The Mayor's Office
and the Controller's Office
have collaborated with City departments to develop San Francisco's first Five-Year Financial Plan covering Fiscal Years 2011-12 through 2015-16. The Plan was adopted by the Board of Supervisors on June 7, 2011.
Purpose of the Plan>
The Five-Year Financial Plan
is required under Proposition A, a Charter amendment approved by voters in November 2009. The City Charter requires the plan to forecast expenditures and revenues during the five-year period, propose actions to balance revenues and expenditures during each year of the plan, and discuss strategic goals and corresponding resources for City departments.
Over the next five years, the City will experience a continued recovery in tax revenues, most of which bottomed out in Fiscal Year (FY) 2008-09 or FY 2009-10 and are projected to return to pre-recessionary levels in FY 2012-13 or later. Despite the fall-off and slow recovery, San Francisco's current budget and financial status is relatively stable compared to many municipalities in California and to other parts of the United States.
Nonetheless, the Five-Year Financial Plan shows the cost of city services is projected to steadily outpace revenue growth during the five-year period. If the City does not take corrective action, the gap between revenues and expenditures will rise from $283 million to approximately $829 million from FY 2011-12 to FY 2015-16.
Employee pension costs, wages and other benefit growth are the single largest driver of cost growth and the imbalance between revenues and expenditures, growing by $648 million, or 32 percent, during the five years of the plan. Benefit costs alone are projected to grow 62 percent by FY 2015-16. In contrast, total General Fund revenues are projected to grow only $416 million over the same period, or 11 percent.
Other costs projected to increase include: Professional & Contractual Services ($127 million, 19 percent); Aid Assistance and Grants ($56 million, 13 percent); Materials and Supplies ($49 million, 43 percent); and Capital and Debt Service ($100 million, 157 percent).
Strategies to Restore Fiscal Stability
Despite these challenges, if the City takes proactive action to address the imbalance between revenues and expenditures, it can restore stability to its finances over the next five years and prepare for future economic downturns. The plan proposes the following strategies to restore fiscal stability:
These strategies represent ambitious but achievable targets so the City can begin developing revenue, savings, and operational proposals that may require multi-year planning efforts. There remains a significant amount of work and planning by City departments and policy makers to develop more detailed plans to implement these strategies.
The Fiscal Year 2012-21 Capital Plan
recommends $8.7 billion in capital projects over the next five years, including $2.7 billion for General Fund departments and $6 billion for enterprise departments. These proposed investments will safeguard and improve the City's infrastructure, facilities and parks.
Major capital projects taking place over the next five years include a new air traffic control tower at San Francisco International Airport, the Central Subway for enhanced Muni service, waterfront improvements in preparation for the 34th America's Cup in 2013, the Sewer System Improvement Program, and the Earthquake Safety and Emergency Response bond program.
The Information and Communication Technology (ICT) Plan
developed by the Department of Technology identifies a total of $338 million in technology projects over the next five years. Of these projects, $172 million are proposed to be funded through Non-General Fund sources. In contrast, $166 million of General Fund-supported projects are identified, but only $40 million in General Fund support is assumed to be available over the next five years. To address this shortfall, the ICT Plan identifies alternative funding sources and strategies.
Major information technology projects discussed in this Financial Plan include consolidation of the City's data centers to improve service and efficiency, replacement of emergency radios to enhance public safety and emergency response, implementation of electronic medical records at the City's hospitals and health clinics, and migration to Voice over Internet Protocol technology for the City's telephone systems.
The Five-Year Financial Plan includes discussion of major financial and operational issues for the City's largest General Fund departments and all of the Enterprise departments. Significant issues identified in the Plan include:
Previous Five-Year Financial Plans
- Airport: Increasing passenger traffic and maximizing revenues while managing rising benefit and debt expenses.
- Fire: Meeting minimum staffing levels in the most cost-effective manner.
- Human Services Agency: Managing increasing demand for services due to demographic changes and Federal healthcare reform.
- Municipal Transportation Agency: Reducing operating costs to improve Muni service while implementing the Transit Effectiveness Project and new parking management programs.
- Police: Maintaining public safety through strategic management and increased use of technology.
- Port Commission: Preparing for the 34th America's Cup in 2013.
- Public Health: Preparing for Federal healthcare reform and the opening of the new San Francisco General Hospital.
- Public Library: Managing increased service demands at branch libraries and expanding public service hours.
- Public Utilities Commission: Implementing seismic and reliability upgrades to sewer and water systems.
- Public Works: Maintaining and improving the condition of City streets in the face of budget shortfalls.
- Recreation and Park Department: Meeting high standards in park maintenance and improving recreation services quantity and quality.
- Sheriff: Managing the anticipated increase in the county jail population due to the State's public safety realignment program and other State policy changes.
In April 2010, three departments were selected for early implementation and submitted five-year financial plans (2010-11 through 2014-15) to the Board of Supervisors for approval: