do so for the san francisco public utilities commission. first, i want to briefly go over our agenda for today. there will be a quick overview of the allegation and the budget priorities that guide our approach to this budget cycle.

there is also the opportunity for the public to hear the budget and weigh in on our priorities. then i'll turn it over to the budget and finance team to go in more depth [indiscernible] then the 10-year capital plan and the 10-year financial plan. later in the morning we'll hear budget presentations by each of the agency's bureaus. what do we do? in the simplest terms, we provide services that people need. we provide drinking water to people in the bay area. collect and clean wastewater. we generate clean power and electricity for 385,000 customers in san francisco, including critical services like san francisco national airport, general hospital, port, muni,

and many others. who are we? we're a diverse team of 220 people. we are a cross section of the state itself, urban, suburban, and rural. people from all walks of life, serving customers across the bay area. our approach to this budget cycle comes amid economic uncertainty as our region, state, and countries around the world try to right their economies in a global pandemic. looming is the drought. we have to see how the rest of the winter goes. we're not out of the drought again. we face an evolving market. we face a demographic shift with an aging workforce bringing a lot of retirements. a phenomenon referred to as the

silver tsunami. there are a relative number of high numbers of employees resigning from their spots. this incorporates our commitment to continue to implement are our racial equity action plan. we'll do so while making historic investments in underserved communities like opening the new southeast community center this year and ensuring public confidence in all of the work we do. i would also note that we face growing regulatory requirements, higher expectation s expectatio customers. a need to make our systems resilient to climate change and to maintain critical infrastructure. given that context, we have identified three overarching priorities, responsible

management, access and affordability, and supporting people in communities. i'm now going to provide you some details on each one of those. responsible management means being responsible and transparent in all that we do, that includes not only financial sustainability but environmental stewardship as well. we have a track record of quality and reliability. that's our most important job. that will continue. when you turn on your faucet, clean water will come out, your toilet will flush, your lights will come on. it also means living up to the standards of being a public utility, embodying the highest principles, ensuring public confidence in all of the work we do. when we fall short like the recent is audit on how we handle our mentorship program, means handle a program and implement it. that's implementing all of the

auditor's recommendations. acquiring an electricity distribution network is an example. doing so won't be easy, but it will be worth it. we can provide electricity that is cost-effective, cleaner, safer, and more reliable. we are beholden to customers. we can provide better rates for customers who need it. this can be money used to keep rates sustainable and upgrading systems to be smarter, safer, and more reliable. the cost of acquiring pg& e's equipment will not take any money away from other city priorities. taking pg&e logical allow us to

deliver public projects, hospital and research facilities, transit and rec centers faster and more affordable. these are projects pg&e has been holding hostage, refuse be them to be connected to the grid unless expensive equipment is added. acquisition will help us meet our climate change goals. we can do things like neighborhood charging stations for electric vehicles. most san franciscans are renters and don't have a garage. they're reluctant to switch to an electric vehicle because they don't know where to charge it. neighborhood charging stations would make this easier. another important aspect of responsible management is updating the way we deliver capital projects. this is delivering cost savings by aligning long-term escape

budgets with project delivery and spending. in a nutshell, we don't want financing costs for infrastructure costs before we're ready to spend that money. we're desiring capital planning and long-term savings and more affordable rates to our rate payers. we're not slowing down any projects, but we are basing this on affordable and delivery capacity. you'll hear more details about this a little bit later when we delve into the capital plan and this factors into our next budget activity, access and affordability. our approach to capital projects is designed to result in a more efficient use of our capital funding, delivering long-term savings and rates for our customers. in the near term, we're taking a number of steps to ensure

customers have access to our services and those remain affordable amidst all of this economic uncertainty. first, there will be no retail rate for water and wastewater in fiscal year 2022-23. additionally, we plan to come to you next month with two proposals. to extend the moratorium on shutoffs and collections which is scheduled to end march 2022. second, recommend several changes to the customer assistance program expanding who is eligible, making it easier to apply and adjust the discount percentages for water and wastewater charges to a standard 25%. additionally, with we are minimizing rate costs to rate wayer payers.

one of the most visible and meaningful ways we change is the economic stimulus we'll be providing. this budget is a local economic jump start. it delivers on jobs, infrastructure, and community benefits. we'll be investing billions through our capital program supporting local labor and business. we're also continuing to do the important work on racial equity, both internally and with those communities that we work with. internally, we are implementing our racial equity action plan and we have a racial equity acting group in each interprize and bureau. our plan put more into the budget development process which my colleagues will discuss. beyond that, we're looking forward to the opening of our southeast community center which will feature a child care

center, non-profit work space, community rooms, and provide a wide range of workforce development and educational opportunities for southeast residents of all ages. internally we're emphasizing retention and recruiting staff through a number of ways. those include converting multiple temporary positions to permanent ones, bolstering our human resources team. we're also investing in our customers to modernize the customer experience windows. that includes additional self-service platforms, cloud-based computer contact system and other improvements. i'm now going to hand the presentation over to charles perl, our deputy c.f.o. who will go into more details of different aspects of the budget. i'll be here for your questions and comments as they arise. thank you for the opportunity to present to you today. charles.

>> clerk: charles, you may be muted. >> sorry. thank you, gentlemen -- >> can i just -- i think the idea was to take public comment at this point. >> we'll take public comment at the conclusion of item 3. >> okay, apologizes. >> thanks, general manager. hello, commissioners. charles perl, deputy c.f.o. welcome to our budget hearing process. our budget director and i are here to provide you with an overview of the commission's budget actions scheduled for february as well as the schedule for what will be between 12 and 16 hours of public hearings during the month of january.

laura will lead with providing details on our proposed operating budget in the next two years. then i'll cover the capital budget, our financial plan pretty much in that order. before jumping into the details, i would like to thank laura and the entire team as well as everyone at the sfpuc who has developed our complex budget on the operating and capital sides. i would like to thank larry sander for providing his guidance during this effort. commissioners, you play a vital role in our budget development process. your role in providing important input and feedback as a critical step as the proposed agency budget is presented in this

public forum, albeit virtual this cycle. our scheduled 12 to 16 hours of public hearings that i mentioned i think is more than any other city department in terms of providing a look into service delivery through the budget development and review lens. it is of course our goal to be as transparent as possible as the budget is under development and review during this month and into the february approval. we very much look forward to receiving your feedback and input from you and the public. as i noted here, we have a meeting scheduled in february for a review and approval of our budget that will be our operating budgets for two years, for the next year 2023 and 2024.

we will provide one year of capital budget, but next year fiscal 2023 which will include a reference to the capital financing for that year as a subset of that capital budget is finance and there will be a separate piece of legislation that needs to go to the board for that. we have the 10-year capital plans from next year through fiscal 2032. i can't believe we're planning into the 2030s already. we will go through modifications

in both of these steps with a final approval of the board in june and then it will be signed after that. our new fiscal year begins july 1. commissioners, we will provide a summary to you once the budget is final describing any changes that occur to our budget after your february approval. these changes include such things as changes to labor agreement, assumptions, infringe benefit costs as well as budget cuts by the board of supervisors and analysts. as we look ahead over the next month or so, here is our budget hearing schedule and i'll quickly walk you through this table. today we're covering this overview and as general manager herrera mentioned, our bureau budget presentations will follow later this morning. our infrastructure bureau

presented by allen joe hansen. and the human services proposals will be presented by mr. herrera. next week we have a presentation by steve ritchie for the water enterprise as well as the hetchy water budget and then wastewater by greg norby. on the 20th, the week after, we have all things power, including clean power. we do have a fourth meeting scheduled if we need it if any run long, on january 27, we have more than enough time to go through the details if needed. we won't hold that meeting if we take everything on the 20th, but

it's there as an f.y.i. and approval on the 28th. so at this time i would like to, first of all, just please as a reminder please ask questions as we walk through this. we will of course try to answer your questions as quickly as we can. we plan to create a questions document that will be updated each meeting and we will provide that as an additional document to not only you but the public as well. we will include this q&a tracker as part of the budget approval in february as well. i'm happy to take any questions on context at this time, and if not i'm happy to pass the presentation back to laura to begin reviewing of our operating budget. i'll pause here.

>> good morning, everybody. hello, commissioners. i'm laura busch, the p.c. budget director. it is interesting hearing my colleagues say this is their first time. i joined p.c. two years ago. so this is my first regular normal two-year budget presentation. i will be walking you through the next few slides about the operating budget. today i'll provide an overview of the agency-wide budget story. let's start with some high-level depictions of the overall budget. here you see a pie shot, an overview of the sfpuc's enterprise. the total budget for 2022-23 is $1.6 and this represents a 5% increase over the current year.

the proportions for each enterprise remain largery unchanged from the current budget. water and hetchy water and then clean power as well. the capital program in the orange segment and capital uses in the medium blue which is revenue fund capital comprise the largest portion of our operating budget, more than a third and, in fact, is the biggest driver of our year-over-year budget changes and will be referred to many times. our remainder of the circle includes personnel,

non-personnel costs including materials, equipment, contracts, energy which is the purchase of power and distribution. and programmatic project which includes facilities and maintenance contracts. so on this slide we describe our work to date on the budget. we started planning this budget almost a year ago and so much work has gone into what you will be seeing here today and over the next months. this is truly an agency-wide effort and i would like to thank everyone for the help putting this together. some key highlights with the finalization of the charter, baseline reviews in june, budget instructions issued in august, steering committee meetings throughout the fall culminating

in the final budget in december. here we show our overall approach to the operating and capital budget. these are parallel but obviously connected processes. on the operating side, our first step was to see what we had in the budget. we had a baseline so to identify what we needed and service levels to identify where investments may be needed. over the summer we made an initial revenue projection which allowed us to decide what funding may or may not be available. this allowed us to step targets and limit growth from the outset. lastly, as the general manager mentioned, we really, really wanted to formalize racial equity considerations as part of the budget process this year and

we included a equity review as part of the budget process to identify resources. racial equity was one of the biggest priorities of investment in the last year. we want to meet our commitments in the racial equity action plan and the resolution. so this cycle, in collaboration with partners from the department, a tool was developed from the budget instructions. this tool provides departments an analysis of how a budget request can advance the commitment to the racial equity action plan. the impact was positive. we noticed that folks in the agency paid more attention to this in their budget than in the previous cycles. some of the new investments include workforce development and analytics, investments in

the southeast community center and you'll hear about in each of the presentations. this budget tool was a pile up and we have some lessons learned from the next cycle, but we feel this was important to embed racial equity into our budget. on the capital side, the baseline review for capital focused on detailing remaining balances available on each and every budget and system. and we wanted people to know how much was available to them. as we've covered, capital is sfpuc's biggest cost driver and it was important to make sure the capital plan was affordable to rate payers as well as deliverable. our overall goal in capital planning was to constrain capital spending on affordability and deliverability, balancing our investment needs. much more to come later in this

presentation on the capital development process as it resulted in some big changes to our approach which we hope will lead to a much better plan. next we will look at policies that guided our process throughout. most of the policies are based on the sfpuc's goal for financial sustainability. we've gone through this budget process many times before so there was no need to reinvent the wheel, but we're trying to improve upon our process such as the racial equity and action tool i mentioned earlier.

just like in previous years we established a budget charter. we ensured the budget proposal is in the rates, the rate payer insurance policy, our capital reserve policy and the debt insurance policy. we wanted to make the most existing use of this as possible so we prioritized efficiencies and prioritized new costs before requesting new ones. this resulted in 60 substitute tutions and as we went through the proposals, we cut this by 20%, prioritizing the most critical needs of the agency investment. we also held many steering committee meetings of the executive team. the steering team was formed with the team to discuss and deliberate. we held eight steering meetings

throughout the fall and we also formed the capital sub-committee made up of key members of the team which focused on the capital plan consideration and helping us to keep on track with our objectives of affordability and accessibility for capital planning. we also held mayor's office meetings on budget priorities and we had vehicle requests vetted by fleet management effective. okay. numbers time. let's get into the details of the budget and what is driving the change. here is a slide showing the year-over-year change. it is going to $1.5 in fy 2022, the current year, to $1.62

billion. this slide shows the line item in the budget growth. this is $120 million of growth over the two years or around 8% total. these changes include labor and benefit, and of course the new proposals we're making. on the next slide i want to talk about these drivers and their impacts on the budget. so what's really driving this $128 million 8% in our budget? we tried to represent this graphically. this chart is representing what's behind the changes, both increasing and decreasing in our budget. the largest, longest bars are the biggest changes. the top two drivers are debt service which funds our capital

program and power purchase driven by energy demand, cost changes and the cost associated with delivering power. the next biggest largest driver of change which is to the revenue is revenue-funded capital which is decreasing. taken together these three items, debt, revenue funded capital, and purchase of power. of the 8% increase in our budget, 6% is driven by capital and power purchase. we assume the new proposals make up most of the remaining changes. labor is assumed to grow by 3% in each year, consistent with the mayor's office projection. this won't be finalized until the labor conclusions of talks in may.

we will go into much more details of them in each of the bureaus in the presentations to come. so i really wanted to explain how capital is having an impact on our budget changes. as i mentioned, capital is our biggest cost driver. debt and revenue fund which are the sources for the capital program make up around 38% of our operating uses, more than a third. debt service cost is the biggest driver of budgetary change. this is due to prior debt issuance to fund capital projects. this is the debt service coming due and that has funded and continues to fund our capital investments. revenue funded capital, however,

is decreasing in this project. the reason of this is we're making much more efficient use of the funds we already have appropriated. we are able to achieve these savings which called out existing differences. we're not cutting projects. we're using our funds efficiently. the project spending will continue at prior year levels as agency focuses on tying appropriation to project deliverability. shifting gears to position changes. as you know, a two-year budget is an opportunity for us to reassess our position needs, to adjust the levels of

