One of the largest water providers in the Sacramento region is once again facing criticism for employee compensation, this time as it seeks to raise rates by 41 percent over five years.
The average annual salary at the San Juan Water District was $76,000 in 2015, the highest amount out of nine independent water agencies in Sacramento County, according to the most recent data from the State Controller’s Office.
District officials say rate increases are necessary to offset a loss in revenue from reduced water consumption and an increase in pension costs, among other things. The first rate hike, 8 percent, would start in May for customers in Granite Bay and Folsom, if approved by the district board on March 29.
In January, the board approved similar increases for four municipal water services that buy water from the district – Citrus Heights, Fair Oaks, Orangevale, Folsom and a fifth district that pays for water treatment, Sacramento Suburban.
San Juan’s practice of raising rates while also increasing employee compensation has drawn criticism from some of its wholesale customers in the past. Some of those customers renewed their complaints because of the district’s latest rate hikes, and those concerns have been echoed by some residential customers.
Granite Bay resident Jack Granville recently wrote the district to complain about employee compensation in light of the proposed rate increase, which would raise the average homeowner’s bimonthly bill from $130 to $140. He said salary information should have been included in the district’s notice to residents about the rate increase.
“A little transparency would go a long way with your customers, who are suspect of the way San Juan has been managed,” he wrote the district.
San Juan Finance Director Donna Silva said the district posts salary information clearly on its website. She said the district has taken steps to reduce personnel costs by ending an employer subsidy for employee pension contributions and creating lower pension packages for newer employees, among other things.
“The San Juan Water District understands that everything it does is paid for with its customers’ hard-earned dollars,” she said.
The district has identified decreased water use as a major reason for the proposed rate increase. The San Juan Water District and the suburban districts that buy water from San Juan had decreases in water use during the last three years, when customers faced water restrictions. San Juan bills customers based on use and brought in less revenue because of the restrictions while some expenses, like operating costs, increased.
The lessening of drought conditions in much of California has led the state to ease restrictions. But the state is considering long-term use limits in the near future, raising doubts about when water use will return to previous levels.
Fair Oaks Water District General Manager Tom Gray said he doesn’t think use in his district will ever return to previous levels, and the district has budgeted accordingly. He said the district has not filled positions and kept salaries and benefits low as part of its effort to not raise rates for customers. He said rates will have to increase as a result of this year’s increase by San Juan.
The average Fair Oaks customer will see his or her bill go up by $101 a year when the final increase starts in five years.
San Juan Water District also received objections to its proposed rate hikes from Sacramento Suburban and Citrus Heights.
Sacramento Suburban said the district’s charges for treating and transporting Sacramento Suburban water were too high and too similar to what the district charges other districts for wholesale water. A Sacramento Suburban consultant said the district’s 2017 rate increase report “likely does not support” the proposed hike for Sacramento Suburban.
Sacramento Suburban General Manager Robert Roscoe said the disagreement is over a relatively small difference in proposed rates, and his district continues to negotiate with San Juan.
Wholesale customers also complained about San Juan using rate increases to pay for its pension debt. The San Juan rate increase report identified pension costs as a major reason for the proposed rate hikes. One of the district’s pension plans is underfunded by an estimated $2.3 million, and the district’s consultant recommended that 75 percent of the amount be paid in the coming fiscal year.
The consultant initially recommended full payment until the district’s wholesale customers objected and the district board lowered the amount.