you after the meeting. if i could ask the mayor to say a few words. >> thank you for being out here to join the supervisors and of the department heads. we also want to a knowledge a number of commissioners out here. i can't name every body, but they are out here. some of them live out here and are interested. the translation is being offered by the civic engagement of the city district office. % in we created with the board of supervisors to make sure everybody is heard to make sure that they are inviting everyone's voices to be heard as well. they're doing a great job. i also wonder let you know there are a lot of opinions that will be expressed today. we're hopeful that everybody

respects each other's opinions. if we have somebody that gets out of hand, the officers are privileged to escort you to some special exhibits at the zoo. i am happy to be out here, too. anytime i have a chance to talk with people, it has been my pleasure to engage all of the neighborhoods in san francisco to hear what is going on. i have been working very hard the last three and a half months to bring more unity to the city family. i know all of these colleagues here, and i have worked with them for many years. they do break once in awhile because we have a $306 million deficit but i am trying to make the best decision of how to fill that gap. i need your input and i need to avoid mistakes. i need to also embrace what we believe the city really reflects.

i have given some very simple instructions to the departments as we began this year with respect to the budget. three very simple principles i have repeated at all of the town hall meetings, i have expressed that to you. i want the city to be safe. safe in a couple of really important aspect. in what you would ordinarily think is a public safety cents, that is why the police chief is here. they're all here to help me forge a public safety plan that you also have tremendous confidence in. we tell our police officers, and they want to make sure they are doing their best. it is about the communications and the dialogue and having systems in place that really are not only responding well, but can participate were --

anticipate where criminal activity might be. i also want a city that is safe with respect to the whole course social network of services that we want. guess what? not so much about police, it is about what is going to happen to them relative to their own safety whether it is nutritional meals, whether it is being across the street safely. those are also part of my definition of safe. i want you to understand that what i say safe, it is public services as safe as well as public safety. you need a in enemy to be solvent. we have got to add more. with a gap, we have a challenge. they will explain how that has occurred and what limitations we

have with filling that gap and why we need to look at all of the programs that we have to make sure that we have the best performing programs, and have we done everything we can to make it most efficient? having said that, height will let you know that a great part of that gap has to do with a runaway pension system. a system that we have not really pay a lot of attention to. a system that every other city in california if not the united states has said we have to fix our own pension systems. our employees are wonderful. i have worked a wonderful 22 years with city employees. we have a very dignified pension system. because of the way the stock markets have acted, in particular the crash in 2008, you're not prepared for the costs have risen as high as they

are. of the $306 million deficit, $100 million of that has been the result of an increase in cost to our attention. that is why i am working very hard to do pension reform. i think we're getting closer and closer to negotiating a with our labor union leaders and our city family to have something before you that will really take a long-term solution to the pension costs. and make sure in the future that it doesn't eat into the general fund the way it has and the way it will. if we don't take care of it this year, in three years, the extra areas of our city will be rising to over $600 million. that will be eating into all the services that you want, the

ability to have levels that we have today. a solvent city is the most important thing i can contribute. we need to make sure that we balance the budget and we have had to reform for you in a most serious way. we will try not to confuse you by having other ballot measures. we're striving to have one. that is what i get to do. not going to another office. i am not trying to win votes or anything. after having a safe and solvent, i want a city that is successful. what made you come and buy a house? it is because you felt the

diversity of san francisco. we have the ability to attract -- we have of events in our parks that just attract so many people, but are affordable to our residents to have a world- class city that can win the america's cup. we have to have those programs and those traditions. that is what brought us. i want a city that is successful. i will stand for a city that is growing old and not paying attention. we need to do all kinds of things to make sure that we have transportation systems, our

communications are modern, and i want a city that is safe, solvent, successful. a lot of things we have worked on for many years, we have to work better at them. we can't afford to do the things that we have done. a lot of them are here. i am happy to be here with combined districts to tell us what you think is important to the city. those are the instructions i have given and i think you for spending your time here this morning. if anybody says they're getting charged $10 for parking, that is false. that is false. and nobody gets charge for parking here today. >> thank you for coming out. you're all about to get an introduction in the fairly daunting numbers that the city

is about to face. that the city is facing right now. the way the process works, the mayor introduces his budget. it gets handed off to the border of supervisors. as daunting as these numbers are, i am fairly optimistic that the west side district for and district 7 are going to be represented. the needs of our districts will be addressed. those things i believe will be addressed. you have heard it from the mayor. the mayor appreciates that which is important to us. for the first time since the board of supervisors has gone back to district elections, the search for an 7 has never had the chairmanship. that is for the first time in over 10 years.