[indiscernible] -- so we first looked to repurposing vacant positions, to changing operational needs, as well as to align job duties with actually classifications. we made 60 substitutions that we had. we are requesting new positions. we are requesting a net 57 new f.p.e. these are covering several key areas, addressing staffing shortages, shoring up construction capacity, strengthening our fiber security, g.i.s. and data management, modernizing customer service, adding staff to ensure we meet regulatory requirements, as well as adding permanent

staff to convert temporary staff to p.c.s. positions and ensuring they are filled with permanent staff which will help with retention and recruitment. >> i have one quick question if i could to interrupt. >> yes. >> are any of these readjusting of the positions or upgrading or taking an opportunity to take a vacancy and redefine it or whatever specifically the process is. are you doing this at all even in conjunction with -- although i know that collective bargaining is coming up later this year, are you taking into consideration the bargaining units or the labor representatives that represent the personnel mostly on the internal staff? in a short way, are they being

engaged at all in this or is this being done internally with current staff? >> that's a great question. charles, would you be able to help me out here? >> yes. commissioner, yes. i think if i heard you correctly, are we repurposing vacant positions. as laura mentioned, we have 16 vacant positions being repurposed in this two-year budget to different classifications. some of those might be upgrades, some downgrades, some lateral changes. these changes will be -- i believe the information is in your packet, but we can provide more details around this if you like. and your question around are

the -- regarding the review of those changes, our h.r.s. division is reviewing all of those changes to make sure they are consistent from a city-wide perspective in terms of proposed substitutions as they're called. >> i know you have these diligent teams putting together the budget today and the next of the month. i wondered if the executive team expanded any labor representation with the unions. it sounds like the answer is no. >> yes. again, our h.r.s. team is reviewing the changes directly and ultimately that will be provided to the labor part of the budget. eventually this will go to the labor unions to see what that looks like. >> and the board supervisors

will be able to have a position? all right. got it. thank you. >> you're welcome. >> thanks, charles. here are the changes in terms of the big-picture numbers of how many staff we have at p.u.c. we're adding 57 net new positions over two years, representing a 51% increase. two-thirds of them are off-budget, project-funded positions. we've tried to be as efficient as possible with our resources. this net number includes some reductions including a reduction in the salary dollars, as some of our new positions will move into permanent roles. and our budget attrition will off that cost.

in fq 2023-24 we will have those positions. here are the position changes broken out by position. quickly i'll go through this top to bottom. in water the main drivers are to meet regulatory requirements and ensuring we can manage our facilities. in wastewater the construction section. and empower them to address staffing shortages and in business services, positions are for customer services modernization, cybersecurity and our data migration. more explanations will follow in the bureau and following presentations and full details will be provided in the binders

as well. lastly, i wanted to introduce the new proposal. the new proposal totals $12.4 million in 2022-23 and it will be a 1% increase annually. a portion of these proposals are a one-time cost, such as equipment where we only have to spend it once and not in the following years. a portion of ongoing is staff because we have to pay them year after year. as i mentioned, these new amounts include the cost of the

substitutions that we're making. as the general manager talked about in his presentation, the key themes are responsible management, access and affordability, and reaching communities. we are strengthening cybersecurity, bolstering our construction inspection capacity, and maximizing the cost increases. in the presentations to come this afternoon and in the coming weeks will provide more information on these new investments. at this point, i would hike to pause to see if anyone has any questions. >> yeah, i have a question and a comment. the southeast facility, while it is located in the southeast, i am it will benefit the city by

its programming and also benefit the p.u.c. by its programming. is that assumption correct? >> that is correct. it is in the southeast, but it is a tremendous project. we are going to be focusing on the community broadly. this will be an asset to the local community and the city more generally and as a vehicle for the p.u.c. as an agency to be an advocate for what it is we do. that is going to be a priority as we start to operationalize.

>> maybe even a water college. >> thank you for the suggestion. >> i have a quick question. i was wondering, laura, if you can go to slide 21 and i have a question if this is changing in this budget period. basically the $55 million is an increase over the debt service. is that right? >> yeah. over the two years, $55 million more in debt service that we're paying from our operating budget. that is principal and interest on the debt we previously issued

to fund our capital project. >> okay. and the revenue-funded capital which is on the left side of your chart, basically that's the amount you have spent or we are going to spend in the coming two years from our revenues? >> so this is showing you that the -- this is the drivers of the budgetary increase, a total of $120 million. if you add up all these positives and negatives, it gets to $120 million. this tells you there is a saving in revenue capital. it is offsetting that $120 million increase. our revenue capital is decreasing in this budget because we're using a more efficient way of using our

funds. we were able to identify funds we already appropriated and making sure there was a spending plan in place before requesting new money. we're asking for less revenue because we have these already appropriated. >> if you could, chair ajami, this is a short-term reduction. we fully anticipate that once the prior appropriation, we almost $2 billion, with a b, of capital appropriations that haven't been used yet and we're prioritizing the use of our existing appropriations specifically in 2023 so that the appropriation or the ask for new budget dollars is reduced so the project managers and h.a.m.

teams can focus on the existing budget. as we focus on that, this number will go back up and in subsequent budgets we'll be increasing the spending back to sort of the deliverable levels back again. >> one last thing, charles, one meeting you had mentioned this, but i would be interested to see this detailed debt service, how much interest. it would be useful to look at it and have a time increase on that. >> sure. would you like that as part of this conversation? we can provide that as a separate piece of information.

>> that would be great. i know you have a lot to put together. >> it's a fairly easy table. just to be clear, water, power, sewer, it will be three sets of information. >> absolutely. one last question i have on slide 25 on the power side, does that position change, that 16, is that because of all the exports that's going to go into acquiring pg&e assets or is it related to other things? >> it's part of it, commissioner. it's a small part of it. the bulk is addressing staffing shortages and temporary to

permanent conversions. i don't have the breakout in front of me. it's certainly going to be in your packet for the presentation and we can provide that information separately about what each one of these positions is related to. there is at least one position in there relating to the pg&e project. >> thank you so much. those are my questions. any other questions? go ahead. >> i was wondering if our debt service is consistent with other public utilities in the industry. is this consistent with what others in the industry would do? >> yes, supervisor. we have a very robust capital financing program. because our capital projects have grown over the one years, we focus a lot on and have been

successful with securing low-cost loans. a typical utility like the sfpuc might issue revenue bonds, but again because of the water system improvements and sewer system improvements, we have large capital projects that span multiple years. we well understood we needed to focus on revenue bonds which is the baseline but also focus on where we can lower those interest rates and we've been able to secure especially in the wastewater program, the low-cost loans from the federal government as well as the state-funded loans, which are 1.5% interest rates versus 3 to 4% bonds. ultimately to answer your question, yes. our focus is to expand low-cost financing as much as we can

where those opportunities come up. >> why do you think it's so prevalent in the wastewater and not the regular water. >> for low-cost loans? >> yes. >> well, there have been a lot of -- the e.p.a. has developed through their financing program a fairly robust lending opportunity for agencies, jurisdictions like ours to fix the sewer systems. and its focus is to make sure the sewer systems are secure, there is no leakage, those effluents are treated properly and taken and disposed properly from a public health perspective. that's really been the focus. there are opportunities in the drinking water space for the

water enterprise and we took advantage of that through the recycled water going in at the oceanside plant. that's one example for water. we will be exploring that more for the mountain tunnel project. there are low-cost loans to support that project. we are taking advantage of it and will take more advantage on the wastewater side because those needs are more immediate and large. >> thank you. >> sure. >> so i'm assuming, looking at my package, we still have more slides to go. >> yes. thank you, laura, for the

overview of the operating budget. we're shifting the overview to our capital plan and budget. we'll start with the basics here. what is a capital plan? first and foremost, a capital plan is a comprehensive forecast of capital investment which is updated annually. we do this for your review, the commission's review and approval, every year as information changes and we make progress on our project and new needs are identified, that capital plan is revised every year. our capital plan plugs into the city-wide capital plan done every two years. it is sort of on a biannual cycle. overall, our story plugs into the city-wide story which is published from a city-wide

perspective. the capital plan is organized by enterprise as well as each enterprise at a high-level basis just to make sense of a story we've broken these down into subcategories. each agent will provide those to you. there is a lot of information at the project level. individual data sheets have been provided describing each project's scope, schedule, and cost. the capital investments not only in the 10-year focus, which is the focus of the plan as being what we pay most attention to at least at this stage, but we identify what are the needs beyond the 10 years. we know that this is a snapshot and what is happening after that. the information gives you a

sense of what is following the 10-year review. we started with a renewed focus on existing project appropriation, as laura mentioned. we always do this, but particularly in this cycle we wanted to make sure because we have $2 billion of unspent capital dollars. we wanted to make sure we were moving those dollars around and deappropriating and reappropriaing these funds. we also have a goal of constraining the overall capital plan. we only have so many contracting

resources in infrastructure. we don't want to appropriate more than we can actually achieve each year. a capital sub-committee was formed and met to not only review strategy, but also the submissions to bring consistency to the process. and the infrastructure team delivered the deliverability of the contracts. how many people are available to get the project done as a clear appropriation of metric need. despite these goals, we came to the shared realization that the capital plan needs more work than we were able to achieve this cycle alone. we didn't want to cut the effort short. what we did is we forged a new path and wanted to share it with

you today. one of the priorities noted by the supervisor herres era. this will deliver capital projects for a timeline in which they were budgeted. we of course had the priorities of priority and project viability from expanding scope, new infrastructure needs being identified and just basic run-of-the-mill inflation. those three things came up against these objectives of pressing for affordability. we had is the need of cost being identified. the question becomes how did we balance the capital plan. in short, we didn't balance it.

over the next 10 years, the project spending in the proposal group grew 9% for the reasons just mentioned. on the funding side, the funding sources -- again, a capital plan is uses in terms of project spending and sources in terms of how are you going to pay it. so on the funding side, the funding resources were tied to budget targets established at the outset of this prospect. we wanted to tie this effort to rate payer affordability as well as meeting our coverage ratios around debt and reserves. capital planning sources tie back to the rates assumed in our financial plan which i'll share with you in a bit. as a result of this, project expenditures are greater than the resources and a proportion

of this is called unfunded. there is an infrastructure planning perspective and having that on our horizoned, but we have not yet identified a funding source for them. having an unfunded portion of the agency plan, while this is new for us, this is a fairly common thing. [ please stand by ]

>> this effort will conclude with a fiscal 24 capital budget for your consideration one year from now.

so we will roll out capital review process that will begin shortly and go for the next few months and end with something around this time next year to propose to you the fiscal 24 appropriation. our intent is to have a much more balanced capital plan that ties with available information resources in terms of project delivery. >> question? >> an i'm sorry, i was off for a while. i had a pg&e outage and must have been hearing you talk about pg&e too much. but when you talk about ton funded portions and the different parts of the capital, and i appreciate the overview here. and did you send out or will we get details somehow? i don't know what what happened or how important those things

are. and the details of the capital plan. and the capital van. and to go through that more. and as the fyi to give you a sense, the unfunded piece ranges from 10-15% of the overall capital plan depending on the enterprise. >> i guess when we start looking at that, could you also come back and tell us, i know that you have said we have decided not to do a rate increase for the next year. but if there is a 6% rate increase, will that make a difference? >> sure. i can provide that to you.

with the total prove and how it is divided between the enterprise on that and it would be useful to have that. do we have that? >> that is the to split that out by enterprise and within each

enterprise, the dollars there and how they get spent. that is a pie chart of how we spend the revenue. >> yep, we can provide that. there a natural pause, any other questions, colleagues? >> next slide, please. and to go into the numbers, this is the capital plan for the next 10 years, commissioners. this graphic shows our plan again from next year fiscal 2023 through fiscal 32 and that total is $9.9 billion. and to the question around what was funded and what is unfunded, this is the entire capital plan. and this includes the piece and this is everything. this is everything on the spending side that the a.g.m. and project managers have requested.

there will be waste water being the largest component of the overall capital 10-year story at about 62% of our projected needs and water at about 21%. and hetch hetchy the water and power at 16% of our picture. and clean power does have a small capital plan, but that is also included here. commissioners, this slide was updated and apologize for that error, but what you see here is the correct version. this is a 10-year amounts and by enterprise. and what we are doing is comparing this 10-year picture of fiscal 23 and 32 that you see in the middle as being proposed to what was in the last cycle

and there is a proposal to the increased needs in the waste water r&r program. and also to note, the clean power reduction, albeit a large percent s a relative small dollar amount. that represents a change assumption in the later years of that plan. and related to a generation and related to project buyout and to provide more details on what is going on in a bit. and maintaining our commitment to local power generation building over time as well as customer programs for clean power. and the agms will provide full

details as we go through the three enterprise budgets. >> shifting from the capital plan to the fiscal 23 and shows fiscal 21 approved capital budget, and the current year which is the middle column at and you will get details in on what is incorporated and in the

waste water treatment and collection specifically.

to appropriate many of the needs already for the year and the goal for fiscal 23 is to spend down that already approved amount. hetch hetchy water and power is at 100 -- i'm sorry, if i misspoke for water. hetch hetchy water and power is at 181.1 million and is also reflecting an increased spending in the new distribution infrastructure here in san francisco and that is mainly where much of that is going. we have also up country

infrastructure needs as well as being a big piece of that $181 million request. and then clean power is capital focus and continues in terms of developing local generation and customer programs again over the longer term. to close out the capital plan overview, i wanted to leave you with this graphic which is an acknowledgment that this is a 10-year slice of time. we have existing open projects with approved appropriation and that is noted in the gray or a slight blue to the left of these three bars. the top bar is waste water. the middle one is water and hetch hetchy power and in terms of the colors, the piece to the left and the gray area is what's

already been appropriated. the middle piece is in the 10-year plan before you during this cycle. and then to the right is the green shading is what is projected at least as of now after the 10-year time frame. and again, this is our attempt at saying current open projects, here are the dollars that are currently on the table. some of it has already been appropriated. so be clear this, whole picture that you see here, commissioners, is about a $20 billion story. so about $5 billion of the $7 billion has been spent and about

