Expanding Access to Safe and Affordable Drinking Water in California—A Status Update

Expanding Access to Safe and Affordable Drinking Water in California A Status Update GABRIEL PETEK LEGISLATIVE ANALYST NOVEMBER 2020 analysis full gutter AN LAO REPORT LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Executive Summary Many Californians Lack Access to Drinking Water That Is Safe and Affordable. Despite federal and state water quality standards, over one million Californians currently lack access to safe drinking water. This is primarily because these residents receive their water from systems and domestic wells that do not consistently meet those established standards. In addition, some Californians struggle to afford access to safe drinking water, sometimes paying in excess of 5 percent of their income on their water bills. In particular, smaller water systems face the most significant challenges in delivering safe and affordable drinking water because their small rate-payer bases render them less able to afford to undertake necessary water quality upgrades. Such drinking water problems disproportionately affect Latino, rural, and lower-income communities in California. State Created New Drinking Water Fund and Program in 2019. Chapter 120 of 2019 (SB 200, Monning) established the Safe and Affordable Drinking Water (SADW) Fund, which provides up to $130 million annually for efforts to provide safe drinking water for every California community. The fund can be used for a broad range of activities for communities and water systems, including emergency water supplies, technical assistance, actions to consolidate water systems, planning support, funding for capital construction projects, and direct operations and maintenance support. Senate Bill 200 tasks the State Water Resources Control Board (SWRCB) with administering the SADW Fund. The board recently created the Safe and Affordable Funding for Equity and Resilience (SAFER) program, which pairs allocations from the SADW Fund with funding from other sources—as well as regulatory actions—to help struggling water systems provide safe drinking water to their customers. SWRCB Has Begun Implementing SB 200. SWRCB has undertaken several key steps to begin implementing SB 200 and the SAFER program, including expending $130 million that was provided in 2019-20, developing an Expenditure Policy for the program and Expenditure Plan for 2020-21 funds, performing a comprehensive statewide needs assessment, and establishing metrics to measure how well the program is achieving its objectives. The board’s stated goals for the program in 2020-21 are to respond to urgent or emergency needs; address the needs of systems and wells that have been identified as being out of compliance with water quality standards; and accelerate projects to consolidate small water systems, particularly in small disadvantaged communities. From the $130 million available, the largest categories of planned expenditures from the SADW Fund in 2020-21 include construction ($49 million), technical assistance ($30 million), and emergency water supplies and interim solutions ($19 million). Good Progress on Implementation Thus Far, but Continued Legislative Oversight Is Important. Our review finds that SWRCB has shown positive progress in its initial year of administering the SADW Fund and implementing SB 200. Despite the logistical complications posed by the coronavirus disease 2019 (COVID-19) pandemic, the board has developed required policies and plans, is on track to complete a comprehensive needs assessment by June 2021, and is actively engaged in identifying projects and allocating funding. We also find that the spending priorities SWRCB has identified are consistent with SB 200 and begin to put the state on a path to improving drinking water conditions in affected communities. However, much work remains to be accomplished in order to achieve the state’s goal of ensuring all Californians have access to safe and affordable drinking water. To ensure the SAFER program is implemented www.lao.ca.gov 1 analysis full gutter AN LAO REPORT effectively and struggling drinking water systems are improved, the Legislature will want to provide careful oversight regarding SWRCB’s ongoing efforts and assess whether additional legislative actions are merited. In particular, oversight issues the Legislature may want to monitor include (1) how well the SAFER program is meeting its objectives based on its adopted performance metrics; (2) whether the state might need to collect additional information to assess the program’s performance, including regarding how effectively the program is addressing the existing disproportionate impacts on the state’s Latino population; (3) the magnitude of drinking water needs that exist statewide and how existing funding aligns with meeting those needs; and (4) how the program will adjust if available funding is lower than anticipated in the coming years given uncertainty about cap-and-trade auction revenues, the program’s primary funding source. Emerging Issues Could Complicate State’s Efforts. The SADW Fund is intended to help the state make progress in expanding access to safe and affordable drinking water to the estimated one million Californians who currently lack this human right. However, certain factors have the potential to worsen existing drinking water issues in some communities. These developments could counteract the progress of the SAFER program by exacerbating the statewide conditions the program is working to improve. In particular, emerging issues the Legislature may want to monitor include (1) whether continued groundwater pumping practices will place additional water systems at risk of failing, and the degree to which implementation of the state’s Sustainable Groundwater Management Act will—or will not—mitigate these risks; (2) whether emerging drought conditions could cause vulnerable water systems and wells to go dry; and (3) the impacts of the COVID-19 pandemic both on vulnerable households that face significant unpaid water bills and on water systems that are experiencing significant revenue losses. 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT INTRODUCTION Despite California being the first state in vulnerable Californians is a high priority for the the nation to adopt a policy stating that clean state. Earlier this year, SWRCB adopted a policy water is a human right, an estimated one and expenditure plan for how it will approach million Californians currently lack access to implementing SB 200. This report provides an safe and affordable drinking water. Many of the update for the Legislature on SWRCB’s decisions. communities experiencing water contamination We begin by explaining the larger context for and shortages are located in the San Joaquin this expanded state initiative, including describing Valley, and low-income and Latino residents are the drinking water problems that the new funding disproportionately affected. To improve upon these is intended to address. We also highlight areas in health and environmental justice issues, in 2019 the which important data—such as a full statewide Legislature passed and the Governor signed assessment of drinking water needs and associated Chapter 120 (SB 200, Monning) which established costs—is still pending, and describe previous a new stream of dedicated funding totaling up state efforts related to drinking water. Next, we to $130 million annually for safe and affordable describe the components included in SB 200. drinking water. The legislation tasked the State We then review SWRCB’s stated priorities and Water Resources Control Board (SWRCB) with proposals for allocating funding—both at a high administering the funding and overseeing efforts to level and specifically in 2020-21—and explain implement both short- and long-term solutions to how the program plans to measure its progress. persistent drinking water problems. We conclude by providing some comments about Implementing SB 200 represents a significant program implementation thus far, as well as by commitment of state funding and is intended to highlighting some issues we suggest the Legislature remediate serious health and safety problems. As continue to monitor in the coming months and such, ensuring the funding is meeting its intended years to ensure statewide goals for improving outcomes and effectively improving conditions for access to drinking water are effectively achieved. BACKGROUND Drinking Water Supposed to Meet level, it has granted most states—including California—the authority to implement and enforce Certain Safety Standards federal drinking water requirements at the state Federal and State Laws Establish Water level. Quality Standards. The federal Safe Drinking Most Californians Receive Water Through Water