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Committee files hearing after analysts flag growing special revenue and reserve balances
Summary
Budget analysts told the Budget and Appropriations Committee that San Francisco's general fund balance rose from $2.2 billion to $2.7 billion and that 22 special revenue fund categories now hold about $1.8 billion, and the committee filed the hearing and asked departments for follow-up during budget reviews.
Sevin Campbell of the Budget and Legislative Analyst's Office told the Budget and Appropriations Committee on April 21 that the city's general fund balance increased from $2.2 billion in June 2018 to $2.7 billion in June 2020 and that 22 special revenue fund categories together held about $1.8 billion as of June 2020.
"The restricted fund balance is the rainy day reserve," Campbell said, and she described the distinction between restricted, committed and unassigned portions of the general fund. Campbell told the committee the board had assigned roughly $570 million to a COVID response and economic reserve in the 2021 Annual Appropriation Ordinance and that only about $12 million had been drawn so far.
The report said special revenue funds '26 largely tied to specific fees, taxes or grants '26 grew by about 26% between 2018 and 2020. "The fact that the fund balance is growing and is now at $1.8 billion does suggest that these funds are not necessarily being optimally used for their intended purpose," Campbell said, urging closer review.
Campbell gave several examples, including a public protection fund that rose from about $34 million to $54 million between 2018 and 2020 and received about $75 million in new appropriations in 2021, with a portion going to the Department of Emergency Management. She also noted smaller internal service funds such as the reproduction fund, which had a roughly $2.5 million balance with about $700,000 of surplus fees that could be returned to departments or reduce interdepartmental charges.
Supervisors pressed staff for clarity about why some funds were created and whether reporting requirements existed. Supervisor Raza Ronan asked whether funds such as street beautification and litter control were voter set-asides or board-created funds with special revenue sources; Campbell said many were created by board action in the Administrative Code and are often tied to specific fee or grant revenue that restricts use.
Chair Matt Haney moved to file the hearing after the presentation; President Walton seconded and a roll-call vote recorded five ayes. The committee recorded that it will revisit the report during departmental budget hearings and ask departments to explain spending plans for funds that show large balances.
Next steps: staff recommended and the committee agreed to follow up during department budget hearings this spring to identify options for better using restricted and special revenue balances within statutory and grant constraints.