$2 billion or so has not been spent. that is, as i have mentioned previously, that is our intent to try and focus the agency on using its already existing appropriation first and before and that is what is in the box for next year for each enterprise. and the green represents what is in the future. and commissioner, as we have talked a little bit about this capital planning re-imagining, we will obviously report back to you on how this goes. i would envision that some of the salmon colored spending would be moved into the future. my sense is that in terms of the re-imagining idea, you will raise rates and over a longer

period. and some of the dollars that are currently in our current capital plan for the 10 years would be moved into the future. and just a general sense of how to going over the next month and something we will be working on. and with that, i will pause on the end of the capital plan and budget overview. i am happy to answer any questions related to capital at this time and then i will spend a few more slides related to the financial plan and then our overview is done. >> thank you. any questions, colleagues? okay. i guess you are ready for the next step. >> yep, great. so the last area i wanted to

share with you today is the overview of the long range financial planning effort that is used to, of course, guide our operating and capital budget planning as well as important decision making. but i will start with the basics. what is our 10-year financial plan? in short, our financial plan, our 10-year financial plan provides a view of projected rate changes needed to generate the financial planning and goals. and i will also review the assumptions that went into the long-range projections of revenues and expenditures during the 10-year time frame.

so as noticed here, the financial plan is required by the city charter. and we review and for your review and approval every year as information changes. it shows the sources and uses and trends of financial metrics. it includes our proposed operating and capital budgets that we will be sharing with you over this month. and just to be clear, our financial planning and our financial planning assumptions for the budget years have incorporated everything that you have been hearing in terms of operating and capitol budget spending and beyond as we speak of the capital plan. and i did also demonstrate compliance with the sfpuc policy. as we're projecting future rates, that we're projecting

sufficient coverage in terms of debt service, a fund balance, etc. to make sure we are prudent with our financial management. next slide. so let's begin this review with the key assumptions that underline the development of the financial plan. in our revenue projections, we begin with sales volumes. so sales volumes, of course, are a key component to our revenues. you hear a lot about rates. but ultimately just as a reminder, it's rates times sales volumes which gives us our revenues. and this budget cycle, there are several external forces that are at play that comes with the projections of our sales volumes. the first driver is the drought.

and given the commission's actions on november 23 where water, water shortage emergency was declared and the spfuc called for customers to conserve water, we are projecting drought conditions through the financial plans to be through fiscal 24. included in our modelling is the assumption that customers will rise to the request and help the sfpuc meet the overall water concentration targets and that a retail drug surcharge will be implemented in april of this year. and will remain in place through the budget years of fiscal 23 and 24. and these dark conditions and assumptions impact our water and waste water sales volumes as you can imagine as well as hetch hetchy power generation power assumptions and hetchy power wholesale. drought impacts all three of the enterprises in terms of sales

and sometimes expense as well. the second driver of our sales volumes are assumptions on economic recovery from the covid pandemic. effects of that were felt fairly significantly and involve drops to the commercial sector, sales volumes in all three enterprises. water, power, sewer, and clean power. our modelling assumptions on economic recovery and sales volume projections are informed by information and research shared by the city's economists. and the assumptions on recovery in the commercial sector incorporate a return to pre-pandemic commercial sales activity and sales volumes resulting in utility sales recovery to just below our sales volumes by the end of fiscal 24. and a slower recovery to

pre-pandemic normal sales and utility sales for tourist-related commercial activities. like power sales to sfo, as well as the convention center. so we've looked at this really customer by customer to get a sense of when do we have a sense that their economic activities will return in the order to inform our sales volume estimates. i will go through these details with you in a minute. i am just painting the picture for you. along the same lines of economic recovery and going a bit further into economic growth and expansion, hetch hetchy power sales volume growth is driven by growth in new customers, particularly large mix micsed use redevelopment projects that are understoodway and planned -- which are underway and planned. which includes power grid growth assumptions. for clean power we have assumed a half percent annual average

load growth tied with existing trends. on the expense side of projections we have included the fiscal 23-24 operating base budgets, of course, as well as the new proposals that laura reviewed and you will hear more about throughout the month. and we generally assume these expenses grow at the rate of longer term inflation which ranges between two and three and a half to 4 percent depending on the type of expense. for capital related expenditures, we have revenue funded and debt funded capital expenditures which are the largest drivers of our growth as laura mentioned over the not only budget years but the 10-year picture. with debt service assumptions, provides 85% of the capital needs and we have a policy that

steers at least 15% of the overall capital plan. but in some cases depending on the enterprise, it is closer to 30% to be funded with revenue or cash. we, of course, want to minimize the use of debt. but it's a balance, of course. we need to use our revenues as prudently as possible and it's different for each enterprise. and we'll provide you more color on that when we get into the detail of each capital plan. >> we assume a 4% long-term interest rate on bonds and aggressively take advantage of low cost funding opportunities to bring that cost of borrowing down as we can. and we have only included the funded portion of our capital plans in our financial plan cost assumptions. so let's go through the slides in terms of the details and the

water that is the last drought and sales volumes did decline

decline quite a bit with the sales volume numbers. and retail sales dropped about 10% during that time. of note is how after the drought as well as other economic shock if you go back to the great recession in the earlier part of the 2000's, we never quite get back to where we were in terms of recovery. the sort of high level data point tends to be slightly below the last high data point, and so you will see that here if you look at the top line dropping before the latest covid pandemic and recovery.

that is the scoop you see there for wholesale and retail sales. and we're projecting a recovery but not quite back to where we were and slightly below it, again, for both, well, mainly for wholesale. retail we are expecting a slight increase, and i'll describe that in a bit. next slide. >> have you thought about sensitivity analysis? what if it doesn't come back? you mention you expect the drought surcharge to be in end through the end of 2024. what if it's not? what if it falls off by a year? do you feel anything like that that you can talk to us about now or later? >> we'll -- yes. so sensitivities are part of the financial planning process. we will look at plus or minus

two to three percent or more just depending on the metric and the enterprise in terms of how close will we be. we were not -- we're not saying that the dotted line projection will be where we will be. we know we will be wrong. and to get a sense of if sales volumes are two to three percent more than what this shows, that means that rates can come down. future rate increase cans come down. and this is, i guess to your point, something that we will include in the detailed plan in february, but yes, we look at sensitivities. we also want to acknowledge this is for financial plans projections and these

projections differ from water supply projections. this is not to say how much water we need. this is ughs estimating sales volumes which translates to revenues. and of course we need revenues to fund the operating and capital expenses which goes into the long-range planning horizon. i guess to your point, commissioner, we can add to the graphics a shaded bar above and below the dotted line you see here reflecting the sensitivities if you feel that would be helpful. >> once again, i think is issue is, again, a variety of assumptions. the two biggest ones you have mentioned are that the drought surcharge will be in effect for two and a half years. what if it's not? what is the impact of that financially? and here, what if it goes only back from 53 to 55 in san francisco? that two million or 20 million? just something to give us some idea of what the differences might be. that would be useful, i think. >> yep. >> maybe i add to that, charles.

i have a slightly -- same outcome, different point of view. i wonder if we can have an estimate of per capital water use and how it has changed over time? and have actually do the sensitivity analysis based on that as well to see, okay, if people have reduced the water use according to recent numbers for the peninsula, 65 gallon per person per day and used to be 80, what does that mean if, i don't know, 50% of the people would now go back to 80 and stay at 55? or average drops to certain numbers. kind of having sort of translating the demands to numbers to kind of, i would call it the uncertainty bouncer to same sensitivity analysis would be very, very useful. one other thing that i sort of ask or have of you is i love

these graphs. i would love to see if we can create these on the same historical sort of data even longer. and at the bottom of that, you can tell me these sales have turned into and i don't know if you have seen these rainbow color bottom that says you know, over the years this is how much of that the sales were spent on debt. this is how much of that was spent on capital. this is how much of that has been spent on staffing, operations, and just whatever categories you are interested in. i would just love to be able to see that and how each one of those categories has progressed over the years. that way we kind of get a sense of which one is growing, which one is shrinking.

if there is a different way to look at this. we have longer time periods and that is a relative easy thing to bring back. in terms of historical spending, we have that information, too. i am not sure, laura, if you can tell me how far back we can go, but i know that we have some working documents that we've used in terms of building this budget that goes back i think at least eight year, but we should be able to go back and -- i am not sure how much more than that -- in terms of showing how much spending is in the bigger categories as you suggested, commissioner. >> thank you. this is sort of complementary to the other ask i had on the pie chart. that would be a snapshot in a year. and this would be more historical perspective. >> definitely provide that. >> the biggest thing you're going to see is 30 years ago there was almost no debt. so that huge debt increase has

happened in the last 20, 30 years. >> i appreciate that. i think it's valuable for us as a group to be able to constantly pay attention to how each one of these categories are changing, especially if our revenue is not keeping up, right? we have to at some point figure out what needs to happen to maek sure we can balance this in a meaningful way to have a healthy financial situation. >> sure. we have made notes on this and will get as much back as we can for the next meeting as we can.

>> we keep wrestling with this thing. and i think this is an area where some transparency would be able to serve us very, very well. the fact is within that band of uncertainty, we bias our numbers in different ways for different purposes. so for finances, we want to have a number that will produce enough revenue is based on the lower estimate and the water supply on the higher side. it would be awfully useful to have some kind of chart or table or presentation that says, this is how that works. so we take some of the mystery out of it and we don't have people coming in and saying,

look at the financial numbers that you have projected is 189.3 off into the future. and that's some issues to this data and on the other hand, is tempting because it looks like a demand projection. i think if we can put some detail and light on that, it would be and not only for the budget and also for the water supply planning as we go forward to make sure that everybody has the same set of numbers and the assumptions to make in the different context. >> and as part of andy's request, i wonder if we can begin looking at this historical data and if we can have water supply demand projections and our financial projections on the

same graph. just to see which one has been more accurate over time. these are two numbers that are, i understand, have two different purpose, but it would be good to see who has been doing better than the other. and making sure we have the right assumptions in place. >> i love that. >> we will reach out to the water taerm and figure out a way to incorporate that. >> thank you. >> it will be a number -- it will be a line that will be, of course, above what you see here. but yes, we can -- >> just like a historical perspective. these are the financial ones and we can just see them next to each other. it needs to be a little bit

longer. and maybe historically focused projections in the future. it would be useful to have that. here is waste water. and this very much mirror what is you see on the retail side here. and waste water and sales volumes and effluent water sales and runs through the water meter and the water assumption that is incorporated into how much water is used indoors versus outdoors and how much goes down the drain and that sort of thing. and that sort of reduction happening with the pandemic and the retail water side. upwards of 10% reduction and that recovery is again projected to come back over the next couple of years.

again, not quite back to the same level as it was pre-pandemic on the waste water side. here is the slide of hetch hetchy power retail sales volumes and historical sales volumes have been relatively flat going back to what is shown here beginning in 2011, hovering at just about 1,000 giga watt hours or so and until the pandemic dropping nearly 30% or so from the peak to trough during the lower point in fiscal 21 last year. going forward, the power price is projected to grow, power sales and not only the scope you saw in the other enterprises out of the pandemic effects with

commercial, mainly commercial customers and we are also projecting growth over abruptly an eight-year period or so of fairly significantly and averaging about 5.3% each year going forward and that is the relatively large growth that you see on to the right piece of this chart. the biggest drivers of this growth are economic recovery, of course, in the near term and for current customers and tourism-related growth through 2026. and also growth from large new redevelopment customers expecting to come online and begin in fiscal 24 and really through fiscal 30 or so. and as i noted, about eight to nine year growth cycle is being currently projected with this

enterprise. and barb hail will provide more color in terms of the specifics around this redevelopment load growth, but also growth from existing customers when she present this is on the 20th. but i did want to highlight this as being something of note and this growth was included in the last financial plan. however, the amount of growth has increased slightly from what you saw a year ago. and i did want to leave this with you and happy to take the questions now, or we can wait until the end if you wish. >> i have a question on that load growth, there is a specific and general version of this. and the question is basically, how much of the future planning depends on acquisition of pg&e

distribution system? and i don't know and you said that what's driving this low growth from the redevelopment clients would be customers of hetch hetchy and not dependent on pg&e distribution system and that is what i assume. and they are here in a longer term picture and are we planning on power sales increases that have to do with the distribution acquisition. >> not yet. and in the capital plan and we have funding and in that effort and we have not incorporated the load or volumes associated with that change year. this is purely business as usual. we are redeveloping the

distribution system within the power enterprise and this reflects customers be connected to the new description system and coming online. and those customers -- some of them are new meaning they don't exist currently and some of them existing customers of pg&e and shifting to both. both are happening with this increase. and with respect to the acquisition of distribution and it is appropriate not to include any power sales in that. and in terms of new and existing pg&e customers transferring to us, there is that assumption about how we have various issues about intersection resolved in the short term and are these consistent additions that don't walk into the the dispute about

pg&e and what can and can't and how it could be best. and this mainly reflects us building a distribution system and us connecting customers to that. and this is somewhat related to what you just described in terms of the connection and conversation happening with pg&e that is reflected and connecting to the customer distribution system from the redevelopment zones, so to speak, and across the eastern part of the city. and new buildings and large, new buildings going up and actually be energized and two months from now. and not only ground broken. and at least in the near term

and assumptions of further connections to our distribution beyond that. to identify any areas where we are assuming success and negotiations and and how many. and i want to make sure that the request i had for the water historical water spending and i meant it for all different enterprises. >> thank you. >> will do. >> next supplied. >> and here we have clean power sales volumes and which, of course, shows the significant growth and sales during the start-up.

a few years ago. and up to current enrollment of the program and with the clean power and the dip related to the pandemic and all the other enterprises had. and assuming a slight half a percent of average annual growth in clean power sales volumes over the period. and fairly consistent with increasing energy use and more e.v. and coming online and with the assumption for clean power. >> a next slide.