Act was enacted in 1974 to protect public Public Water Systems. Drinking water comes health by requiring that drinking water meet certain from surface water—such as rivers—or water standards. These standards take into account the pumped from underground, and most California health risk, detectability, treatability, and costs households receive their water via treatment of treatment associated with various pollutants. and delivery systems operated by either local California has also enacted its own safe drinking government agencies or privately owned utilities. water legislation to implement the federal law and A small proportion of residents receive water from establish additional state standards. (There are private wells. Figure 1 on the next page identifies certain state drinking water standards which are the different types of water systems in California. more stringent than federal standards.) While the As described in the figure, a public water system U.S. Environmental Protection Agency enforces is one that provides water for human consumption federal drinking water standards at the national www.lao.ca.gov 3 analysis full gutter AN LAO REPORT and has 15 or more service connections, or of “state small water systems” that serve between regularly serves at least 25 individuals daily at least 5 and 14 connections is unknown but estimated at 60 days out of the year. (A “service connection” roughly 1,500. These systems are not regulated by is usually the point of access between a water SWRCB but are overseen by county health officers, system’s service pipe and a user’s piping.) In however, the applicable water quality standards California, SWRCB—together with its regional and testing requirements, oversight procedures, water quality control boards—is responsible for and data collection practices are significantly less regulating public water systems. The state contains robust than those for public water systems. The approximately 7,400 public water systems, of water quality conditions of domestic wells—which which about 2,900 provide service to yearlong supply water for an individual residence or up to residents and are referred to as “community four connections—are not regularly monitored by water systems.” (The remainder—transient and the state or local governments. Data suggest that nontransient noncommunity public water systems— between 1.5 million and 2.5 million Californians rely do not serve year-round residents, and include on domestic wells for their water. schools, rest stops, and campgrounds.) The vast Many Californians Lack Access to majority of California residents—over 90 percent— receive their water from about 400 large community Safe and Affordable Drinking Water water systems that have 3,300 or more service Many Californians Lack Access to Drinking connections. Most community water systems are Water That Is Safe... Despite federal and state comparatively smaller, with about half of all systems water quality standards, SWRCB estimates that having between 15 and 100 connections. over one million Californians currently lack access Very Small Water Systems and Wells Are to safe drinking water. This is primarily because Not Regulated by the State. The exact number these residents receive their water from systems Figure 1 Types of Water Systems in California 9 Public Water System: Provides water for human consumption and (1) has 15 or more service connections or (2) regularly serves at least 25 individuals daily at least 60 days out of the year. Water quality is generally regulated by the State Water Resources Control Board (SWRCB), although in 29 counties SWRCB has delegated authority to regulate smaller systems with between 15 and 200 connections to county environmental health departments. • Community Water System: Public water system that (1) serves at least 15 service connections used by yearlong residents or (2) regularly serves at least 25 yearlong residents. Roughly 2,900 across the state, serving about 39 million people. • Noncommunity Water System: Public water system that (1) regularly serves 25 or more of the same persons for more than 6 months but fewer than 12 months per year (referred to as “nontransient”), such as a school, or (2) does not regularly serve at least 25 of the same persons over 6 months of the year (referred to as “transient”), such as a rest stop or campground. Roughly 1,500 nontransient systems and 3,000 transient systems across the state. • Tribal Water System: Public water system that is located on tribal land and serves a federally recognized tribe. Regulated under tribal sovereign authority in partnership with the U.S. Environmental Protection Agency, not SWRCB. 9 State Small Water System: Provides water for human consumption with between 5 and 14 service connections and does not regularly serve drinking water to more than an average of 25 individuals daily for more than 60 days out of the year. Water quality is overseen by county health officers. Roughly 1,500 across the state. 9 Domestic Well: Groundwater well used to supply water for the domestic needs of an individual residence or a water system that has no more than four service connections. Water quality not regularly monitored by the state or local governments. At least 350,000 across the state, providing water for between 1.5 million and 2.5 million Californians. 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT and domestic wells that do not consistently meet water quality issues, acute water shortages those established standards. Many of these emerged in certain areas of the state during the systems and wells provide water that contains severe drought that occurred between 2011 and contaminants such as arsenic, nitrates, and/or 2016. In particular, low precipitation combined with 1,2,3-Trichloropropane, all of which pose health increased rates of pumping for agriculture caused risks for both children and adults. A 2019 analysis groundwater levels to drop significantly in many of data from SWRCB conducted by the California parts of the Central Valley. This in turn caused Health Care Foundation found that only 17 of some wells serving residential homes to dry up or California’s 58 counties had public water systems become affected by contaminants that emerged that all complied with state and federal drinking in the underlying aquifers. Research suggests at water standards, and that in 12 counties—including least 1 in 30 of the domestic and agricultural wells San Joaquin, Kern, and San Benito—more than constructed after 1975 ran dry between 2013 and 10 percent of residents had unsafe tap water. 2018, and data from the Department of Water …And Affordable. Besides suffering from Resources indicates that at least 2,760 households water quality problems, some Californians also have experienced water shortages since 2013. In struggle to afford access to safe drinking water. many areas of the state, pre-drought groundwater Pursuant to Chapter 662 of 2015 (AB 401, Dodd), levels have not yet recovered and wells are still dry. SWRCB recently completed a report looking into Communities Served by Small Water Systems how the state might implement a low-income Confront Greatest Challenges. Smaller water water rate assistance program. The report cites systems face the most significant struggles in that, adjusting for inflation, the average California delivering safe and affordable drinking water. This household paid around 45 percent more per month is primarily because their small rate-payer bases for drinking water services in 2015 than in 2007. render them less able to afford to undertake This has created an affordability challenge for necessary water quality upgrades or pay the many low-income households that have not seen a infrastructure costs necessary to consolidate with commensurate increase in their incomes—in fact, other water systems in their region. Moreover, when adjusting for inflation, the average incomes even if these small water systems can qualify for for the bottom quartile of California income earners one-time grants to fund needed upgrades, they decreased by 9 percent between 2007 and 2015. often lack sufficient technical, managerial, and The study also reports that less than 20 percent financial resources to operate and maintain their of the state’s low-income population who are systems on an ongoing basis. SWRCB found served by community water systems currently that in 2019, while only about 5 percent of the receive benefits from a low-income rate assistance total 7,403 active public water systems had one program. Additional research conducted in 2014 or more violations of water quality standards, found that in some California cities, one in five over 91 percent of those that failed to comply households was spending almost 5 percent of contained fewer than 500 service connections. their annual income on water. (Federal and state The aforementioned SWRCB AB 401 water rate programs have adopted policies indicating that assistance study also found that smaller systems water rates exceeding the range of 1.5 percent face greater affordability challenges than larger to 2.5 percent of household income may create systems. Specifically, the water systems with the affordability challenges.) As we discuss later, highest percentages of customers from households these affordability challenges likely have been earning less than 200 percent of the federal poverty exacerbated for some households in recent months level are mostly small or very small systems, and by the spike in unemployment rates resulting from those systems typically lack the means to fund a the economic slowdown and coronavirus disease low-income water rate assistance program. 