Year in Review: State Water Board provides $2 billion to advance California’s water infrastructure

SACRAMENTO – Strengthening California’s infrastructure to increase water supplies, protect the environment and preserve economic progress, the State Water Resources Control Board provided $2 billion during the past fiscal year (July 1, 2024 to June 30, 2025) to water systems in about 390 communities for projects that capture and recycle more water, clean up and recharge groundwater, expand access to safe drinking water and sanitation and improve stormwater management.

When complete, these projects will benefit over 18 million Californians, or 46% of the state’s population. They also will add 5,000 acre-feet to the state’s water supplies and substantially advance Gov. Gavin Newsom’s Water Supply Strategy and build more, faster agenda to deliver infrastructure upgrades across the state.

The State Water Board relies on a variety of state and federal sources to fund its financial assistance programs. General Fund appropriations, proposition bonds, the Safe and Affordable Drinking Water Fund and other state sources made up about 30% of the funding the board distributed last year. Of these, the Drinking Water Fund, which is financed through Cap-and-Invest dollars, is the board’s most flexible source and helps facilitate drinking water projects in small, rural and disadvantaged communities. About 355,000 people in 216 communities benefited directly from assistance through the fund this past fiscal year.

Federal funding support for water infrastructure in California generally takes the form of low interest loans and grants from the Drinking Water and Clean Water State Revolving Funds, major financing instruments that combine state and federal dollars for water infrastructure investments nationwide. This past fiscal year, the Revolving Funds and other federal funding programs provided $1.4 billion, or 70%, of the financial assistance the board distributed. Annual appropriations from the 2021 Infrastructure Investment and Jobs Act (IIJA) contributed over half this amount, or about $730 million. Per legislation, states are to receive the fifth and final instalment of IIJA funding next year.

Altogether, the state revolving funds account for approximately 60% of all financial assistance – totaling over $11 billion – the board has provided since 2019.

“Thanks to strong commitment and partnership at the state and federal levels in recent years, we have been able to distribute an extraordinary amount of financial assistance that is now delivering results,” said E. Joaquin Esquivel, chair of the board. “Every other week, a new treatment plant opens or new pipeline connects a community to safe drinking water, and we strengthen our water resilience and reinforce the state’s progress on multiple fronts. Continuing to support this work so that critical water infrastructure projects remain affordable for communities and we build on the gains we have made is essential.”

This last year, nearly half of the board’s total financial assistance, or about $960 million, was provided as grants and loan forgiveness that don’t need to be repaid. The remaining amount, over $1 billion, was provided as loans from the state revolving funds at an interest rate less than half of California’s general obligation bond rate, saving communities immense amounts in interest on large infrastructure loans over time.

Expanding access to safe drinking water

Now in its sixth year, the board’s Safe and Affordable Funding for Equity and Resilience (SAFER) drinking water program continues to expand access to safe drinking water for the two percent of Californians who don’t have it. Since the SAFER program’s inception, the board has distributed over $1.6 billion in grants for projects in disadvantaged communities, and 320 water systems serving over 3.3 million people have returned to compliance with drinking water standards.

This past fiscal year the board provided $837 million in financial assistance to secure safe drinking water through upgrades to aging infrastructure, consolidations of failing water systems with larger, more functional ones, and deliveries of emergency hauled and bottled water and technical assistance. About 75% of this assistance was awarded from federally funded programs, including the Drinking Water State Revolving Fund.

The city of Wasco, a small, rural community in Kern County of about 27,000 people with household incomes less than 60% of the state median, relies entirely on groundwater for its drinking water needs and has been struggling since 2019 with wells contaminated by 1,2,3-trichloropropane (1,2,3-TCP). The city received $38 million in federal grants through the SAFER program this past year – $37 million from the federal Emerging Contaminants (EC) in Small or Disadvantaged Communities Grant (SDC) program and $800,000 from the Drinking Water State Revolving Fund – to replace five contaminated wells and install a treatment system. The city anticipates that the new system will begin delivering safe drinking water to residents’ homes by 2027.

“In small, rural communities like ours, projects of this scale are cost prohibitive for ratepayers and therefore impossible without the state and federal funding the State Water Board provides,” said Scott Hurlbert, Wasco City Manager. “We’re thankful that the board didn’t just identify our drinking water problems but helped us to overcome them, enabling us to bring our failing system into compliance and ensuring water supply reliability for our community into the future.”

To date, the 2021 Infrastructure Investment and Jobs Act (IIJA) has provided over $700 million to California to address emerging contaminants.

Nearly one-quarter of the board’s total assistance through the SAFER program last year was drawn from the Safe and Affordable Drinking Water Fund, established by Gov. Newsom and the Legislature in 2019 to improve access to safe drinking water in small, rural and disadvantaged communities. The fund primarily supports planning, construction, technical assistance and emergency drinking water assistance, complementing other state and federal drinking water sources that are generally limited to capital infrastructure projects. About $21.1 million of the $35 million the board provided to deliver hauled and bottled water to 19,000 people over the last year, mostly through its regional programs, came from the fund.

Despite significant investment in drinking water infrastructure, financial need far outstrips the assistance available. The 2024 Drinking Water Needs Assessment projected an estimated five-year drinking water grant funding gap of $5.5 billion for communities with failing or at-risk infrastructure.

Increasing supplies and upgrading wastewater infrastructure

The board prioritizes projects for funding that build the state’s water resilience by diversifying, expanding and protecting its water supplies. This past fiscal year, it provided a total of $1.2 billion for projects that will recycle, capture and store more water, and protect groundwater and surface waters through upgraded wastewater infrastructure.

Of this amount, over $800 million, or about 57%, was provided as low-interest loans or principal forgiveness from the Clean Water State Revolving Fund.

The San Francisco Public Utilities Commission (SFPUC) and city and county of San Francisco received a $100 million loan from the state revolving fund and $15 million in state loans and grants this past fiscal year to construct a new wastewater treatment facility on Treasure Island in San Francisco Bay. The facility will replace aging infrastructure and produce 1,100-acre feet of recycled water for irrigation and toilet flushing when it comes online by 2026. The new plant is foundational to major redevelopment plans that include 8,000 new homes, public spaces and businesses; by 2036, the populations of Treasure and Yerba Buena islands are expected to grow by 20,000.

“Advances in wastewater treatment and water recycling now make it possible to create a new source of supply when upgrading infrastructure, as with the new Treasure Island facility,” said SFPUC General Manager Dennis Herrera. “However, financing is key to making these projects affordable for cities and ratepayers. Without the low interest loans and grants we are receiving from the State Water Board, the Treasure Island project would have cost more. These financing options allow us to pass savings on to our customers and support our commitment to ratepayer affordability.”

In small, rural and low-income communities, upgrading wastewater infrastructure often takes the form of septic-to-sewer projects that expand access to reliable sanitation and protect groundwater from leaking septic tanks. This past year, the board provided over $344 million in state grants for 20 septic-to-sewer projects that will benefit over 27,000 people.

The Elsinore Valley Municipal District received $103 million in grants from the board for septic-to-sewer conversion projects that will connect over 3,500 residences in two small, severely disadvantaged communities to sewer services by 2028. The funding fully covers installation costs, connection fees, septic decommissioning and critical improvements that include new pipelines, manholes and lateral connections. The district expects that state grants will save each property owner as much as $60,000 in costs and septic system repairs.

More information about the Division of Financial Assistance is available on the board’s website.