on that last slide and the focus on the rate projections and that produces against the budget years and produce required revenues with the retail budget that each a.g.m. to provide more details on. and the average increases over two-year budget for 3% and 4% for waste water. both have a projected rate increase in 2023 and for the two enterprises in the first year of the budget was take within great care. and was supported by the following. and the reactions of the sfpuc has taken over the course of the

pandemic to assist our customers faced with financial hardships during the economic recoveries and the new spfuc leadership with the general manager herrera joining us. and the reality of the in terms of projections and how it's going and also kicking off the rate study for water and waste water and we're currently in the midst of the power rate study in the spring. so within the next couple of months for at least the next

five years. water and waste water, we were in the midst of to solicitation process and expect the selection of consultant to that plugged into the timing of the aver all cost of service study efforts. we will be bringing the next rate package for water and waste water for your consideration a year from now as we pawuk to you more about fiscal 24 budgetary changes. we also feel this allows us to

get through the fiscal 23 period and the drought offsets that idea as well a little bit. it is fairly a balancing act and we are fairly confident we will be able to get through definitely during the next year or so. and for hetch hetchy power and clean power, rate changes from the rate goals for hetch hetchy power and clean power. and this is a three-cent increase for the budget increase and this is a tripling of the prior one-cent increase that we

have been receiving over the past few years. a fairly significant support from the mayor here in the maw yor understanding that we need -- the mayor understanding what we need resources and the general fund rate needs to increase and shifting from one cent a year to a three cent a year increase. that is very, very helpful in terms of providing critical resources to the power enterprise. and a 3% increase for enterprise rates similar to how pg&e's rates are changing as well as the hetch hetchy retail power rate change in each year. and we will talk about clean power rate assumptions and there is a fairy significant decrease that will be happening soon and offset by a subsequent increase.

and we will tie this back together to the cost of service study is saying as well as the underlying cost assumptions for clean power and to estimate the budget change. and one of the long-term goals and to mention how we bring down the projected rate increases over time that is the informal conversation with you around rate change and not being any greater than double digit as being maybe one way of calling it o z a philosophy and great change. we feel that this is something that we need to bring down over time closer to the rate of inflation. i think the rate power understands the notion of

inflation mare -- inflationary change, and one thing we are focused and in this budget psychle is what does an inflationary rate change mean? we have not set rates at inflation as being something we can achieve tomorrow, but something we will work on over the long-range financial planning horizon so that by the time we get further in the planning cycle, we will have rates that will be that we think are closer to the rate of inflation. and that is generally ranging from 3-4%. and we understand that there will be need for departure of the basic philosophy with capital needs surface and operating needs, frankly, and so

we will be and what the needs are of the agency and trying to have the overall cost growth down to something that the rate payer understands and what the main charge is. so with that, i will take any questions on the financial plan and that actually end our overview presentation. >> thank you so much, charles. and colleague, any question or comments? i have a question. go ahead, andy, please. >> yes, thank you. >> just a comment on the time rate increases to inflation. let me provide a different perspective on that. and that is that a lot of the costs do respond to inflation and a whole bunch don't. and i think we need to not fall

into a trap of taking those costs which don't or are not driven by inflation and constraining them to inflation. that is typically the capital project and the approach that i have suggested from time to time is that we split out the portions of the budget that should correspond to inflation and the operating budgets, the personnel costs and equipment costs, materials and supplies. and be able to demonstrate that that is being prudently and is within inflation guideline. that is a reasonable metric for most of those costs and they are projects with limited duration

and providing a physical thing that you can point to. and the beginning and the end to it. and it is what it is. and hopefully you get that done quickly enough that inflation is not a huge impact factor. and we have some projects unfortunately that when they go on for 20 years, inflation is a big deal. and i think breaking it out that way and as you establish criteria for how you constrain the budget and make sure the constraint fits the nature of the expenditure. >> great. thank you. just to follow up on the same talk about inflation and i think, charles, that you might have been again keeping the -- painting the picture and saying

that the rate payers are cognizant and historically more willing to separate changes that are based on inflation. and i assume that was more about perception and not just perception but had more to do with the ability to accept a rate change based on their own reality and their own internal budgets and individual budgets as opposed to what our chair and our president was saying that we should know what is affected by it and inflation and be transparent and brothers and sisters, our costs are going up. i don't care what the reality is. i don't know if you have a comment on those two different pieces of what inflation will be. >> commissioner paulsen, you are

exactly correct. my team and i along with the external affairs team when we have a rate package that is before the commission, we go and meet with a lot of neighborhood associations, business associations, and other grouping conveying a clear sense of what the drivers are. what is driving our cost into the future? and a good portion of the story is always capital and about what work are we doing as it relates to the capital plan. and the feedback that we get over and over from the rate payer is i get inflation. costs are going up. i understand that. but you need to be really clear, puc, if you're suggesting rates that are above the rate of inflation. what is driving that? what are the causes of those changes? and you are exactly correct. and commissioner, you are exactly correct that we need to be very clear if our rates are

changes and above inflation and what are the drivers of that and that additional increase. and you are correct. >> any other questions? >> i have a question for you, charles. actually, on the power rate side, we are slowly sort of building up our power enterprise and we have an opportunity to think about the whole set up in a way with the enterprises and i wonder, for example, a lot of power utilities have decoupled their rates. and are we looking into that to see how we can -- and put this whole thing together, we can have decoupled rates for the power rates. and in the power side, 80% of the utilities are investor or utilities and 20% nationally are

publicly owned utilities. and differences between the two and so much to be learned from what has been done over the past 30 years in that sector that we can actually see what works and what doesn't work and establish our rate setting process. that is appropriate to the time that we are dealing with. and decoupling the rates would be very important and valuable as you're sort of dealing with rate increases and maintenance and operation of the system and buying of the assets and a lot of other pieces that goes into that. that was my comment on this specific last slide on rates and the process. >> commissioners, if i could clarify decoupling, do you mean unbundling between supply and demand and supply and distribution? >> cost versus valuable cost. and so basically making sure fixed cost is always covered

regardless of this happening. and operate the systems and invest in them and the variable cost is the operational cost can be differ from year to year depending on what utility you are running and the utility running the proportion between fixed and variable costs can differ. and at some point looking into that on the water side and to help us better and figure out how we can recover the cost of surface. and that is actually decoupling that is actually the financial health of our system as you know, maintaining and operating

bonds and investing in it from the volatile nature of youth. and change from year to year and for every sort of unexpected shocks that the system experiences. and you are always making sure you have enough revenue to maintain your system regardless of use. and we have definitely been for water and waste water focussing on fixed versus variable charges and looking at how much the cost recovery via the fixed charge and versus the variable charge and of course, there is the conservation, right? don't move too far away and from the fixed cost recovery from conservation. and use more, pay more philosophy not to be lost in

that exercise. and so yes, on the power side for sure, we can look at how do we do cost recovery and what pieces of the enterprise operation is covered by a fixed charge with the variable charge with the rate study in a few months. >> just to clarify, actually, if you do to decoupling, you actually do end up being able to incentivize contributions.

>> members of the public who wish to make public comment dial 1 (415) 655-0001. meeting id 24927172413 pound pound. to raise your hand to speak,

press star three. please note we will be giving you a 30-second warning. mr. moderator, do we have any callers? >> madam secretary, there are three callers in the queue. >> secretary: thank you. >> hello caller. i've opened your line. you have three minutes. >> caller: can you hear me now? >> loud and clear. >> caller: great. good morning. david pillpell. i have reviewed the slides made available to the public this week and i have sent in some written comments if i may run out of time today to clarify my remarks. i don't recall a slide that

listed the various commission policies, for example, the debt policy and the rate payer insurance policies and how they influence the budget development. i would add to the staff presentation a request to not increase the total overall p.u.c. authorized f.t.e. positions. i remember that commissioner moran regularly asked for that. it seemed to me in a further presentation that infrastructure has a number of evacuee cannot positions is that perhaps could be i understand there are different positions, but in any event, my suggestion is to not increase the overall f.t.e. account. i would also request a copy right now by mail of organization charts for the entire p.u.c. to further inform

my comments on the various units. i've got binders and charts and whatnot going way back and i like to review those and compare. we should assess asset management in state of good repair including condition assessment and depreciation of various asset and asset categories as part of this process i believe and i'm not sure i heard specific reference to that. i think i understand that the ten-year capital plan is not fully funded, but the two-year c.i.p. is funded and balanced. i think i'm okay with that. i didn't see or here the details on capital projects for two years or the ten-year capital in financial plans. perhaps that will be prior to the february approval or maybe there's some level of detail that i haven't yet seen. i was going to ask when the next five year water and waste water rate process starts with

the rate consultant, the rate fairness review board etc., but i heard that's coming this year or next. i did hear a proposed pause on previously approved water and waste water rate increases. i don't support doing that. i think there are other ways to address. >> 30 seconds. >> caller: great. thanks. i don't support that. i think there are ways that are already under way to address customer arrearages and i think that is the rate ability to support the capital projects and results in that deficit in the capital plan. and finally as you may know, i followed the p.u.c. for over 40 years. and carlos and yolanda and that kind of thing. i'll leave that for a moment and hope to speak to it in item

four. thanks. >> thank you for your comments. next caller, i've opened your line. you have three minutes. >> caller: thank you. good morning, commissioners. i thought yours conversation on 34. you might need different graphs because projections for this year's changed. it would be good to have a graph for each ten-year financial plan. however, you could have one graph with an average of projections each year. on a related note, we've enjoyed reviewing the s.fpuc's and i'm optimistic it will convince you we can meet the

requirements of the bay delta plan without running out of water. when glaring problems of the study that uses 227 mgd as the baseline demand unless the water position report is wrong, you know that the fiscal year 2020 and 2021 was n95. also analyzing 240, 265, 226, and 334 mgd but nothing below 227. in would 38 mgd was used as

current demand. at worst it was dishonest. moving forward, we hope the sfp.u.c. will be accurate with current demand figures. i'll refer to as the graph. and you can probably guess what sfpuc division i'll be betting on. thank you very much for your service and for the opportunity to comment. >> thank you for your comments. next caller. you have three minutes. >> caller: good morning commissioners. i begin with process with you. i've got three specific comments on the discussions you've had so far. first prioritizing the existing appropriations that you've not yet spent. this is the second time you

have made this so i support that effort, but we also raise the question as to why is the puc not raising capital consistent with its own plan and i think that's something that needs some further investigation. that's the concern that bobka has had more to date about project delivery and successful project delivery and while i'm sure for the last two years, a lot of it can be pointed to covid and the impacts of covid. i guess it would be helpful to really clearly understand that and to make sure the p.u.c. is addressing those issues as well. second item, i appreciate the transparency on this issue and i look forward to working with

your staff as you addressing these issues. i appreciate the comments of president moran and vice president ajami about the differences that's done for finance and the numbers that are put out for water planning. the numbers that you have before you for wholesale rates have no basis in any long-term plan. i'll say that again. they have no basis for any adopted long-term plan. they are merely just a straight line projection, literally flat moving forward. now i will agree and admit that, you know, we are in a challenging time. we've talked about this. this is part of the reason

we've updated projections as we speak and looking to that planned activity, but i continue to be deny concerned that this slide as shown is complicated for the public. and i encourage the commission to work with its staff so that we're not arguing and looking at all the facts and what that means for our planning. thank you very much. >> thanks for your comments. madam secretary and commissioners, there are no more callers in the queue. >> secretary: that closes public comment on item number three. >> president: colleagues, any questions, comments? okay. i'll give it back to you go

ahead. >> secretary: yes. i'll call the next item. >> president: please do call the next item, madam secretary. >> secretary: the next item is item number four, proposed bureau operating budgets for fiscal year 2022-2023 and fiscal year 2023-2024. we heard the items appearing on the agenda ininfrastructure, general manager, external affairs, and business services. the commission will take public comment on the discussion item after all four components are presented. general manager. >> thank you, madam secretary. to present from the infrastructure bureau. >> thank you. good morning, chair ajami, and commissioners. another in the list of new presenters, this would be a

first time for me. next slide, please. so the agenda and the infrastructure presentation is going to be introduction organization, service areas, speaking about our capital programs and staffing plan. some brief highlights of accomplishments, going to what we did for deliverability review and where we're going to go. some of the challenges with delivery and then we'll kind of provide the calculations for the overhead and how we recover our costs in infrastructure and finally an update on our progress on racial equity. basically, we're involved in the planning and the implementing of the capital

program and we don't provide the labor, of course. that's the contractors and the labor force, but what we do is we work with the enterprises from the initiation of the projects and then continue along for the design in the implementations and the construction to close off, close out, and hand over to the enterprises. next slide, please. so our basic organization or the matrix of our organization which is the complex delivery programs and so we have the basic bureaus, the project management bureau and the

construction and people really have assisted me putting this together. i couldn't have done it without this whole team. my small part of it. the f.t.e. for part there as you can see are loned, myself and assistant. it's very important for the planning of the program directors katie miller and speaker robinson and they also have small support salaries, but they support growths that they have and everybody else with infrastructure to support them in their work.

next slide, please. this group of people were very instrumental. the cost for the past four months, we've been doing this plus, it's been a big lift on top of overseeing their ongoing projects. engineering management bureau has for a couple years been doing kind of the deliberate building review. that i believe is johanna wong and and they've kind of

spearheaded that. what are we going to be plan to be doing in the near future and how resources that we have in-house or consultant resources can help deliver these projects. next slide, please. construction management, bureau manager is and we look at going forward as part of a progression for this and deliverability review, we're going to implement the same kind of process we had at engineering management bureau with construction management. environmental management group is currently acting manager is karen fry and their role in all our projects starting out in the planning phase following

ceqa, the implementation, making sure we're meeting our permits. it's important and i think a very unique group within the city in term officer the depth. next slide, please. the functional service areas, this is a large group of individuals that really support all along the way to deliver these projects. the project admin bureau which is here is instrumental getting our contracts out in the streets. so workforce economic program services. ben pool is the term manager there. they do our outreach for our projects. they're involved with the tracking the l.b.e and work force participation which is so important in the work we do.