2019 (COVID-19) pandemic. Drinking Water Problems Concentrated in Drinking Water Issues Worsened During Central Valley. Many of the areas that experience Recent Drought. In addition to long-standing problems with their drinking water are small www.lao.ca.gov 5 analysis full gutter AN LAO REPORT farmworker communities located in California’s water shortages during the recent drought, Central Valley. Figure 2 shows a map of the two-thirds served a “disadvantaged” community and public water systems that violated one or more nearly one-third served a “cumulatively burdened” federal or state primary drinking water standard community. (The researchers defined communities as of September 2020. This means that testing as disadvantaged if they had a median household revealed the systems’ water contained at least income of less than 80 percent of the state median, one contaminant at amounts that exceeded the and cumulatively burdened if they ranked in the maximum levels set by the standards, and that top one-quarter of census tracts in the state SWRCB undertook enforcement actions (such as issuing a compliance order or fine). As shown, while violations Figure 2 occur statewide, they are Public Water Systems That Fail to concentrated in systems in the Comply With Drinking Water Standards San Joaquin region. (Because As of September 2020 comparable data are not readily available, the map excludes information for state small systems and domestic wells that are not regulated by the state.) Most Drinking Water Challenges Affect Lower-Income Communities. Research has also found that many of the affected communities contain high proportions of residents earning lower incomes. For example, analysis by researchers from the University of California (UC), Davis found that low-income communities located outside city boundaries are served by “a fragmented patchwork of small and often underperforming water systems that result in uneven access to safe drinking water.” A separate analysis of water quality data in the San Joaquin Valley found that community water systems serving predominantly socioeconomically disadvantaged communities had both higher levels of arsenic and higher odds of violating water quality standards. Moreover, a study by the Pacific Institute found that of the public water systems in California that experienced or were on the verge of experiencing 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT for environmental burdens and socioeconomic short- or long-term solutions have not yet been vulnerability.) identified, and state small systems and domestic Latino Residents Are Disproportionately wells about which the state has not historically Affected by Lack of Safe Drinking Water. In collected water quality data. addition to socioeconomic status, race and ethnicity Pending Needs Assessment Will Help Inform are important factors in understanding who has State’s Efforts. SWRCB is in the process of access to safe drinking water in the San Joaquin conducting a comprehensive needs assessment Valley. For example, the aforementioned UC to inform the state’s drinking water efforts. This Davis study reports that Hispanics/Latinos make assessment, which was partially funded with up a much larger percentage of the population $3 million from the General Fund appropriated in served by out-of-compliance community water the 2018-19 Budget Act, will be completed by systems (57 percent), as compared to Caucasians June 2021. The assessment will (1) identify and (36 percent). Moreover, research has indicated map systems that may currently comply with but that Hispanics/Latinos in the San Joaquin Valley are at risk of not meeting water quality standards, are disproportionately exposed to higher levels of (2) identify state small systems and domestic nitrates and this exposure is particularly prevalent wells that are violating or at risk of violating water in smaller water systems. These trends are partially quality standards, and (3) develop a cost analysis due to historical housing discrimination practices for interim and long-term solutions to the identified that restricted which racial groups could live problems. Because limited information is available to and purchase homes in the incorporated cities address the second component of the assessment, that contained larger and more developed water SWRCB is developing a map of aquifers that are at systems. These practices forced many residents high risk of containing contaminants that exceed of color to concentrate in rural and unincorporated safe drinking water standards and are used or likely areas that are dependent on wells and less to be used as a source of drinking water for state sophisticated water systems. small water systems or domestic wells. This map will be completed by January 2021. Full Accounting of Drinking Water Problems and Costs Unknown Prior State Efforts to Address Drinking Water Problems Available Data Are Incomplete. SWRCB has developed a list of potential solutions and cost State Law Establishes Right to Safe Water estimates for addressing problems at public water in California. In 2012, the Legislature passed and systems that currently fail to meet water quality Governor Brown signed Chapter 524 (AB 685, standards. The board has also begun developing Eng), which established the state policy that “every a list of potential capital projects and temporary human being has the right to safe, clean, affordable, solutions and associated costs for some state and accessible water adequate for human small systems at which deficiencies have been consumption, cooking, and sanitary purposes.” identified. As of July 2020, the combined costs for This legislation made California the first state in these identified potential solutions totaled roughly the country to legally recognize the human right to $900 million. However, this does not represent a water. Chapter 524, however, did not expand any full accounting of what it will cost to address all of obligation of the state to provide water or require the drinking water systems and wells in the state that additional state resources be spent to ensure that fail to, or are at risk of failing to, provide safe that the policy’s intent was achieved. and affordable drinking water. Rather, these data Expanded State Authority to Address Poorly are limited to the systems that have either been Performing Water Systems. The Legislature has identified by or have already requested funding from provided SWRCB with increased powers to address SWRCB. They therefore exclude at-risk public water drinking water issues. Specifically, Chapter 27 of systems that have not yet been flagged by SWRCB 2015 (SB 88, Committee on Budget and Fiscal or requested funding, those for which potential Review) authorized SWRCB to require certain www.lao.ca.gov 7 analysis full gutter AN LAO REPORT water systems that consistently fail to provide safe • Drinking Water State Revolving Fund drinking water to consolidate with, or receive an (DWSRF). The DWSRF is primarily used to extension of service from, another public water finance local water infrastructure projects system. Additionally, Chapter 773 of 2016 (SB 552, through grants and low-interest loans, Wolk) and Chapter 871 of 2018 (AB 2501, Chu) and also supports SWRCB staff to provide provided SWRCB with the authority to appoint an technical assistance and conduct regulatory administrator to provide either broad management activities. DWSRF funding comes from responsibilities or specific duties for a public water federal grants, revolving principal and interest system in a disadvantaged community if needed repayments, and investment earnings. to help the system consistently provide safe and (The state has also used portions of the affordable drinking water. aforementioned bonds to meet federal Some Funding Provided to Address Drinking requirements for state matching contributions Water Issues. The state and federal governments