Is the Sewer Fund Self-Supporting?
Two scenarios for the sewer fund, compared against recent actuals. Bond/capital charge excluded (they match by design).
The O&M rate has never covered operating costs
The capital charge covers the bond — that side works. But operating costs have been subsidized every year: $30K/yr from the Water Fund plus ~$20K/yr in GF admin absorbed without charge.
Recent History
| Fiscal Year | Operating | Subsidy | Reserves | |
|---|---|---|---|---|
| FY 2022-23 | $57K | $44K | $-34K | Below target |
| FY 2023-24 | $100K | $25K | $-57K | Below target |
| FY 2024-25 | $221K | $50K | $-14K | Below target |
Mayor's Budget — Repay Over 2 Years
Keep the current budget. Repay the $173K loan over 2 years ($86K/yr). Water Fund subsidy continues.
| Fiscal Year | Operating | Contingency | Subsidy | Reserves | |
|---|---|---|---|---|---|
FY 2025-26 projected | $315K | -- | $50K | $-14K | Break-even (loan) |
FY 2026-27 $86K/yr repayment | $208K | $0 | $50K | $-62K | Subsidized |
FY 2027-28 During repayment | $208K | $0 | $50K | $-48K/yr | Subsidized |
FY 2028-29+ After repayment | $208K | $0 | $50K | +$38K/yr | Subsidized |
Rates per quarter
| Quarter | O&M per BU | Capital per EDU |
|---|---|---|
| CY Q1 2026 (Jan-Mar) | $162/Q | $179/Q |
| CY Q2 2026 (Apr-Jun) | $162/Q | $179/Q |
| CY Q3 2026 (Jul-Sep) | $162/Q | $179/Q |
| CY Q4 2026 (Oct-Dec) | $162/Q | $179/Q |
| Ongoing | $162/Q | $179/Q |
No rate change proposed. Current rates continue indefinitely.
Uku: Forgive + Amend + Rate Increase
Forgive the advance. Budget sludge at $50K. New O&M rate from January 2027. Self-supporting from Year 2.
| Fiscal Year | Operating | Contingency | Subsidy | Reserves | |
|---|---|---|---|---|---|
FY 2025-26 projected Advance Forgiveness | $315K | -- | $255K | $19K | Subsidized |
FY 2026-27 Proposed Amendments | $258K | $20K | $20K | $19K | Transition |
FY 2027-28+ Ongoing (Year 2+) | $258K | $20K | -- | +$30K/yr | Self-supporting |
Rates per quarter
| Quarter | O&M per BU | Capital per EDU | |
|---|---|---|---|
| CY Q1 2026 (Jan-Mar) | $162/Q | $179/Q | |
| CY Q2 2026 (Apr-Jun) | $162/Q | $179/Q | |
| CY Q3 2026 (Jul-Sep) | $162/Q | $179/Q | |
| CY Q4 2026 (Oct-Dec) | $256/Q | $179/Q | new rate |
| Ongoing | $256/Q | $179/Q | new rate |
O&M rate sized at $307K/yr. FY 26-27 blended (2Q old + 2Q new): $261K. Rate adjusts with sludge budget.
Operating = all costs except bond principal, contingency, and reserve contributions. Contingency = budget set-aside for unplanned cost spikes. Funded before reserves. Subsidy = Water Fund transfer + GF implicit admin. Reserves = cash above $$90K target.
Sources: Sewer Fund Budget Draft 3/30/26, FY 25-26 Approved Budget, AFR FY 24-25.