budget and finance. i really have to thank rosy for helping me put together this for my operating budget and helping with existing slides and last-minute questions. our d.p.l. is angery salazar and constant turn over and individuals looking for other opportunities outside the city or related to covid, we've had real challenges with keeping our staff and it's keeping the hiring process going has been a significant lift. of course, racial equity.

overall, our positions, we've decreased the number of positions we have this year, but we still have a high vacancy rate and there is challenges bringing in hiring. we did have probably as everybody's aware, there's a hiring freeze during covid, so we are now trying to catch up and with people departing from it's a full-time job. >> we have always had a higher vacancy rate than any place

else is there anything in the budget here or our budget for human resources division that will make this better. i realize part of it is a city wide should we do something different as opposed to hope for the best? >> it hasn't been sponsored by a different department. we're doing it for construction management right now, but it's

a lengthy process. that would be helpful. i think probably guide more in the h.r. section. we're getting a bit of a challenge right now with the transition of software that everybody's struggling with, but i think it's a short-term issue. >> yeah, this is a big issue for everybody. >> yeah. i think a little bit of the challenging part is the engineering. throughout california, everybody's very busy in every sector and it's a highly competitive market for engineers. and i'll touch on one potential solution i have later on. >> commissioner herrington, if i can just jump in for a second if you don't mind.

the issue that you've highlighted quite frankly has been in my two months that i have been in office, the number one issue that i've heard from everybody and that is the inability to fill positions and some of it is the competitive marketplace. some of it is the processes that the length of the processes that behave here in the city with that, it's the competitive marketplace in terms of salary and processes and allen and i have had a number of discussions about things that we're going to look at, but it is going to be like my number one priority over the course of the next year to have discussions both internally and more citywide with how we can.

it is the nurnl one issue i hear from everybody on my tour and you were right to be pointing it out. >> that's great. and we have an opportunity to share, i think these somewhat new head of city wide h.r. came from the p.u.c. and came from local 21 before that. so she's very aware of these issues and would be a good ally in this case. >> and, if i might, commissioner harrington, on one thing which i'm not really prepared to announce in person yet, but i have achieved that i have already hired and i have been -- i need an individual that's going to help us to take the initiative to break some of the things creatively to get out of some of the roadblocks we've had and i'll be

announcing shortly, but that's going to be a priority for that individual to work with us to think creatively. >> just one quick comment, maybe, dennis, and that applies to allen's positions too. i wonder if there can be some analysis done to see whether the market out there, how much more people get paid if they leave, whether we have to offer with the incentiveized, sticking with us is that the growth opportunity they're missing or is it financial? it will be good to have an analysis to be honest with you to see what is it that's going on. >> i have a comment also, if i could on the same issue and i don't know where but i just

know there are sometimes some squawking ha goes on between whether or not these positions are vacant and whether or not they get filled. i know there has been some tension around that issue, i don't know if that's an incentive or who plays into that conversation that the new general manager is taking on as a priority. so i'm just throwing that out there and i'm not asking for a comment, but if there is one sentence, i will take it, but i'm just saying, i've been aware of that particular issue in the past. >> commissioner paulson just like what commissioner ajami alluded to and commissioner harrington, that's a piece of the puzzle. absolutely no doubt. every one of those things are issues that we've identified and that's going to be part of

the puzzle that we're looking at. >> i think it challenges in addition to if it's a part-time position or a temporary position. sometimes our solution is a temporary or three-year position and a lot of job applicants are not as interested in something that's more of a risk that way. no further questions, i'll move on to the next slide. so this is broken down into the matrix team once again, but this is broken down into what you would see on our project and how it would all interface. basically, the project manager's staying with the project from inception and then bringing in the different team

members and coordinating with them throughout and then the matrix, the individuals report up to a project manager on that project, but also different bureau managers for the various entities. next slide. so this is what our workload looks like. it's broken up too, but you've seen this in the slides before, the largest sewer system and water and other two significantly large amounts. what's interesting and i think when we first looked at it and i'm sure with the general manager was the water system improvement that the pile was so large and we've been saying that for awhile. i believe it was in 2011, a certain list of clients were

designated for ground water and recycle were taken out what we record for the program. next slide. this is our overall look at programs that are ongoing and the duration and the cost and completion status. next slide. so the highlights, four of our largest areas of activity is the southeast treatment plant, one of the most challenging is what's going on in head worksen which is right, you know, there's a tremendous amount of so that's between infrastructure and waste water.

this photo will highlight the head works project going on right there which is the primary power and switch project and those two are right on top of each other and we've had excellent cooperation from both the contractors and the program team we have working together. you can't see it here, but it was also discussed earlier. the transmission projects are headed up to the plant and on the other side of evans which would be on the right, there's the switch yard over there. this is the control facility shaft that's being excavated. this aspect of the project is going to be crucial during the

next shutdown. the one in the following year, the same time for january, we're going to be tying this facility with the mountain tunnel. next slide. so this is about a month ago where we are with the community center. this has been a very successful project. and a lot of the assistance from the department of public works. this is really not our wheel house in terms of building and, you know, horizontal. you know, we and it's been a very successful project. so what we've got going on over

the last year with 30 construction contracts at $420 million. professional service contracts. an update here on the workforce and economic program development this is some of the numbers dan has provided and i think it updates regularly we're at 62% of a requirement of 50%. and district 10 is where a majority of our construction is located right now is 36%. the l.b.e.s have been awarded $430 million. >> i have one quick comment, if i may and i know this is about budgets and mostly the economics, but i know that some of the issues that have come up

around work force development and a lot of squeaky wheels, i do have to comment and acknowledge and in particular, there's so much construction in the bayview right now and those numbers aren't as wonderfully acknowledged but i'm also looking forward to how policies within the with the discussions taken place over the last year or two about that process. so i just want to put a bookmark up that i'm hoping to

hear from folks about any policy changes in terms of outreach for the l.b.e.s and giving away work force development contracts as part of these overall contracts. thanks. >> thank you for that, commissioner paulson. this was mentioned in the previous budget slides. we've spent a lot of time taking a look at what baselining all the projects, looking at them from scope, what we saw into what it would

take to make sure we get these projects out on the streets and supported during construction. as i mentioned next year, we'll be doing the same kind of similar effort in construction management, but for now, we're looking at developing in more detail our work plan and with those, use the historical data we had over the last programs and projects for similar projects to estimate f.t.e.s. based on an associate engineer, the rate that the step five at the top based on the number of hours per year and then we did a split with that assuming 60%/40% and, of course, it works significantly more

complicated and faster paced projects that we would need to, you know, we couldn't keep up peaking so the consultant split is more on those. next slide. so this is -- you're probably not seeing the details, but this is a sample excerpt from a pivot table that was built up by interior manager and it works up from individual excel spread sheets that you look at the scheduled duration and you look at the resources required and you provide individual names or potential if it's future work, maybe potential hires, but if you work with the individuals, you can have and the consultant resources you

have and then work it from the ground up to identify what kind of staff is going to be able to order the project workload. as part of this, when there are problems, we saw that there were challenges delivering per the schedule the way we handle it is we adjusted the scheduled hour, we move the projects back. we said if this is too much going on this year, there was no way we were going to be able to handle it, so we're going to have to push it out a year or two when the availability for the engineering staff was there. next slide. and it is kind of gives you an idea of the different and it's real interesting and there's a

peak right now with what's going on in the southeast plant and the waste water, but i think also some of this would be the unfunded 10% to 15% that charles was talking about previously. that's why it looks like the staffing's dropping off, but as we get closer to those later years, those bars will change. next slide. z next slide. we tested on this already when you look at the positions, our normal vacancy rate, the 25% to 30%. we are kind of on the high range at 28%. that was previously discussed. what's been a challenge for us is procurement, contracting

timelines, professional services for various reasons. it's been taking eight to twelve months and if there's a process that can push it back farther, you know, some of the ones i've been involved, we've got to do multiple bids which can be really causing significant problems in delivering projects. for construction, we used to aggressively say get one out in four months. sixth was what we were using, but i think in looking at our records now, it's closer to seven months. some of the challenges with that is i know there's been the past couple of years, we've been differing in starts requirements on our contracts that had required even long-term contractors to go back to their insurance companies and get more information to submit to the city on their policies. so, are you know, it's kind of

small of course, with covid, hopefully some of the predictions i saw is they may be backing down which would be great. escalation and inflation, now we're dealing with numbers that are on 6% on some items. for construction in particular, fuel is a big factor in everything we do because it's moving materials, moving dirt and that's escalated significantly and the city's vaccination mandate really implies to most of the consultants working with the trailers and in the office buildings with us because it's a longer duration contact, i think the city's has put

together a very wise process and especially for the type of work the p.u.c. does, with most of our contractors, we're not going to get into a situation where we're really reaching the maximum hours and we'll be able to work around that. so i'm not expecting anything from that, but there might be certain isolated things and especially if you're working inside a building where that could be a challenge. next slide. so our overhead which is a question, you know in my career at the p.u.c., i've always heard from the enterprises when your overhead rate's so high and so i guess here's kind of what's behind the curtains and how we peel at our overhead. basically, we charge direct labor to the project and we

recover the overhead for a monthly recorpse process. the overhead and the direct are related to performing direct labor services on a project. so that includes indirect labor, indirect mandatory fringes and paid time off. indirect materials operating expenses and work orders. next slide. here's the calculation. the denominator is the direct labor and above it is the indirect, the fringes, the expenses, the work orders, and that gives us our overhead rate. in the next slide, you can see an example which will probably clarify this a little bit better. so if your salary is a factor of one, with that, the mandatory fringe benefits would

be .37 and your overhead rate is 1.58 which is our current overhead rate. of the multiplier then is 2.95. so the way this works out is you have an associate engineer charging your project. then the pring benefits are on top of that and then the overhead rate at 150% is that and that gives you what is charged to the project. and so that $2.11 per hour is the way that infrastructure covers our direct cost and overhead for the capital project. >> i had a question for you, allen. >> sure. >> president: so what's the difference between your overhead rates and your other

groups? 1.58,, 8%. where are those other groups? >> you're at this time pating the next slide? >> president: perfect. >> so here's -- so ours currently is 2.95. public works varies depending on the bureau and the work. the 3.5 and private is around 2.33 and that's nationwide. so i think you're -- i know from the multiple eyes i see on our professional service contracts, there's quite a range. that 2.33 from the bay area is pretty low. >> president: so we're not that far off from these numbers. >> no. no, we aren't. and it's within infrastructure, it's -- we've got a monthly

print-out and i get to see the bureau managers and i get to see who's charging the projects. we've really got to make sure everybody's associated with the project to keep down the overhead multiplier. >> president: okay. thank you. >> commissioner: and i have a quick comment on page 17. i was doing a little bit on the projected charts and what says $211 an hour for associate engineer and 19, 20 hours a year even though i historically have used 2020. you know, again, that's probably based on whatever your averages are. it seemed like that was a little bit confusing if somebody was just going through

the back envelope of what that labor cost us. so i would think that maybe the general public would be if they did what i did kind of say, boy, that doesn't make any sense. when you've done your exercise on page 23, you know, you have the overhead rate and all the other stuff to do the aggregate of $210.88. so just to comment if you're leading with that $210 on page 17, that's maybe a little premature in term officer confusion. >> president: actually, on the same topic, it's good to know that our contracts are paying

different levels of engineers that work on our project and how much we are paying our own engineers internally just to get a sense of where everything goes and i do understand when you hire somebody part-time. there's so many other things that come into play, but it would be good to have a sense of we are paying this people this much and the same person in our site gets this much. that would be another way in figuring out why there's this mass exodus of engineers due to the infrastructure that we see partly because of the infrastructure bill that just passed and where we are in that process. >> it's interesting. we were talking about this week

because we've had some feedback. we have a cap on our professional services which is, you know, it's right now around $250 per hour. so there's certain consultants far would exceed that when they get their multipliers in there. so they're actually working on our projects, they're taking a loss. so, you know, they compensate by having a more junior supporting engineers to cover that. and we were wondering just the feedback we're getting from the consultant was that our numbers were really low and you're all lucky at the p.u.c. because you have such interesting work, but really, you know, it's significantly tough for us with that cap. so we're looking right now. we're going to look at east bay mud. san diego, sacramento just to see what the other professional

service contracts look like and that will open up to us to a view on what they're paying in private if might help educate us towards the question that you pose. >> president: yeah. and if you're looking at that, it would be good to see what's split between the consultants and city's utility staff to see if they have a different right. >> yeah. >> i think if i could make a comment, chair ajami, is that, you know, it's generally well-known that a public service job, you're going to make per hour a different rate if you're in the private sector but at least in the city, it's

somewhat indexed if it's a position as opposed to working on a project, but if the project's over, you're done and you have to go find another job in my experience, i've heard that all the time, but you're making more money than me. and, you know, there's that whole dynamic that seems to happen. so now when everything is so busy, everyone wants to make the big bucks and everybody wants to work for the county or the city. there's that dynamic. >> yeah. and i think that's a great

point and i tried to mention that at the beginning to consider all the things that happen when you are city employee, but i think there should be some sort of index for us to be able to say, this is how much vacation, that's your pension, this is this. and at the end when you put them all together, you should be able to have a competitive package that people would say i do understand, but i have a lot more things to look forward to. a full-time job. a better vacation, better sick leave. there needs to be something that attracts people. so especially in the shortage you're experiencing right now. >> and that data should be readily and i don't want to be labor this, but all that data should be immediately available because it's all locked into the collective bargaining

agreements that the city has with its employees, you know, for the most part including managers. with that being said, i am done. thank you. >> okay. moving on to the next slide. so here, similar to the slides you saw earlier, but this is specifically for infrastructure shows our growth over the last four years and the increases that are going up primarily are due to cost of living on the salary. so here in detail, it shows the

two and some other increases. and we're not asking for anything crazy with our vacancy rate. that would be sort of futile anyway. so we're basically sticking with rezoning. and we identify within infrastructure hiring and recruitment, so moving to hiring and rement. this has been a long term effort and we've been very

successful. it's been hampered recently because of covid and doing quite a few things virtually instead of in person. and we have a very strong student engineering training program and we revladimir putin at the various organizations and we're also going to various, this year, i think we planned to go in person to some of anesthesia but i think for the most part, it's turned virtual and, you know, a lot of our focus we've seen is to try to look at the schools in our area because we've had some challenges in the past when we get students from out of state when we try to locate for the summer what the cost of living in the bay area and also we are, you know, they're working

downtown, that's fine, but i know for construction management, they have to have a vehicle to get to the site. i think there's an advantage to us focusing on local students. preefgs, we've all gone out to the society for women engineer and in addition to the students in college, there's an ongoing project poll for high school students and summer interns and that's been very successful and we've managed to do that through the pandemic and it's a very fibrous program and helps us with getting people interested in the work we do. next slide.