to the DWSRF.) Based on federal guidelines, have provided some funding to address drinking financing is prioritized for projects that water issues over the past several years, including: (1) address the most serious human health risks, (2) are necessary to comply with federal • Voter-Approved General Obligation Safe Drinking Water Act requirements, and Bonds. California voters have approved (3) assist public water systems in small several general obligation bonds that have disadvantaged communities. In recent included funding to address drinking water years, federal grants have averaged about issues, primarily to provide grants for capital $90 million annually. improvement projects. Most of the funding • General Fund and Special Funds. From that is currently available is from the two most 2013-14 through 2019-20, the Legislature recent natural resources bonds. Proposition 1 provided several one-time appropriations (2014) included $720 million to prevent and totaling roughly $200 million for drinking cleanup contamination of groundwater used water-related activities from the General for drinking water and $260 million for public Fund and the State Water Quality Control water system infrastructure improvements, and Fund Clean Up and Abatement Account. Proposition 68 (2018) included $250 million for These funds were primarily to address safe drinking water projects and $80 million urgent needs—in part to respond to drought to treat and remediate contaminated conditions—such as providing emergency groundwater used for drinking water. Nearly drinking water supplies, connecting smaller all of this funding has been appropriated by systems to larger ones that had more stable the Legislature and SWRCB is engaged in sources of water, and replacing wells. allocating grants. LEGISLATURE CREATED DRINKING WATER FUND AND PROGRAM Overview funding and parameters for how it must be used. The legislation states that the fund’s intended Safe and Affordable Drinking Water (SADW) goals are to “help water systems provide an Fund Established in 2019. To help address the adequate and affordable supply of safe drinking long-standing issues around access to safe and water in both the near and long terms” and to affordable water, SB 200 established the SADW “bring true environmental justice to our state and Fund in the State Treasury, along with a source of begin to address the continuing disproportionate 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT environmental burdens in the state by creating for activities to help water systems provide safe and a fund to provide safe drinking water in every affordable drinking water. California community, for every Californian.” As Program Could Be Partially Supported highlighted in Figure 3, SB 200 requires that by Special Fund Loan in 2020-21. Due in SADW Fund monies be prioritized for three part to the economic slowdown caused by the broad objectives, including a focus on serving COVID-19 pandemic, the cap-and-trade auctions disadvantaged communities and low-income held in May 2020 and August 2020 generated households. less revenue than previous quarterly auctions. This creates some uncertainty about how much Funding GGRF will be available to transfer to the SADW State Will Provide Up to $130 Million Annually Fund in 2020-21. (As noted, the provision requiring to SADW Fund. Senate Bill 200 requires that each supplemental funding from the General Fund year beginning in 2020-21 and through 2029-30, does not take effect until 2023-24.) To make 5 percent of revenues from the state’s Greenhouse certain that the program is able to undertake Gas Reduction Fund (GGRF) must be transferred expenditures totaling $130 million in this fiscal year, into the SADW Fund, up to an annual total of the Legislature authorized a one-time loan from a $130 million. The GGRF consists of revenues different special fund as part of the 2020-21 budget generated from the state’s cap-and-trade auctions. package. Specifically, Chapter 40 of 2020 The legislation authorized that the transfer to the (SB 115, Committee on Budget and Fiscal Review) SADW Fund be continuously appropriated from allows the Director of Finance to transfer up to the GGRF, meaning it is not dependent on an $130 million from the Underground Storage Tank annual budget act appropriation by the Legislature. Cleanup (USTC) Fund as a loan to the SADW Fund Because the amount of revenue the cap-and-trade in 2020-21 to help make up the difference should auctions generate can vary, however, in some 5 percent of GGRF revenues fall short of that years 5 percent of GGRF revenues may total less amount. (The USTC Fund—which has maintained than $130 million. Senate Bill 200 requires that a large balance in recent years—is administered beginning in 2023-24 and through 2029-30, if the by SWRCB and is used to clean up soil and amount automatically transferred from the GGRF groundwater contaminated by petroleum leaks from to the SADW Fund does not total $130 million, underground storage tanks.) The loan will need sufficient monies from the General Fund shall also to be repaid to the USTC Fund by future GGRF be transferred to make up the difference. revenues. While SB 200 authorized the transfer from Based on the results of the August the GGRF to the SADW Fund to begin in 2020 cap-and-trade auction, in the first quarter of 2020-21, the Legislature provided the first year of 2020-21 the SADW Fund will receive $20 million comparable funding in 2019-20. Specifically, the from GGRF and $12.5 million loaned from the 2019-20 budget provided $100 million in GGRF USTC Fund—totaling $32.5 million, or one-quarter and $30 million from the General Fund to SWRCB of $130 million. Figure 3 Primary Safe and Affordable Drinking Water Fund Expenditure Priorities 9 Assist disadvantaged communities served by a public water system and low-income households served by a state small water system or a domestic well. 9 Consolidate water systems or extend the services of existing systems to new communities. 9 Fund costs other than those related to capital construction costs—except for capital construction costs associated with consolidation and service extension—such as administrative and managerial services. www.lao.ca.gov 9 analysis full gutter AN LAO REPORT Program Administration of stakeholders, including: public water systems; local agencies; nongovernmental organizations; SWRCB Administers Drinking Water Fund and residents served by state small water systems, and Program. Senate Bill 200 tasks SWRCB with domestic wells, and community water systems in administering the SADW Fund. The board recently disadvantaged communities. SWRCB convened this created the Safe and Affordable Funding for Equity advisory group beginning in January 2020. and Resilience (SAFER) program, which will pair allocation of monies from the SADW Fund with Activities funding from other sources such as bonds and SADW Fund Can Be Used for Many Types of DWSRF—as well as regulatory actions—to help Activities. Figure 4 describes the types of activities struggling water systems provide safe drinking SB 200 prescribes for using the SADW Fund. The water to their customers. In combination, the fund is intended to complement SWRCB’s other 2019-20 and 2020-21 state budgets established programs and help “fill in gaps” to better address 71 new positions for SWRCB to administer the persistent problems faced by water systems. The SADW Fund and SAFER program, which will be other funding sources upon which SWRCB primarily supported by about $13 million annually from the relies to support drinking water activities—bonds SADW Fund. The board plans to implement SAFER and the DWSRF—generally are restricted for capital program services through three of its divisions and infrastructure projects. This is why, as highlighted offices: the Division of Drinking Water (to enforce in Figure 3, the SADW Fund is prioritized for uses compliance with federal and state laws), the Division other than capital construction projects. As shown of Financial Assistance (to administer grants and in Figure 4, the SADW Fund can be used for a much loans), and the Office of Public Participation (to broader suite of activities, including operations and facilitate community engagement and input). maintenance costs, emergency water supplies, and Senate Bill 200 also requires SWRCB to form appointed administrators. an advisory group to provide input into how the Senate Bill 200 states that SWRCB can use fund is allocated each year. The group must the SADW Fund for grants, loans, contracts, or contain representatives from several categories Figure 4 Allowable Uses for the Safe and Affordable Drinking Water Fund Pursuant to Chapter 120 of 2019 (SB 200, Monning) 9 Operations and Maintenance. Operation and maintenance costs to help deliver an adequate supply of safe drinking water in both the near and long terms. 