we have a budget chair person. and while it is a committee of five, that chairmanship means a little bit. i am excited that she is in that position. i know she absolutely appreciates what is important in district 7 as well. with the mayor in charge, i am pretty optimistic that the daunting numbers can be addressed and will be addressed. . >> i appreciate the opportunity to share with you a little bit about what the financial picture looks like and what the challenges are for us over the next few months as we go through that process of balancing the city budget.

as you know, i think they are in the process of setting up some slides. we have an ironclad requirement that we have a balanced budget every year. we can't print money or borrow money. we have to have our revenues coming in matching our expenses going out. for the coming fiscal year that begins on july 1, we have a general fund budget deficit. you have heard $306 million. we have to make decisions and will either reduce our expenditures are increasing our revenues in the general fund by that amount. and in the big picture, when you look at city finances, things are starting to look of a little bit out there in the economy.

we are aware of that. we're not out of the woods, but there are glimmers of hope on the horizon compared to where we were over the last two or three years. we are in slightly better shape and starting to see some of our revenues as the economy begins to pick back up. it is stabilizing, not dropping as they have been. we're starting to see a little glimmer of hope at the end of the tunnel. at the same time, while the revenues are stabilizing, we have other things that are going on that have financial challenges for this year and for the foreseeable future unless we take some actions to correct our structural budget challenges. we're losing money from the state and federal governments as they tackle their own budget deficits. we have used a significant amount of federal money to balance the budget for the last

couple of years, including money from the federal stimulus package that has gone away. we are on our own, and as i am sure you are aware, the state budget has some real financial challenges. we're waiting to see what that is going to mean for local governments. the bigger issue as we look at what the projections are for the coming year, in the coming five years, referring to the long- term financial planning. even when they begin to recover and the revenues are coming back in and starting to show some growth, where projecting that they will slowly recover over the next several years. we have an expenditure problem in the city. when we look at what the growth and the costs are, a significant

piece of this is a about our employee costs. those costs hour -- are projected to grow at a rate so quick that even as the economy recovers, the expenditures will outpace the revenue. even as the economy recovers and we come back and a happier economic times, we still face budget deficits for the foreseeable future unless we can do something to get our expenditure costs under control. that is why we have been working very hard with supervisors to try to come up with a solution for pension reform. just to put the $306 million budget deficit briefly in perspective, as you know, within the budget, we have different lots of money. we have the city budget and many

people who say that we have $6.5 billion, why is the budget deficit, it was outside the general fund. they are generating their own revenues to pay for expenses. in the other part of the budget, the general fund is a portion of the budget that we are talking about when we say we have a $306 million deficit. that is where we have the services that are funded primarily by tax dollars. those services are the department of public health, the fire department, the police department, the sheriff.

we don't have a source of money to generate from providing those services. in the general fund, it is 45% of the budget. have significant restrictions on what we can do. we have pension costs. there are obligations that we can't decide to reduce. even before we start making decisions about how to balance the budget, we have the voters approved restrictions, and at the end of the day of the 45% of the budget, only about $1.2 billion or $1.3 billion is truly

flexible money. the $306 million budget deficit is approaching and about 25% of that flexible part. we have some big decisions to make about how we will address that deficit. one last point to reemphasize, these numbers at the bottom here are projections for what the deficit is going to look like for the next three years. as i said earlier, even as the economy begins to recover, because of expenditure growth, we are showing the budget deficit getting larger over time. next year, we are going to have a $480 million deficit in the

$642 million deficit the following year. those numbers can be corrected, we are working on correcting them, but a means will have to take some pro-active steps to address the growth. a thing that is the big picture. i am happy to answer questions later on if it is useful. >> that was a brief overview of the budget. every line every piece of it is complicated. it is about 10:40, so we will do department conversations for 20 minutes. >> thank all of you for being here this morning. the mayor made some very clear statements, and i want to tell

you that we're here to support them. the basic function of local government as public safety. when i came to the city, how committed to do everything we could to make san francisco the safest city in the country and we will continue to do so. we also recognize that there are tremendous and her budget shortages and there is a lot that needs to be taken care of. we're moving to try to make the office more efficient. we are about $39 million of the total. the primary goals will be public safety. you're going to work with the police department will do everything we can to make sure that we attend low-level crimes and rican who the higher level of clients. you create neighborhood courts around the city. we know we can deal with a lot