is within the not making that choice but that can be whether to take calculus or not when you're in high school and if you don't make that decision, you're off the track of being an engineer and sometime later in your life, construction

management looks interesting so what i've contacted people in the industry and the united corps of engineers already has management on this and they have training that are once individuals have been in the career for awhile there's variation organizations. with these kind of certificates, maybe a couple steps after that and so i've kind of taken this and first

attended an and i've noticed this was sitting as an action item and so right now public works is working on a sample description and salary and then it's working with the course of local 21, the labor unions and h.r. and the department of human resources to see if we can move this forward. of this is really i think makes a difference. and i think getting back racial equity because it's opening the door to a larger group of

people and ugh. >> president: can i ask you another question? do you know how many people you have with an engineering degree, but they do not have p.e. and that sort of hinders their growth. it would be interesting to figure out how that's divided between male and female >> i can get you the information. you can only get so far in the engineering classifications and if the other is going into a

construction inspector. >> president: and i'm wondering if we have that information we can give them time or something that they can and people with engineering asking them to have p.e. is the most ridiculous thing. i know at the state level, the same requirement is a problem and they want to appoint people to different positions. so it's a broader discussion to have that some of these things have been said in a time that people only had engineering like bachelor's degree. at this point in time, people do end up getting masters and

phd and i'm not saying we should train those, but we have to have some understanding of who comes in what situation. >> right. it makes a lot of sense to require p.e. when you need p.e. for design and drawings, you know, whatever the requirements that the state has, but not just to take a broad brush to it when it doesn't apply, i agree. next slide, please. you know, there's been programs before, but we didn't currently have one.

water we're using engineering software out there. the software seems fairly simple to use and would match up mentors and mentees so when we're looking at that software in advance, our team is looking at can we develop a pilot and see if we can start mentorship programs going up. so that's our current push right now. next slide. what we're doing in our professional service contact is we're including that now and we learned when we were in this

process through working with the city attorney's office that others were looking at the same thing. and so we anticipate this will be a report and we're really to include it in early february. so examples of where we're tending to is the 2000 marin cm/gc, the treasure island d-b, and the wastewater capital plan program services which is in development the right now. next slide. although we identified the three areas of focus, we got some feedback from ininfrastructure there might be

interest in other categories that we'd be able to get information from staff to help educate us and fine tune where we're going. next slide. last slide. >> president: thank you so much, allen. that was very informative. colleagues, any questions before we move to the next presentation? allen, one other comment i have is i wonder if you have any internal mentoring programs, you know, people trying to mentor or seek mentorship within the organization? >> we haven't done that. that's what we're -- >> president: i thought that was an external. >> no, we wanted to do that

within infrastructure. we had a real need for it. so we wanted to kick off with that. >> thank you so much. >> president: back to you. >> thank you, madam chairperson. the next item is the general manager's office budget and this will be broken up into two different sections. one will be my presentation, very short presentation on the actual office of the general manager and but within that will be right after me the h.r.s. presentation which will be presented by our acting chief people officer rachel gardunio. with that, next slide, please. one of my roles as a general manager is to ensure there's a clear leadership and direction in implementing the commissions adopted policies and i've worked with every part of our organization to ensure that our

proposals and actions are aligned under the following three overarching principles and we've mentioned them earlier. one is responsible management. we want to make sure we're responsible and transparent in everything we do and that includes not only financial sustainability, but environmental stewardship. it includes a new approach to our capital plan and improving our agency's statebility and resiliency to deal with disasters and climate change. affordability, it's important we ensure we're always being mindful of how our decisions affect rate variability with attention to those most in need as we recover from covid-19. and, finally, that we're ensuring that we are creating sustainable career opportunities and pipelines within the many communities that we serve and promoting racial equity in all of our actions both externally and internally within the organization. next slide, please. to help implement these strategies, i rely on my

executive leadership team members led by ron flynn and michael carlin. while the organization reports up to me, general manager's office budget primarily includes only the groups you see in yellow. including human resources which will be presenting their budget separately to commission right after me. real estate which negotiates our lease and land transactions. emergency planning and security which plans and coordinates our agency's response during emergencies like covid-19 as well as ensures the security of our critical facilities. next slide, please. the general manager's proposed budget is approximately $35 million and has 116 full time kwifls. this includes h.r.s. as well. the budget does not have any major changes. the main cost driver is the annual cost of living for

labor. as you see there there's really not much course change over the last. >> president: any questions, commissioners? okay. let's move on. >> okay. rachel is our acting officer and she'll be presenting the rest. >> good afternoon. i have been with the team and the relations manager for the past six years. next slide. today, we will review the human resources organizational structure. go through our strategic

planning process and the priorities we developed, discuss our challenges and budget requests and introduce h.r.'s team and core functions. next slide. this is a high level look at h.r.s.'s current organizational structure. it's made up of teams that work on our daily demands, but also work together to achieve our common strategic goals. we'll talk more about the teams and some of here challenges a little later in the presentation. next slide. as a field, human resources and in particular human resources and the public sector, but in the past three years, we've been very intentional in developing our business strategy, we started with an initial 6-month project both for h.r.s. and the p.u.c.. we built models across our organization. we've then created long term goals and measured our progress over time. we identified the skills we

need to achieve that strategy. this work force plan drove us to and also shaping how we would hire new staff and develop existing staff. this work culminated in our strategic plan published july 2021. the strategic plan is a road map for h.r.s. and each of our teams to ensure we're working towards our individual and shared goals and holding ourselves accountable to measurable objectives. through the strategic planning process, h.r.s. developed these five priorities of our h.r. work and our staff. by engaging in this project.

h.r.s. moved to being fully remote in 2020 and learned how to collaborate electronically. we all continue to stay on track and make sure we don't lose the momentum. the challenges we're currently facing is staff turn over. we've had nine vacancies due to the impacts of covid alone. allen talked earlier about the infrastructure and this is also true for h.r.s. and also is a piece of the pie for why other groups are experiencing high vacancy rates as well. h.r.s. carries out the core

functions. the high vacancy rate is one of the top challenges facing h.r.s. and the p.u.c. right now each exam takes a considerable amount of time due to the great and once the recruitment and selection process it still takes eight to six weeks. the on boarding process can take even longer depending on the complexity of the situation. the acquisition boarding team has been impacted by turn-over in the last few years and one thing we can do to enter the process as smoothly and quickly as possible is to ensure that our on boarding team is fully staffed. in order to do that, we're

asking for a permanent 1204 for the town acquisition on boarding team. e.e.o. programs are responsible for investigations and training related to discrimination, harassment and retaliation based on a protected class. the health and safety team is available for a comprehensive safety team. they collaborate with our divisions. people strategy, equity analytics is responsible to understand our current work force and to prepare the sfpuc to have the right work force with the right skills it to continue to deliver our essential services into the future as i mentioned one of our top priorities is to be

data people want more data with more nuanced information. the value has increased and the demand is beyond what our capabilities can provide. allowed to make data driven decisions. we need to move beyond just an h.r. person doing statistical analysis. as a result, we're asking for an 1823 administrative analyst so that we can hire people with specific data analysts, and experienced team. the labor relations team ensures a fair working environment.

they also provide day-to-day advice to our supervisors and managers and interfaced with our labor partners. our learning development team works to facilitate training, coaching, and consulting. our payroll team is made up of dedicated staff that work to ensure 2,300 employees all get paid on time every two weeks and it gets even more complicated to pay our employees when they're on a leave of absence. as you can see, the number of transactions and complexities has increased. overhappening laws and rules. our employees go on leave because they have personal challenges whether due to their

own health or family members and we want to ensure they receive proper pay in a timely manner in order to do our best, we're asking for a 1224 principle pay clerk and analysis. these are the teams and their core functions. as discussed earlier, we are requesting three new positions over the next budget cycle to address the key positions. you'll see that the only change to our budget is personnel costs due to cost of living increases this is the overall cost based on the previous slide. we're requesting three positions open in the next

budget cycle so we're not asking for any new funding. thank you for your time today. >> president: thank you so much, rachel, i really appreciate it. that was a great presentation and i'm so glad to hear you're talking about using data more effectively. as you know, it's my bread and butter and i have a lot of excitement around it. i think we can definitely do a lot more. colleagues, any questions, comments, please. >> yes. since you mentioned that so many people are leaving, is there any attempt to find out why to do any interviews when people are gone so that we can at least find out is there a survey or collect information better? >> absolutely.

we have started doing exit interviews and we have been reviewing the data and the and we've been tracking that information and following up as needed. i will say we've definitely been impacted by the city's telecommute policy. the requirement to return on site and also the requirement to work within california. we've had nine vacancies alone as a result of that. >> yes. i can believe that. but we had some problems even before covid and so i think it's important. so when will you have that information? how are you gathering it since we're talking about data? that would be so important as we talk about hiring new people. so when do you expect to have that? >> we have data and we're compiling it as we go. we are connecting exit interviews, of course, they're voluntary.

so often people don't choose that information, but we do have some data that we are now following up on. >> okay. i'd like to see that in some form. if there's 15 people leaving and we get two, there's still some insight. so i'd like to see that in some form or another. thank you for your work. you know, i know this just happened to you. thank you so much for dealing with it in such a graceful manner. thank you. >> i know that the key to suring up all these vacancies is to first sure up h.r.s. so i'm here and committed to keeping things stable. >> commissioner maxwell, i just want to highlight the work that rachel's done in a tremendously complicated time with everything going on with the pandemic and then for two people to leave, she really did

step up in this whole process and take responsibility and hit the ground running. so i do appreciate that. >> we all do. thank you, rachel. any other questions, colleagues? >> okay. rachel, i have one last question. is there any way we can have sort of like a profile of people who do apply for this position, but they don't get them and maybe we can sort of have -- we are going back to people or having less that we can send an e-mail out to people when these things are posted, you know, i'm sure there are some legal things associated with that, but i'm not sure, maybe there isn't not being a lawyer, but i think it would be good to kind of make sure we can reach out to people who are interested and didn't get the job and maybe we can bring them back to the pool and have them apply. >> absolutely.

thank you. >> president: excellent. if there are no more questions, maybe then we can thank rachel and go ahead then. >> thank you. r, commissioner ajami. presenting external affairs budget will be deputy a.g.m. emily lamb. >> thank you so much, general manager herrera. good afternoon, commissioners. i'm the deputy a.g.m. of the external affairs division. it's my honor to represent external affairs in today's budget hearing and i'm joined today by my colleagues, the managers of the various divisions and emily alt who manages our budget. it's a dedicated team of employees and is organized in the following divisions. communications, policy and government affairs, strategic initiatives and community

benefits. we convey the core messages of the agencies to entities in a timely and transparent process. we are responsible for deseminating the policies and programs of our agencies to stakeholder groups including our commissioners, elected officials, the media, businesses, community organizations, residents, and employees. we strive to improve awareness and understanding of the agency's mission, the long-term partnerships and strengthen the common identity of our employees. we're going to start off today talking about communication. the goal of this division is to drive awareness and understanding of the mission and values. core functions include leading our agency's external communications on our operations and projects.

and managing internal and external websites and social media. next slide, please communications include water conservation and drought. public power. ful storm water management and flood preparedness. rates, affordability and customer assistance programs and covid-19 response and recovery. next slide, please. next, our policy in governed fairs. the team supports sfpuc enterprises and bureaus to achieve all policy at all levels of government. key functions include guiding items through the legislative process. developing nurturing relationships and managing legislative affairs in washington, d.c., and sacramento. then we have strategic

initiatives which supports development in the agency's direction and division. and coordinate supports and/or lead strategic planning, implementation and communications for critical sfpuc initiatives, programs, and projects. key functions include being responsive to high priority and mission critical crisis, policy matters, stakeholder requests and matters involving elected officials. and the lead for the sfpuc for public records requests. at the local level, policy and government affairs supports capital projects by securing legislative approval. for example, pending commission approval, we'll bring several important legislative items for

clean power sf which is critical to the program's success. at the state level, lobbying for funding. for example, p.g.a. was implemental in last year's state budget. $3.6 million for power customer arrearages. in particular, we will make sure additional funding will be available to waste water arrear ages in the next round. this includes coordinating with staff across the agency to analyze and engage in over 200 bills a year. additional supports the agency's party if needed including the state water board

and c.p.u.c.. infrastructure funding is also a top priority as funds are implemented from the recent infrastructure bill. also priorities that support sfpuc and rate changes. lobbing to create and unfund a program that's in addition to the one-time moneys i had talked about previously. the strategic initiative parties include serving the public records request and be responsive and transparent in the community. we also staff the sfpuc citizen advisory committee to ensure the seats are filled with

diverse and engaged representatives. parties also require the development and update of our low income customers and small businesses one initiative is the implementation of the debt forgiveness office and the treasurer's office. this pilot will analyze how effective existing discounts are in helping customers versus larger discounts or with that incentive. finally, the team is looking forward to working and supporting business services as they lead the up coming rate study. our community benefits program consists of rate payer funded programs that are tied to our agency's core operations and approved by our commission. and the social impact partnership program with private firm investments in community. the community benefits team collaborates with staff throughout the agency to ensure we are collectively moving to

working to more equitably serve more communities impacted by our services and praegszs. next slide, please. the top list is a new southeast community center at 1550 evans. it will be a point for bayview communities to learn, play, gather, and grow. the building is slated to open in the spring of 2020 and our team is currently working hard on finalizing leases, activation and programming initiatives and operations and facility maintenance plans. another priority is coordinating between sfpuc's project team artists and the sf arts commission to align our agency's considerable art enrichment contribution with the sfpuc and our community benefit policies. next, is our efforts to engage

with young people to develop and to utility career awareness. through the project learning partnership grant program, we are currently executing contracts with 18 youth serving organizations to support the integration of p.u.c. contents into the program. and, as a result of our summer future externship and our partnership with john o'connell, hundreds of sfstudents have learneded about where their water comes from and what happens when they flush their toilets at home this fall. we have reached an external audit of our partnership program. the staff are working on implementing its recommendations. and, finally, we are working to advance our environmental justice goals and a new initiative related to air quality monitoring. >> emily, on that last point, not right now, but at some point, could you give us more information on what that means. that last point is very

interesting. i'd love to know exactly what's happening. >> sure. do you want a break now and i can hand it over or do you want to wait? >> you can just send it to us. that's fine. >> all right. >> what point are you talking about? advancing of environmental justice? >> yeah. land use strategies and air quality monitoring. >> yes. thank you for asking for that. >> yes. we'll be happy to get you more information on that. okay. so three funded project based to be securely funded by our operation budget. mission critical legally mandated work. we ensure that we as an agency are timely, fully responsive and transparent to community while meeting our legal obligation and responding to public records request. regarding the staffing of the citizen's advisory committee.

they actually were all approved in a previous budget cycle and two are currently filled with tent positions and one is in active recruitment and one thing i'd like to note is that the volume and complexity of public records request has increased exponentially. and the temporary emergency allowance is now gone. so it's critical that these positions be used to obtain current staff. again, they ensure we're able to meet our mandated requirements around time line so this is our budget and the use of our funds. as you can see it goes to our

use of funds. the personnel is related to the cost of living adjustments as well as those three positions i just spoke about. next slide, please. and here is also another look at the same thing, where you can see the two positions we requested during the 22-23 fiscal year. so we're requesting too then and also being sensitive to the budget, we decided to request another one, but waiting for 23-24. next slide. and here's the total position counts that those request. we're asking for the next fiscal year and the one in 23-24. you can see the modest increase in our total budget. and that includes my presentation. thank you. >> president: thank you so much, emily.

that was very useful and i just want to say from my personal experience working with emily this last year on some of the local, i mean, not local, statewide efforts around assistants to customers and she was excellent in helping to make sure you have secure enough resources and participate in the efforts. colleagues. is there any questions? no questions. another thing i want to say is, maybe we should on the communication side and external affairs side also think about how we can use information and data in a way as a way of engaging with customers. i don't know if this falls under your category or a broader communication theme,

but it would be good to know that people, customers and users are engaged actively overtime and know exactly what's going on. >> yes. that would be under external affairs, anything with customers. so that's a great point and i think numerous parts of external affairs are how we do in our relationships with our local customer who is have arrearages and that's what i alluded to in the pilot. all the way to we're getting some new and exciting staff who are going to be working on the digital and social media side and we're getting to work on data and web analytics and we would love to continue engaging with you on what are the new and forward thinking ways that we can engage our customers especially given the complexities of customers

dealing with drought to their bills, you know, the potential rate increases moving forward. so i think that's all an exciting area and we'd be delighted to have you give your input on that. >> president: thank you. that sounds great. excellent. okay. i actually have a request and an announcement. so we were hoping before we move on, if there's any other questions for emily, i think you have a question. go ahead. >> very quickly. could you give us b1 with dollar amounts attacheded. i know there are a lot of substitutions happening. just to see if we're going a creep up or creep down as we substitute old positions for newer positions. okay. that's it. >> president: okay. any other comments, questions? okay. so i have a request. so two things, one is i was hoping we can all take a

5-minute break and the second thing is we have donna tirelessly working behind the scenes to get us an extra 30 minutes on sfgov tv to make sure we can finish this round of conversations and presentations and then we can sort of roll to the next meeting and talk about the content we have there. so 5-minute break and we will wrap up at 1:30 to make sure we can hear from ron and have public feedback as well. if that's okay with everyone, we should all be back here by 12:43. . >> president: thank you so much for indulging this break. general manager herrera, back to you. >> thank you, madam chair. to present the business services budget, my chief of staff who some of you have met

and some of you who haven't, ron flynn from the deputy city attorney's office will be presenting that budget. ron. >> good afternoon, commissioners. thank you very much for having me today. i will be presenting the business services bureau's proposed budget for 22-23, and 23-24. can we go to the next slide. this is what we're going to go over today. we're going to look at the business services background and vision. our priorities for the next year, its budget themes and how they interact. we're going to specifically call out the business services budget proposals and we're going to go over the budget summary and, of course, we will need time for questions. next slide, please. so this is an overview of business services. i want to start with what is not on that slide. this is a general manager visit services chief financial officer eric sandberg who

retired last week. he and the financial planning team are the ones who put the budget and i and we all owe them a debt of gratitude for his years of service and leadership. he asked me to present this and to take over his role as acting general manager of business services, but in the meantime, before we have a new cfo, we have two deputy chief financial officers, nancy hong and charles pearl until we have a permanent cfo. so sfpuc services consists of i. divisions who herself is headed to a well-earned retirement in a few months. this is the beginning later

this month, we will have jennifer hawkins. we're really excited about that and we want to thank lawrence for all of his work he's been doing. this is a critical component. you can see oversees business applications and enterprise systems. also, all of our technological operations critically cyber

security also for the budget, for all the work that led into this meeting headed by deputy c.f.o. charles. and that really eric described it as his swap team. it really helps implement all of the commissions and the bureau's initiatives and also houses first management. and finally, we have a new bureau that is -- we are in the process of recruiting and this comes directly out of really

elevating this so that we can work with the controller's office on audit arriving out of the public integrity audit. this is an important new provision. next slide, please. business services vision has four pillars, stewardship, excellent service, financial stability and culture of inclusion equity and excellence. all four of those pillars support the work that we do which includes accountability to our customers and rate payers and really understanding our customers'' needs that includes all the enterprises and all of our retail and customers. and it really involves lowering cost of debt and we engage in an inclusive high performance

team on equity and excellence where we're really working across the agencies on these issues. next slide, please. we wanted to look back at the last budget and sort of see what business services told the commission was going to be doing. at that point, there were three big themes. meeting of the increasingly and diverse complex agency. that really sort of clean power is growing, increasing the operational needs of all the bureaus to support them and innovating on programs and all of those things were achieved and worked on in the last two years. developing to meet these demands, that was planning for succession, enhancing employee engagement. one of the most recent things, we hired a brand new chief

information officer and all of our candidates were excellent in the field of technology. we hired someone who understands the need to bring all of her staff along and support them and keep them and so we're really excited about that. and then, of course, managing the debt services. this was it. some huge successes came out of this group, really pursuing all alternativetive financing. versus the revenue bonds the team was able to achieve. next slide, please. so, of course, like everyone, there were seismic chips for business services in the last dumb of years. the pandemic completely realigning business services priorities not just for us but across the agency with remote

work solutions, growing cyber security risks, all of those came into play. emergency response increased our need for fema reimbursement for d.s.w. workers. the public integrity response really did come and hit business services hard. when i was at the city attorney's office, we worked on that day by day from the first day of the announcement that the group was able to secure a clean audit opinion really

leaned into and that's something we really want to highlight: next slide, please. despite all these challenges and hard times. employee engagement and business services is high. and we're business services not only responded in the highest numbers, but really have a high level of engagement, but the important part is over the last two years during this challenging time, it grew. the reported engagement group by 10%. so it's a group that's really digging in and is ready to push forward on the commission's agenda. next slide, please.

so here's what we're these are the pillars that are holding up business services, this is what the team worked with eric and developed and it is at the top culture of inclusion and equity developments. that's for our own monitoring our systems. really focusing on cyber security means which we're going to talk about and meeting the technology demands of the organization which means increasing our data abilities, financial sustainability, really institutionalizing the management and external funding. we really want to be able to continue to leverage long-term debt and so we're looking to bring that in-house rather than

relying on consultants in that and focusing on customer affordability and access and alignment with the commission's wishes and impeccable stewardship really looking at restoring the trust agency and business services is at the heart of that. the next slide, please. so just very briefly, while these are four pillars that business services came up in developing their budget and our budget, i have a harder time with eric's budget until last week, so i'm going back and forth. but these pillars just align right in with the overall piece budget where the themes are set out in the general manager's budget, responsible management, access to affordability and supporting people and communities. so,s with that, we want to turn

to the actual budget with that background. this is a look at the current budget right now. fiscal year 21-22 of which the budget proposal is keyed off. you can see how the money is spent consistent with what we said is the largest share of our budget and customer service bureau is the next largest together. they make up about two thirds of the budget. finances about a quarter. in there, we have the other divisions. you'll see there's a portion there called cow calf at 8%.

and that is going to increase because those are going to be consolidating to business services. it's going to come out of other budgets and then we allocate it out. next page, please. so on that about $80 million budget, this is really meant to highlight what we're going to talk about for these are the new proposals that are set out in business services budget. and so this is -- they add up to about $1.7 million and $1.6 million a year over the next two years. some of that one-time much of

it ongoing. it really is focused in these areas that you see which i'm going to discuss on the next few pages, but this gives you the sense of the scale and we can always come back to this if you have questions about particular budgets, but it is as you can see cyber security and data maturity are two things in which we're really going to be seeking to expand a role in. next page, please. so the first four proposals that i'm going to talk about are the first one is cyber security. currently, we have two cyber security satisfy in an increasing workload due to reduced cyber security and risk. new city wide requirements as a result of a mayoral directive and an increase in records request, without the highest

level of access to our records. d.t. and ot.a.'s review of all vendors taking up additional security and administrative staff plea. to support these principles, increasing demands, we're requesting a new 1054i.s. business approval. including service now and cyber security technology which used to just be absorbed into the i.t.s. budget and is now yvr growing. the next proposal is just an increase in money for applications, licensing and maintenance. our c.2m. electronic licensing and billing fees, those are

large costs about $300,000 a year which are being added to our budget and there's no other, you know, it's all added in for the new licensing fees. the radio project is a really important project. it really provides all of our field operations, the entire agency to communicate when cells go on in our far regions of hetch hetche. it allows them to respond on its own radio system rather than relying on cellular systems. that has been built. now we are.

it is really taken the first year and it's hiring a vendor to get into an analysis. what is the data that p.u.c. has and what are the uses that people have a need for? we heard h.r.s. has some needs. we heard, you know, infrastructure has some needs and really figuring out what are all of -- what are all of the needs and then design a new data maturity program based on that. that then leads to further positions which are running it in i.t.s.. so it is a two-prong. part of it is the review

analysis. that will be coming to the commission really sort of seeing what kind of data you're looking for as well in building that out. can we go to the next slide, please. so these two proposals are both housed in customer service bureau. one of them is for the capacity charge program which is staff resources at our 49th south van ness park center which is amazing if you haven't visited it yet. i encourage you to do. these are all but ten positions that are moving to permanent. there is one new position that thises in not coming on to our budget. it's a $16 million capital cost over four years.

>> and that program is going to be up and running, but much of this is on the capital slides. the final thing i want to talk about are the grants and loans manager. this is a new position. it is really meant to bring in-house the management and administration of our external funding. this is working to get as many of our food that.

and right now, we're running out of money on the contract and, you know, what do you do and how do you do it so this is really looking to institutionalize it. and last something that i talked about is there's going to be an increase in the finance budget for controller's office work orders. this is cost neutral. this is taking out of other enterprises and bureaus budgets so it all comes from one place and then it will be allocated out, but it does appear as an increase in the budget. move to the next. so this shows the use of our funds and the total budget across the three fiscal years.

without the cal cap, the budget goes down, but in reality, we need to be honest and there is increase in our budget from 21-22 to 22-23 when you set aside the cal cap. about $1.7 million of that is for the new projects that we just went over ifor ben fits which have gone up. for 23-24, there's a $3 million increase. $1.6 million is for the new projects we just went over and the rest is primarily for increased salaries and benefits. the next page, please. so this is our actual breakdown of the increases. these numbers line up with the 1.7 increase.

it does show a decrease because of the elimination of the cal cap, but, again, that's a false decrease and the all other that is there, again, $1 million of that is for the centralization of the controller's work orders and the rest is for regular based budget changes, minor increases and fees and other things like that. and then finally, i want to show you the total positions that we're talking about. there are an increase in positions. there are from the 2021 adopted 21-22 adopted positions, there are requests for 14 new positions. eight of those are on the operating and six are not. those are the project base ones that are the capital funded ones. of the eight in the operating, four are done through salary savings.

our offset which leaves four new positions onto our operating budget and i'm happy to talk about what those are and where they're going and during the second year, there's a request for six new positions, but three are being offset, so it's an increase of three. those are connected to the radio project and the data maturity project. i guess i should point out in the first year, the ones that are going on to the budget are data maturity, cyber security, and then a position in the capacity charges at the customer service bureau. and that is an overview of our budget for the next two years. i'm happy to take any questions. >> president: thank you, ron. that was great. colleagues, any questions. go ahead, andy.