9 System Consolidations. Consolidating water systems, or extending drinking water services to other public water systems, domestic wells, and state small water systems. 9 Emergency Water Supplies. The provision of replacement water, as needed, to ensure immediate protection of health and safety as a short-term solution. 9 Appointed Administrators. Costs associated with appointing an administrator to a system to provide administrative, technical, operational, legal, or managerial services to help the systems become self-sufficient in the long term. 9 Long-Term Solutions. The development, implementation, and sustainability of long-term drinking water solutions. 9 Administrative Costs. Relevant administrative and implementation costs for State Water Resources Control Board staff. 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT services, and defines eligible recipients as public recognized California Native American tribes, agencies, nonprofit organizations, public utilities, administrators, and groundwater sustainability mutual water companies, federally and state agencies. BEGINNING IMPLEMENTATION OF SB 200 Program Goals will provide funding and services to address water systems that currently are out of compliance with SWRCB Identified Short- and Long-Term water quality standards, as well those identified Program Goals. Pursuant to a requirement as being at risk of falling out of compliance. contained in SB 200, in May 2020 SWRCB The policy also states that to increase efficiency adopted a policy to guide its development of and decrease administrative burdens, SWRCB annual expenditure plans for the SAFER program. will seek to promote regional-scale solutions The policy lays out two short-term goals for the as opposed to a series of individual projects or program: (1) provide safe drinking water to more services. For example, this could include funding communities and people, more efficiently, and in the infrastructure needed for two small water less time, and (2) promote system consolidations systems to join a larger neighboring system rather and extensions of service. The stated long-term than appointing multiple administrators and water goals are to (1) support permanent water system treatment facilities to maintain each of those small improvements and (2) build technical, managerial, systems separately. The funding categories for and financial capacity to make systems safe, which monies from the SADW Fund will be used are efficient, and sustainable. Because the program is described in Figure 5. intended to be both responsive and proactive, it Figure 5 Categories for SADW Fund Expenditures Category Examples of Funded Activities Emergency water supplies Emergency improvements or repairs to existing systems; provision of bottles, tanks, and interim solutions or filling stations for short-term water supplies; temporary connections to safe water sources; and point-of-use water treatment systems. Technical assistance Training for water system staff, support in developing plans and grant applications, technical/managerial/financial capacity assessments, rate studies, financial audits, negotiation of consolidation agreements, and community outreach. Planning Project planning activities such as feasibility studies, engineering plans, and environmental permits. Construction Implementation of projects such as new wells, connections or extensions to other systems, or new water treatment facilities. Direct operations and Temporary support for systems that are in the process of consolidating, such as maintenance support covering revenue shortfalls until infrastructure upgrades have been completed and water rate adjustments have been made. Pilot projects Projects to help develop and test new approaches before wide-scale implementation, including innovative water treatment technologies. Administrators Support for SWRCB-appointed water system administrators. SWRCB staff Staff costs for administration and implementation of the SAFER program. SADW = Safe and Affordable Drinking Water; SWRCB = State Water Resources Control Board; and SAFER = Safe and Affordable Funding for Equity and Resilience. www.lao.ca.gov 11 analysis full gutter AN LAO REPORT Expenditure Plan the process of consolidating. SWRCB will select projects to fund from submitted applications and Expenditure Plan Identifies Specific Priorities staff-identified needs. While the amounts displayed for 2020-21. Senate Bill 200 requires SWRCB in the figure reflect planned expenditures, SWRCB to develop—and provide to the Legislature—an has delegated authority to the Deputy Director annual plan that describes how it intends to expend of its Division of Financial Assistance to make monies from the SADW Fund. SWRCB adopted its adjustments across expenditure categories over 2020-21 Fund Expenditure Plan in July 2020 and the course of the year based on evolving needs. identified four primary priorities for 2020-21: Below, we provide detail on the largest expenditure • Address emergency or urgent needs. categories. • Address community water systems and school • Construction. As noted earlier in Figure 3, water systems out of compliance with primary SB 200 requires that the SADW Fund drinking water standards, with a focus on be prioritized for noncapital projects. small disadvantaged communities. Construction, however, is the largest • Accelerate consolidations for systems out of proposed spending category for 2020-21— compliance, at-risk systems, and state small $49 million, or 38 percent of the total. The water systems and domestic wells, with a plan states that these SADW Fund monies focus on small disadvantaged communities. will help make up funding shortfalls to enable • Address the needs of state small systems and completion of larger scale projects for which domestic wells that are out of compliance with available grants from other sources—such as water quality standards. bonds—are limited by statutory funding caps. • Technical Assistance. Just over half of the Expenditure Plan Provides Details on How 2019-20 expenditures ($67.2 million) was Funds Will Be Used. Figure 6 summarizes spent on technical assistance activities, information from the Fund Expenditure Plan dropping to a proposed $30 million in detailing how SWRCB used SADW funds in 2020-21. As highlighted in Figure 5, these 2019-20 and its planned expenditures for funds could support a wide variety of activities 2020-21. As shown, in comparison to the prior to help local systems increase their technical, year, the 2020-21 plan distributes funds across financial, and managerial capacity, and to a broader collection of activities, including to pay take the necessary steps to enable them to for SWRCB staff and to provide direct operations implement projects. and maintenance support for systems that are in • Emergency Water Supplies and Interim Solutions. As shown Figure 6 in the figure, SWCRB also plans SWRCB Expenditure Plan for SADW Fund to increase SADW Fund spending (In Millions) on responding to emergencies and 2019-20 2020-21 providing interim water supplies until permanent solutions can Construction $53.8 $49.0 Technical assistance 67.2 30.0 be implemented—$7.4 million in Emergency water supplies and interim solutions 7.4 19.0 2019-20 compared to $19 million SWRCB staff —a 12.8 in 2020-21. According to the Direct operations and maintenance support — 10.0 plan, the 2020-21 budgeted Planning 1.6 6.0 amount can provide more than Pilot projects — 3.2 9,000 households with bottled Totals $130.0 $130.0 water (at $75 per month per a SWRCB received a separate one-time appropriation of $3.4 million from the General Fund to household) for two years, with support staff in 2019-20. SWRCB = State Water Resources Control Board and SADW = Safe and Affordable Drinking $2.5 million remaining available to Water. 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT address unforeseen emergencies. Even with monies to support the costs of appointing this increase in SADW Fund spending, the administrators to take over struggling water program likely will not be able to fully fund systems in the current fiscal year, despite the the identified need for emergency supplies Fund Expenditure Plan mentioning that the board and interim solutions, which SWRCB has intends to “gradually ramp up” use of this option estimated at a total of around $400 million. in 2020-21. This is because as of July 2020, The plan states that SWRCB will give priority $10 million from the General Fund remained to requests from systems that serve small available for this purpose from Chapter 1 of 2019 disadvantaged communities and face the (AB 72, Committee on Budget). SWRCB adopted greatest threats to public health and safety, an Administrator Policy Handbook in September including those that are experiencing elevated 2019 describing when and how it might appoint hexavalent chromium levels in their water. an administrator to take over responsibilities in a (SWRCB is in the process of adopting public water system. The Expenditure Plan states an enforceable water quality standard for that SWRCB anticipates being able to appoint at hexavalent chromium. Elevated levels of this least five administrators in 2020-21. contaminant currently cause public health Increasing Emphasis on Addressing Needs risks, but affected systems are not yet flagged of At-Risk Systems and Wells. The differences as being out of compliance.) in planned SADW Fund expenditures across • SWRCB Staff. The figure highlights that years displayed in Figure 6 also reflect a shift in SWRCB plans to dedicate a notable the types of water systems to be targeted for proportion of the SADW Fund—$12.8 million, financial assistance. Specifically, as shown in or roughly 10 percent of the total—to Figure 7, $90 million (70 percent) of SADW Fund support 71 staff working on SAFER program expenditures for water systems in 2019-20 were for activities. (This compares to $3.4 million that was provided from the General Fund on a Figure 7 one-time basis for 23 positions to initiate the Shifting Focus for Use of Safe and program in 2019-20.) While SB 200 caps Affordable Drinking Water Fund the amount of SADW Fund monies that (In Millions) can be used for administrative tasks at State Small Systems 5 percent, the proposed totals also include and Domestic Wells staff who will be working on implementing $140 Systems at Risk of Failing the program. Proposed implementation Systems Out of Compliance tasks include working with water systems 120 to develop potential solutions, conducting 100 public outreach, providing legal reviews associated with system consolidation orders, 80 and developing plans and assessments. In contrast, administrative tasks include 60 accounting work, grant and contract administration, and information technology 40 support. SWRCB indicates that 43 positions and about $8 million are associated with 20 implementation tasks while 28 positions and roughly $4.8 million are associated with 2019-20 2020-21a administrative tasks. a Amount displayed for 2020-21 is less than $130 million because the plan does not attribute $16 million allocated for State Water Resources Control Board Other Funding Sources Available for staff and pilot projects as benefiting a particular type of water system. Appointed Administrators in 2020-21. Notably, SWRCB does not plan to expend SADW Fund www.lao.ca.gov 13 analysis full gutter AN LAO REPORT grants, loans, and services benefiting public water future annual expenditure plans, in consultation systems that are currently failing to comply with with the advisory group. drinking water standards. In 2020-21, however, Other SAFER Program Funding Will SWRCB plans to place additional emphasis on Supplement SADW Fund. As discussed earlier, also addressing the needs of systems identified the SADW Fund is not the only source of funding as being at risk of falling out of compliance, as available to address drinking water issues across well as state small systems and domestic wells in California. Figure 8 summarizes how much SWRCB areas at high risk of having contaminated aquifers. anticipates expending from various sources to Specifically, the board plans to spend a larger share support projects and activities in 2020-21, totaling of funding—totaling 61 percent—on at-risk systems $539 million. These estimates suggest that the ($50 million) and state small systems and domestic SADW Fund will make up roughly one-quarter of wells ($20 million). (The amount displayed for the total funding for the SAFER program this year. 2020-21 is less than $130 million because the plan does not attribute the $16 million for SWRCB staff Performance Metrics and pilot projects as benefiting a particular type of Board Has Adopted Performance Metrics water system.) to Gauge Progress. The expenditure policy that Expenditure Plan Establishes Threshold for SWRCB adopted in May 2020 included eight Defining Affordability. The Fund Expenditure Plan metrics by which it will measure SAFER program outlines approaches for addressing concerns that performance each year, which are displayed in drinking water is not currently affordable in some Figure 9. The Fund Expenditure Plan includes communities. Generally, the expectation is that data for 2019-20 and establishes new goals a focus on certain strategies—such as system for what the SAFER program will accomplish in consolidations—will reduce water systems’ ongoing 2020-21 for the first three metrics, which are operations and maintenance costs, which in turn will allow systems to reduce the rates they must Figure 8 charge their customers. To help guide SWRCB’s Multiple Funding Sources Available for work, the plan includes a working definition for State Drinking Water Activities what level of rates it considers “affordable.” SWRCB Estimated Expenditures 2020-21 (In Millions) Specifically, the plan adopts an affordability threshold of 1.5 percent of the community’s median General Fund Older Bonds $31 $7 household income. That is, community water systems that currently must charge fees exceeding Proposition 1 $134 1.5 percent of the median household income for their areas in order to provide drinking water that DWSRF $115 meets state and federal standards are identified as having challenges providing affordable rates. Water systems in disadvantaged communities that exceed that threshold generally are eligible for grants, rather than loans, from the SAFER program. While acknowledging that data limitations make its list incomplete, the Fund Expenditure Plan identifies SADW Fund Proposition 68 $130 190 community water systems that exceed the $121 affordability threshold, of which 92 were identified Total = $539 Million as serving disadvantaged communities. (This analysis omitted 1,140 community water systems for which sufficient data were not available for SWRCB = State Water Resources Control Board; SADW = Safe and Affordable SWRCB to estimate water rates.) SWRCB indicates Drinking Water; and DWSRF = Drinking Water State Revolving Fund. that it will revisit the appropriateness of its current level and methodology for defining affordability in 14 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT displayed in Figure 10. The plan Figure 9 states that because the program Annual Performance Metrics for SAFER Program has completed just one year of implementation, SWRCB does 9 not yet have sufficient information Number of communities provided with interim supplies of safe drinking water. to set appropriate goals for the other metrics. The board plans to 9 Number of communities provided with executed and completed gather baseline data in 2020-21 for preliminary planning assistance projects. other categories—such as current 9 application processing times and Number of communities provided with long-term solutions. average pounds of carbon dioxide 9 Number of communities returned to compliance and remaining out of saved by type of project—to inform compliance with drinking water standards. goal-setting in expenditure plans for 2021-22 and subsequent 9 Climate change adaptation and resiliency improvements, including years. Both the accomplishments pounds of carbon dioxide saved per project. and goals reflect projects and 9 solutions that were or will be Cost effectiveness, including cost of solution per connection or per person served. funded by all SAFER program funding sources, not just the SADW 9 Administrative efficiency, including time for processing applications Fund. As shown, in 2019-20, and executing projects. the program ended up funding a 9 greater number of communities Community engagement effectiveness, including number of meetings than originally planned, and with and levels of participation. a larger-than-anticipated focus SAFER = Safe and Affordable Funding for Equity and Resilience. on providing interim solutions. As discussed earlier, interim solutions Figure 10 include activities such as providing Initial SAFER Program Goals and Performance emergency water supplies, Number of Communities whereas long-term solutions might 2019-20 2019-20 2020-21 include consolidating with other Goals Accomplishmentsa Goals systems. The plan sets even more ambitious goals for the number of Interim solutions 75 173 150 communities it will serve 2020-21, Planning 100 72 100 Long-term solutions 75 67 100 in part due to increased SWRCB Totals 250 312 350 staffing capacity. a As of June 2020. SAFER = Safe and Affordable Funding for Equity and Resilience. LAO COMMENTS ON IMPLEMENTATION AND OVERSIGHT Overall Assessment Despite the logistical complications posed by