of the left -- low-level crimes and reduce the cost of dealing with the crimes. it is approximately $1,500. starting may 2, you'll see the rollout of neighborhood prosecutors throughout the city ha, ha and the goal was within 12 must have the entire city cover by this process. they're hoping to create more room so we can attend to the more serious crimes while not forgetting the quality of crimes and all those other was under so important to everyone in order to have a good city to live in. secondly, lee wanted a shield -- make sure that we deal with white collar crime. there are a lot of problems here. there are consumer problems. when only have some bad banking practices, and at the end of the

day, will also have the tremendous impact. finally, in order to get all of the gun and try to do it as efficiently as we can, we are reorganizing the office. as a matter of fact, i am reaching to fry the partners that we will work with a look for ways to make the office and better run and a more efficient office. our priority will be public safety. white collar crime. who and how to do this in a more efficient way. >> home the morning. the san francisco police department budget for the $471 million, of that, 90% of that is salaries, fringe benefit, so what and so forth.

it comes out to about $11 million that i have been given back. $11 million of that is personnel. that is the only way that i will be able to give back that $11 million to the city. in a perfect world, we have between six and eight officers that retire each month. i will have to have a least three academy class's just to maintain that 100 person retirement account. for me to give back about $11.3 million, i will have to cut personnel from 2200. i need as many police officers as i can. but my commitment to you is that no matter what happens.

getting back to the field of control services, we will have to be a much leaner and smarter thinking police department. next week i will go to seattle for a couple of days. they will have lack of personnel because of funding issues. this is what we will do for the community and for the district. we'll make sure that we have as many assigned to patrol as we can. pool of that overtime issues and we will stream down the police department. when i talk about the sky is falling, it would be hypocritical for me to stand here and tell you that after- school programs, day care programs and elderly programs,

if they are not successful, i can't be either. out of the social service programs will be vying for the same money that i am, and i will work very hard to accomplish what my task is. >> we define small business as 100 employees or less, about 90% of businesses within the city. our role and function is to work with the mayor and the board of supervisors to advise on policy matters that help make it easier for small businesses to open and operate within the city. we provide direct services for entrepreneurs and starting businesses and help them with a road map to opening their business so it is as short as possible.

what we understand and what the supervisors and the mayor, they are very dedicated to their small businesses. the neighborhood commercial corridors help keeping them alive and vibrant really helps revenue for the city. they are great contributors to the general fund. supporting initiatives with the jobs coming in, those are important for all of our neighborhoods. my role and function in the city department is to support businesses so that we can help in the general fund creating more money for us. >> good morning, everyone. i am president of the board of education the key for having me.

san francisco unified as a separate entity from the city. we are funded by the state, but we rely heavily on the support services and funding from the city. without that, we would not have been able to be afloat as we have had the last couple of years. leadership has been tremendous. it has severe impact on public health at all the things that our city is made of. you want to make sure that our kids are graduating. the last couple of years, we have been doing a multi-year budget. last year, we're looking at about $113 million for a budget deficit. we worked through that with the labor partners, cutting the costs hit as many places as possible and try to stay as far away from the classroom as possible. we're looking at an additional

$25 million on top of the hundred and 13 budget deficit. we have tried to do as much as we can in continuing to be more efficient in cutting back. we're continuing to do for love days. this last year, we're talking about increasing some of the class's, cutting back on some of the programming in it has been a real challenge for many of our students in terms of wanting to make sure that they graduate with their requirement that they can be eligible for college. we have tough road ahead, how we are continuing to work with the city to make sure that funding continues to come through. in the city has an extremely helpful -- we have prop a. we have been able to maintain our library sports, music, and

arts. as the the areas where we will not have because it was voters approved. will also able to receive a rainy day dollars. we have upwards of about $50 million that has come from the city to help support the school district. that is what has allowed us to keep our teachers. we have close to 400 layoff notices. every year, we have been able to bring back mostly half of them because of the rainy day dollars. we are grateful for that. we're working very hard to make sure that we are accessing as many federal dollars as we can. we support six of our schools, so were most of the resources tend to go all haven't additional support of $43

million. we have also secured a $10 million with the other dollars. we can use them this year. we will be able to use the $10 million to bring back teachers. we are also tapping into all of our foundation dollars and making sure that we are going for the best as possible. the gates foundation is an organization that has not been working with san francisco for the last 67 years. because of the leadership, we have been able to bring them back to the city, and that is really important. 22% of the budget is spent on health care. this is a really big area and we need to think about our