>> thank you, ron. the businesses services section, were those function all within the c.f.o.'s per view or was there a mix and match? >> i can't speak historically where they all are here, but there are functions that are not -- that don't historically fit under c.f.o., so i.t.s. is not housed in the c.f.o. and the same with some places. the core c.f.o. functions are there, but there are additional functions which i think because of eric's strong ability as a leader, he ended up being asked to take on and. >> that was my question, not really industry norms, but within the p.u.c. what the

change is that we're making here and it looked as though the c.f.o. position had both the specific finance responsibilities plus the business services as well and and that's changing. number one, i wanted to make sure i'm reading that right. >> so it's not changing necessarily for the long term. when eric retired, we were left with the position that had the c.f.o. position and we need to fill those with people who have that training and experience who charles and our financial team is stepping up and doing that but together, we decided i would take on the acting a.g.m. so that administrative role of

overseeing all the agencies so ha charles and nancy did not have to take on those particular roles. we hope to be able to come back and have business services led by a c.f.o. and a.g.m. of business services. but in the short run, rather than having charles in the middle of budget season and nancy who was, you know, she was always busy take on all of eric's role, we have split it out on a temporary basis during the recruitment process. >> okay. that may be getting to my question that, dennis, in your organization chart, you had the chief of staff responsible for those functions and i was wondering, it's now a temporary accomodation to the vacancies and as opposed to really a realignment of responsibilities.

>> that is correct. >> okay. thank you. >> any other questions? >> president: okay. i have a question if you all are done with questions at this point. ron, can you talk a little bit about the c.i.o position? where does it fall? who will go under it? i'm just very curious to see how's that going to play out. >> so the c.i.o. position as it's currently in business services reports directly to the c.f.o. and so it is an overseen -- all of the -- let me get my chart here, it oversees all of the various functions, in that location. the system managers, the

i.t.c.f. center, customer service which will go up to the new chief information officer and as we discussed, as we build the data program and we call it the data maturity program, that's going to roll into and roll up to the c.i.o. currently. and that position reports to the c.f.o.a.g.m. of business services. and you know dennis is looking at the overall structure, but that is the structure as it currently exists. >> president: i wonder though. okay. so question for me is how does that position interact because that whole potion at some point, it would be a function that connects all these different enterprises and can

bring all this information together. it can provide across the board some cross collaboration, cross coordination, cross poll in addition, whatever you want to call it to create, you know, better usability. i think there's a lot of great points made about the position you're in. >> madam chair, this kind of goes to both you i think and president moran. you have highlighted sort of the organization and i answered the question about some things were dictated here by vacancies and whatnot, i'm also evaluating the organization and looking at it and i've always believed the best thing to do is come in and not make any radical changes, but make sure it is as you move forward, that

it's organized in such a way that you're building collaboration, building communication, making sure entities are talking to each other and that you have an organization that is designed for the challenges that you are facing, not just for what you did in the past. so i am and that is something that i committed to myself that i was going to learn the organization and make evaluations and make adjustments as necessary if we need to change structures so that we are more efficient and promoting collaboration and cooperation. so that goes to kind of bode the question that i think you and commissioner moran were getting at and that's something i'm in the process of evaluating. >> president: great. in the appendix, i very much appreciated and i jumped up and down reading it which said utilizing data for strategic decision making which is definitely what i want to see more of. so i'm hoping that.

>> yes. and i will tell you that our new -- excuse me. our new chief information officer is very focused on that. she and i have talked about the use of data and she's very excited about the possibilities. that's something that we're going to look at. >> perfect. thank you. >> i'm currently the acting i.t. director and i just want to follow up on the point about the current position resides in business services and one of the key functions of business services is we service all other parts of the interprizes and other bureaus. so we do interact with all different facets of the agency in support of their technology needs. so that's a function not only today and we anticipate that going forward. >> sure. >> i'm sorry again, pg&e, did i miss something?

have we talked about cyber security? because that seems like a big deal and are we comfortable we're doing enough. >> i'm happy to have you do that, lawrence. >> the part of the budget request is not only a request for additional position, but additional funds for software and services to continue to evolve our cyber security program. i'm absolutely happy to probably discuss this in a closed session if you want more details about our cyber security program just given the sensitivity of the nature it's probably more appropriate to discuss it in the closed session. definitely, we are looking from a budgetary program to continue to advance our cyber security program and as a result, the requests for additional funding not only for fiscal year

2022-23, but also 23-24 as well. >> that would be good. i know we've had that a little bit before, but there's been fairly recent information from the federal government about specifically water agency risks and so having some discussion some time in the future would be great. >> great. >> president: great. any other questions? okay. it seems that we are in the junction to have some public comment. so madam secretary, could you please open to public comment. >> secretary: members of the public who wish to make three minutes of public comment specifically on item number four, the proposed bureau operating budgets for fiscal year 2022-23 and fiscal year 2023-24 for infrastructure, general manager, external affairs, and business services, dial (415) 655-0001. meeting id 24927172413 and

pound pound. and you will have three minutes to speak and we will give you a 30-second notice. mr. moderator, do we have any callers? >> madam secretary, there is one caller wishing to be recognized. hello, caller, your line is open, you have three minutes. >> caller: guess who. david pillpell. as i alluded to earlier, i have reviewed the organizational structure over a long period of time. here are my thoughts. i would consolidate and restructure infrastructure to some degree. ultimately, i would have a smaller infrastructure bureau providing centralized comments to the three enterprises with

the chief engineer and staff in each enterprise. this change contemplates the position by katie miller to waste water. i've said many times we should reduce the amount of contracted engineering work and hire more in-house. i would move human resource back to being under business services consistent with most city departments. clearly the general manager is ultimately the appointing officer so there's a dotted line no matter what. within human resources, i would probably have three major divisions, one i'm calling work force, one work place and a third box including payroll, analytics, admin and probably staff training and development. i would move the external affairs functions under the new and very capable i might add

chief of staff, probably after you've hired a new head of business services. i don't think external affairs needs to have a stand alone a.g.m., i think that would be an excellent improvement and, again, i think that can be under the new chief of staff. i challenge the data maturity initiative. i read those slides several times, but it still doesn't make a lot of sense to me. i would delete that initiative or program entirely or just fund an initial study with a maximum of $100,000. i think any findings or changes that are made as a result of that study can be accommodated with existing staff. it seems like it's just better integration of data into decision making, so i'm not sure that that needs to create a whole world unto itself. i will study the slides more carefully and i intend to

submit these comments and my earlier comments in writing and expand on that. i support the thoughtful work that staff presented here and the various managers and their staff. i will -- i still have a few seconds. of excellent. in my 30 seconds, i was in last week to pay a bill and customer service, staff, could not have been more pleasant and helpful. i have told marge that directly, but i wanted the commission to hear that the front line staff and customer service that relate to customers front-facing every day do a great job and, you know, they're really the face of the p.u. krvmentd and i could not be more pleased with marge and her staff in customer service along with everybody else and the whole operation top to bottom just so that i'm very clear on that. thanks for listening. >> thank you for your comments. madam secretary, there are no more callers in the queue.

>> secretary: thank you, public comment on item four is closed. >> president: thank you so much. any comments? suggestions? thoughts? okay. if we -- go ahead. >> commissioner: i just wanted to thank everybody for a job well done and i also wanted to thank david pillpell because i really appreciate his comments and i know they're honest because if they weren't right, he would have told us, definitely. so i really appreciate that and i appreciate all his thoughtfulness and his commitment to the p.u. krvmentd, so thank you, david, and thank you everybody else. >> president: andy, go ahead, please. >> commissioner: two things. i think david could also give staff some training on how to pack a lot of information into a short period of time. [ laughter ] but i really intended to say however was that, you know, within our

discussion, i think the one thing i have outstanding, i think we need to keep looking at is as we've talked about reconfiguring the capital program and stretching it out in part because we have accumulated surpluses. we've talked a little bit about the fact there's two approaches to that one to do less, commit less over time and the others to try to solve the capacity problem and to do more. i think we need to look at both and make sure that we have an appropriate size and that we are funding our efforts appropriately to take care of the real needs of the agency and that we're not just using a financial problem to exacerbate a maintenance problem. >> commissioner: and i have one comment, through the chair, and that is in my two plus years now sitting on this commission, i have noticed today and i don't know if this

is just -- well, it's not just, but at least partially because of the commitment the new general manager has to do a real assessment piece by piece what he's inherited that i've felt that there's been, you know, certain levels of energy in and excitement if i can use the word in what we've seen on this first particular meeting of the budget process that just, you know, i think really reflects the commitment of the staff to let's put this whole thing together. i don't know. i remember when the new head of the san francisco symphony took over for tillsom thomas, i went to one of the performances and it was like the whole drill is like playing at the top level and it was like are they just trying to impress the boss or something, you know, keep their first clarinet seat or whatever

it is. i'm just very whimsically saying that. i just wanted to note that. >> thank you, commissioner paulson. and let me just say for the staff has been -- i couldn't ask for a better group to have sort of got my feet wet with in these first two months. they have been incredibly professional and committed and full of energy and, believe me, i'm not taking responsibility for that. they have their own commitment to professional excellence and when i came in, they were there before i even got there. so they deserve all the credit. they've done a fabulous job, thank you. >> president: thank you so much. and i also want to say, i personally couldn't attend eric's retirement get together, but if you know and he's not here, but i also want to thank

him for all the effort and time that he puts into this. there's a lot of questions that would come up and he would say we're trying to understand the budget process and now you can see it's for alongside everybody else and it's quite exciting. and, again, i also want to thank everybody who presented today and all the great set of information that was provided to us and i echo so fi's comments that david pillpell is always providing a lot of information. but, you know, it's okay. we can all agree to disagree or have a debate. with that, i think -- i know that madam secretary, we have the next item that needs to be read if there are no more comments by the commission. >> secretary: the next item is item number five, a motion to

continue the meeting to a special meeting noticed for friday, january 14th. >> commissioner: move to continue. >> commissioner: second. >> secretary: great. [roll call] the motion passes. >> great. i think with that, do i need to join the meeting or send it back to the president to join the meeting. >> secretary: we're continuing the meeting. >> next week. >> secretary: yes. >> but for today, we are done. >> secretary: yes. >> okay. see everyone next week. >> happy new year everyone. >> happy new year.

♪ >> it is unclenate's creativity time. welcome to uncle nate.

we are are going to draw bubble letters. you need supplies. you need a pencil, markers, something to color with and a few pieces of paper. gather up supplies and meet me back right here. all right. let's go. got all supplies out. draw your name lightly in the center of your page. give yourself room. give each letter a little room. all right. now, i want you to draw around each letter like you are driving a car around each letter. next, let's erase the center. take away the original outline and then we will be left just with the bubble letter.

make sure you get the center part out of there. okay. we will touch it up. time for color. i chose yellow, orange, and red. yellow at the top, then the orange in the center, and i am making a stripe right through the center all the way across. last, my red, which makes a cool fade. time for the outline. unclenate's creative time. figure it out. now we are going to do a drop shadow. a shadow underneath each letter and to the side. it is really going to give it a 3-d look.

wow! great job. i bet you didn't think you could draw that. now you can draw bubble letters you can use it to draw things for your friends, cards. it is really useful. i hope you had a good time. i will see you next time on uncle nate's creativity time. ♪ . >> my name is dave, and i play defense. >> my name is mustafa, and i am a midfielder, but right now, i am trying to play as a

goalkeeper, because they need a goalkeeper. >> soccer u.s.a. is a nonprofessional organization. we use sports, soccer in particular to engage communities that can benefit from quality programs in order to lift people up, helping to regain a sense of control in one's life. >> the san francisco recreation and park department and street soccer u.s.a. have been partners now for nearly a decade. street soccer shares our mission in using sport as a vehicle for youth development and for reaching people of all ages. rec and park has a team. >> i'm been playing soccer all my life. soccer is my life. >> i played in the streets when i was a kid. and i loved soccer back home. i joined street soccer here. it was the best club to join. it helps me out.

>> the tenderloin soccer club started in the summer of 2016. we put one of our mini soccer pitches in one of our facilities there. the kids who kpriez the club team came out to utilize that space, and it was beautiful because they used it as an opportunity to express themselves in a place where they were free to do so, and it was a safe space, in a neighborhood that really isn't the most hospitalable to youth -- hospitable to youth playing in the streets. >> one day, i saw the coach and my friends because they went there to join the team before me. so i went up to the coach and asked, and they said oh, i've got a soccer team, and i joined, and they said yeah, it was he for everybody, and i

joined, and it was the best experience ever. >> a lot of our programs, the kids are in the process of achieving citizenship. it's a pretty lengthy process. >> here, i am the only one with my dad. we were in the housing program, and we are trying to find housing. my sister, she's in my country, so i realize that i have a lot of opportunities here for getting good education to help her, you know? yeah. that's the -- one of the most important things that challenge me. >> my dad was over here, making some money because there was not a lot of jobs back home. i came here, finish elementary in san francisco. after that, i used to go back to my country, go to yemen, my country, and then back here.

last time i went back was a couple years ago. >> i came here six months, i know nobody. now i have the team has a family, the coaches. amazing. >> i'm hoping for lifelong friendships, and i'm super inspired by what they've been able to achieve and want to continue to grow alongside them. >> i love my family, i love my team. they're just like a family. it's really nice. >> street soccer just received a five year grant from the department of children, youth and family, and this is an important inreflection point for street soccer u.s.a. because their work in our most important communities is now known beyond just san francisco recreation and park department, and together, we're going to continue to work with our city's most vulnerable kids and teach them to love the beautiful game. >> i want to tell everybody

back home, i hope you all make it over here and join teams like this like street soccer u.s.a., and live your life. get a better life. >> right away, just be patient, and then, everything will be okay.

>> first of all, thank you for coming to celebrate this incredible milestone. i am really excited that she accepted. because i know what you often times may see is the fights between kim and i. what you don't know is about the friendship and the amount of love and respect i truly have for her and her work ethic from

the