the COVID-19 pandemic—such as the shift to Good Progress on Implementation Thus remote work and meetings—the board (1) formed Far. Based on our review of the adopted Fund and convened the advisory group; (2) met 2020 Expenditure Plan, SWRCB has shown positive deadlines for adopting an expenditure policy and progress in its initial year of administering plan; and (3) is on track for delivering the required the SADW Fund and implementing SB 200. aquifer map, needs assessment, and 2021-22 Fund www.lao.ca.gov 15 analysis full gutter AN LAO REPORT Expenditure Plan by the associated 2021 time lines. want to carefully monitor SWRCB’s ongoing efforts Largely positive feedback provided at SWRCB’s and assess whether additional legislative actions official meetings—as well as our conversations are warranted. Questions that we believe merit with stakeholders—suggest that the program has the Legislature’s particular oversight in the coming also been effective at conducting outreach to months and years are summarized in Figure 11 and and incorporating feedback from a wide array of discussed in greater detail below. interested parties. How Well Is the SAFER Program Meeting Spending Priorities Reasonable. We find that Its Objectives for Expanding Access to Safe the spending priorities SWRCB has identified are and Affordable Drinking Water? As described consistent with SB 200 and begin to put the state in Figure 9, SWRCB has adopted metrics which it on a path to improving drinking water conditions will track and report in its annual Fund Expenditure in affected communities. In particular, we find that Plans. Beginning in 2021, these plans must be continuing to focus the majority of SADW Fund submitted to the Legislature annually every March. expenditures on nonconstruction activities like The Legislature can use these performance metrics providing technical assistance and emergency to monitor SB 200 implementation progress. water supplies is reasonable because many water Should the Legislature observe that SWRCB systems are not yet ready to undertake the projects is regularly failing to meet the annual goals it and permanent solutions that ultimately may be has established, it may be an indication that necessary and other funds are available for many additional legislative oversight or action could be capital projects. We consider the short-term merited. For example, if in a given year SWRCB goals—providing timely water assistance to more plans to implement projects and solutions in communities and promoting actions that will lead 350 communities but only ends up serving 250, the to consolidations—and long-term objectives— Legislature may want to investigate what obstacles supporting permanent solutions and improving the are impeding progress. Information reported in operational capacity of local systems—identified conjunction with these metrics could also highlight by SWRCB to be prudent and appropriate. While areas of concern for the Legislature. For example, data limitations have thus far limited SWRCB’s if the number of communities remaining out of ability to identify and respond to the needs of state compliance remains comparably high across small systems and domestic wells, the forthcoming multiple years despite significant investments in needs assessment should aid in those efforts, and expanding the Figure 11 program’s focus to those systems makes sense given the large Key Legislative Oversight Questions for Ensuring numbers of residents they serve. Access to Safe and Affordable Drinking Water Continued Legislative 9 How well is the Safe and Affordable Funding for Equity and Oversight Is Important Resilience (SAFER) program meeting its objectives for expanding access to safe and affordable drinking water? While we view SWRCB’s 9 implementation progress positively Does the state need additional information to assess the performance thus far, much work remains to be of the SAFER program? accomplished in order to achieve 9 How well is the SAFER program addressing disproportionate impacts the state’s goal of ensuring all on California’s Latino population? Californians have access to safe 9 and affordable drinking water. How will the program adjust if funding is lower than anticipated in the To ensure the SAFER program coming years? is implemented effectively and 9 struggling drinking water systems What are statewide drinking water needs and how well aligned is available funding to meet those needs? are improved, the Legislature will 16 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT solutions, this could indicate a growing problem. investments, given research suggesting they have Additionally, if the time to fully execute projects been disproportionately affected by shortages and seems excessive—leaving communities without contaminants compared to other groups. Should safe water for many years even after problems, such data reveal that SAFER program investments solutions, and funds have been identified—the and projects are not significantly rectifying the Legislature may want to investigate what barriers existing inequities across racial and ethnic groups, are preventing timely progress. The Legislature may the Legislature may want to provide additional also want to weigh in if it believes that SWRCB is direction on how SADW Fund monies should be not setting sufficiently ambitious annual goals for prioritized and how community outreach efforts these metrics and improving drinking water access. may need to be expanded. Does the State Need Additional Information How Will the Program Adjust if Funding to Assess the Performance of the SAFER Is Lower Than Anticipated in the Coming Program? The Legislature may want to consider Years? Should GGRF revenues not be sufficient whether additional information that will not be to support full funding for the SADW Fund in reported through the established metrics might be 2021-22 or 2022-23, the Legislature will need to important to ensure the objectives of SB 200 are decide whether to provide supplemental funding being met. For example, while SWRCB’s metrics from a different source. (As noted, beginning in consider how many communities are provided 2023-24, SB 200 requires that the General Fund projects and attain compliance with water quality provide a backfill if 5 percent of annual GGRF standards, they do not speak to how many people revenues total less than $130 million.) While the or households are on a path to receiving or have Legislature authorized a loan from the USTC Fund gained access to clean drinking water. Given to ensure the SADW Fund receives $130 million in that providing safe and affordable drinking water 2020-21, that fund likely will not be able to support to more Californians is the ultimate goal of the a similar loan in future years. If the state’s fiscal program, this seems an important measure to condition and other spending priorities preclude it assess. Moreover, none of the performance metrics from providing full funding for the SADW Fund in directly address the issue of affordability and the coming years, SWRCB will need to determine assessing how effective SADW Fund expenditures how to prioritize available funds for the program. might be at lowering exorbitant water rates. If the The Legislature may want to provide input into Legislature needs additional data to adequately that process to reflect its particular priorities. For assess the degree to which SB 200 implementation example, if funding is limited, the Legislature could is meeting its goals, it could request that SWRCB direct SWRCB to place a greater emphasis on collect and report additional information. addressing immediate health and safety needs as How Well Is the SAFER Program Addressing compared to undertaking longer-term solutions. Disproportionate Impacts on California’s Latino What Are Statewide Drinking Water Needs Population? As discussed earlier, access to safe and How Well Aligned Is Available Funding to drinking water disproportionately affects California’s Meet Those Needs? Until the pending needs low-income and Latino residents. Because assessment clarifies the extent of current drinking SB 200 prioritizes funding for disadvantaged water problems, the state cannot fully assess how communities, the Legislature can have some quickly the SADW Fund and SAFER program will certainty that funded projects will help address the be able to address those deficiencies. Depending drinking water needs of lower-income Californians. upon the magnitude of the estimates identified However, SWRCB does not currently collect data in the assessment, the Legislature may want to on racial disparities in access to safe drinking reassess its annual funding commitment to the water. The Legislature may want to request that SADW Fund. For example, if estimates suggest SWRCB collect and report data on the degree that $130 million annually (together with other to which Latino residents are gaining access SAFER program funding sources) through 2029-30 to safe drinking water from the SADW Fund will be more than enough to meet the state’s www.lao.ca.gov 17 analysis full gutter AN LAO REPORT drinking water goals, the Legislature may want two decades. Moreover, the researchers found to consider amending statute to provide a lesser that many of the plans developed pursuant to amount of GGRF and General Fund for the SADW the Sustainable Groundwater Management Act Fund, at least for a couple of years. Such an (SGMA)—which are intended to help bring the approach might be particularly helpful to balancing groundwater in these basins back to sustainable the state budget in the near term if California levels—would not prevent these impacts. That is, continues to face a reduction in fiscal resources. many of the plans reviewed by the researchers In contrast, if the needs assessment indicates that set goals for “sustainable” minimum groundwater the costs of ensuring safe and affordable drinking thresholds that could allow thousands of additional water for all Californians will greatly exceed the domestic wells to go dry. Additional reviews by UC amount of funding that has been identified for Davis researchers found that the majority of these the SAFER program over the next ten years— initial SGMA-required Groundwater Sustainability which is a more likely scenario, given the number Plans do not adequately consider how drinking of systems and wells about which water quality water stakeholders could be impacted by the data are still lacking—the Legislature may want criteria they set for water quality and water levels, to identify additional funding options for achieving but rather concentrate on potential impacts to other its objectives. For example, the Legislature could types of water users. In light of these concerns, direct additional existing state funding for this the Legislature may want to conduct additional program or consider raising new revenues. oversight—such as through hearings or information requests—to ascertain how the Department of Emerging Issues Could Complicate Water Resources and SWRCB are addressing State’s Efforts these issues through their implementation and enforcement of SGMA. The SADW Fund is intended to help the state Drought Conditions Could Cause Additional make progress in expanding access to safe and Wells to Go Dry. In addition to potential impacts affordable drinking water to the estimated one from continued groundwater pumping, the prospect million Californians who currently lack this human of an emerging drought has also raised concerns right. However, certain factors have the potential about the vulnerability of some existing wells and to worsen existing drinking water issues in some water systems, particularly in light of the significant communities. These emerging issues—including number of communities that lost water during continued groundwater pumping, drought, and the last drought. The SAFER program’s focus on COVID-19—could counteract the progress of the identifying and assisting at-risk water systems and SAFER program by exacerbating the statewide wells is intended to help ameliorate these potential conditions the program is working to improve. vulnerabilities. If the state continues to experience Groundwater Pumping Practices Place below-average precipitation patterns in the coming Additional Water Systems at Risk of Failing. years, however, the Legislature will want to conduct As the state continues to work on identifying the oversight to ensure SWRCB’s efforts are adequate systems and wells that currently fail to produce at proactively addressing communities in danger of safe drinking water, recent research has raised losing access to safe drinking water. concerns that changing conditions could put even COVID-19 Pandemic Could Impact Vulnerable more communities at risk. Specifically, a June Households and Drinking Water Systems. The 2020 report by The Water Foundation suggests that pandemic-caused recession has the potential to between 4,000 and 12,000 domestic drinking water interact with drinking water in two key ways, both wells are at risk of failing by 2040 if significant of which may merit legislative action as conditions groundwater pumping continues in San Joaquin evolve. First, the economic slowdown and Valley basins that are already critically depleted. associated job losses could make it more difficult The report estimates this will cause between for certain households to be able to afford to pay roughly 46,000 and 127,000 people to lose some their water bills. In April 2020, the Governor issued or all of their primary water supply over the next 18 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT an executive order imposing a moratorium on water in aggregate, the drinking water sector could shut-offs due to unpaid bills, but how long this experience a 17 percent negative financial impact— order will last and the manner in which struggling primarily from lost revenues—associated with households ultimately may be expected to repay the COVID-19 pandemic. SWRCB is undertaking money that is owed are still unclear. Second, a survey of water systems in California to try some water systems likely are experiencing lower to ascertain how they have been impacted by revenues—as a result of unpaid bills and less changing conditions. Perhaps unsurprisingly, commercial water usage—that may affect their initial survey responses indicate that small water ability to continue service and maintain affordable systems (with fewer than 1,000 connections) are rates. more likely to experience revenue losses that make How widespread or severe these challenges up a larger share of their budgets compared to might be for households and water systems larger systems which have greater revenue bases across the state is still unknown. A national and cash reserves. The degree to which these report published in April 2020 estimated that, funding shortfalls ultimately impact water rates and affordability remains to be seen. CONCLUSION Enacting SB 200 and establishing the SADW should be targeted for improvements. However, Fund in 2019 represented important steps in the state is still in the very early stages of California’s path to ensuring that all of its residents implementation. Given the serious threats to public have access to safe and affordable drinking water. health, safety, and environmental justice posed by One year later, SWRCB has made good progress existing drinking water deficiencies, the Legislature in establishing spending priorities, beginning to will want to continue conducting robust oversight allocate funds and execute projects, and collecting over how efforts to rectify these conditions essential data to identify the communities that proceed. www.lao.ca.gov 19 analysis full gutter AN LAO REPORT RESEARCH CITATIONS American Water Works Association and Feinstein, L., Phurisamban, R., Ford, A., Tyler, Association of Metropolitan Water Agencies (2020). C., Crawford, A. (2017). “Drought and Equity in “The Financial Impact of the COVID-19 Crisis on California.” The Pacific Institute. U.S. Drinking Water Utilities.” Jasechko, S., Perrone, D. (2020) “California’s Balazs, C., Morello-Frosch, R., Hubbard, Central Valley Groundwater Wells Run Dry During A., Ray, I. (2011). “Social Disparities in Recent Drought.” Earth’s Future, Volume 8, Issue 4. Nitrate-Contaminated Drinking Water in California’s London et al. (2018). “The Struggle for Water San Joaquin Valley.” Environmental Health Justice in California’s San Joaquin Valley: A Focus Perspectives 119:9. on Disadvantaged Unincorporated Communities.” Balazs et al. (2012). “Environmental justice Davis, CA: UC Davis Center for Regional Change. implications of arsenic contamination in United States Conference of Mayors (2014). California’s San Joaquin Valley: a cross-sectional, “Public Water Cost Per Household: Assessing cluster-design examining exposure and Financial Impacts of EPA Affordability Criteria in compliance in community drinking water systems.” California Cities.” Environmental Health 11:84. The Water Foundation (2020). “Groundwater Dobbin, K., Bostic, D., Kuo, M., Mendoza, J. Management and Safe Drinking Water in the San (2020). “SGMA and the Human Right to Water: Joaquin Valley; Analysis of Critically Over-drafted To what extent do submitted Groundwater Basins’ Groundwater Sustainability Plans.” Sustainability Plans address drinking water uses and users?” Center for Environmental Policy and Behavior, UC Davis. LAO PUBLICATIONS This report was prepared by Rachel Ehlers, and reviewed by Brian Brown and Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 20 LEGISLATIVE ANALYST’S OFFICE