$1.9 million that the m.t.a. study has concluded has been missing. $609 million, the structural deficit for the maintenance of the existing fleet. the central subway, as you may know from our previous communiques, in our opinion, is a poor investment, a politically initiated projects that does not serve chinatown or north beach. the central subway projects project -- reduction of services to the stockton corridor. about 75,000 hours per year. we think even the existing state and local funds of $384 million, of which $123 million

in prop k funds, might be a salvation of the muni system in the next few years as the city faces increasing budget deficits. we hope there will be some enlightened leadership, if not from our city, from washington, perhaps the fta themselves, independent agency that are not as potenbeholden to the politicl forces in the city, to guide us, in no way that will improve public transit for all of san francisco in the coming years. thank you. >commissioner chu: thank you. are there any other members of the putt that would like to speak? seeing none, public comment is closed. commissioner dufty: i just want to comment, as a supervisor who

has a district including the castro, i cannot imagine the sustainability of my neighborhood without rail transit. the central subway will offer the reliability of hundreds of thousands of people every year to go to chinatown in a very expedited and fast manner, also union square. i think it does set an important milestone, in terms of providing rail access to other parts of the city. i think this is an important project and is good for the city as a whole. commissioner chu: thank you. any other comments from the committee? commissioner cihu? commissioner chiu: this is a project that will have an enormous impact on the community. insuring that we have real north/south access to our system will expand our transit options

and will help the community in ways that is hard to imagine at this time, particularly being able to use such an enormous amount of federal funds in these tough economic times is an opportunity that we have already decided on numerous occasions as a city to move forward on and that i will continue to support. >commissioner chu: thank you. next item. >> introduction of new items. this is an informational item. commissioner chu: commissioners? commissioner dufty: earlier today, we took action on a number of black related funding items which all of a strong support. i recently spent a bit of time with some policy makers, representatives of the dpw, visitors from the netherlands,

to see how public transportation and biking is really a way of life, but not here in the country. i would like to hear an item at the ta to discuss the future of the bicycling in san francisco. we have been in conversations with representatives from other departments, the viking community, and we would like them to take part in a conversation so we can inform the work that the ta is doing. commissioner chu: thank you, commissioner. related to the topics we spoke about earlier today, we may have spoken on, taking action on with regard to the central subway. it was simply an update to where we are in regards to closing the gap. that will be an important conversation to have. at least an update on where we are heading to, where we might need more help. the other issue relates to the

$100,000 additional increase for the audit. i know that we spoke earlier about the opportunity to bring back to the committee, once we have a good idea of the scope and completion of the components of that. i would also like to request that we have that update as well. any members of the public who wish to speak on item number nine? seeing none, public comment is closed. >> item 10, public comment. commissioner chu: any members who would like to speak in general comment? seeing none, public comment is closed. >> item 11, adjournment. commissioner chu: thank you, we are returneadjourned.

>> pursuant to the law that supervisor mar mentioned, specifying findings recommendations, and in this case, the board of supervisors is required to respond to all recommendations except for two, f1 and f2 that have to do with the employee retirement system board. the draft of the response resolution that is before you is merely a template. it does not include anything indicating disagreement or agreement that during this hearing and after the hearing, i'll be working with the clerk's office to fill in the blanks, and we will be forwarding the completed resolution and i will also be available to answer any questions. supervisor mar: before we open this up for public comment, i

want to ask the department heads that are here, and there are a number of them, briefly give a kind of verbal response to the grand jury's findings specific to their department. i know first we have someone from the comptroller -- controller's office. >> i am from the mayor's budget office. sometimes we overlap quite a bit. a couple of quick remarks, and the department chair can come up and walk through the recommendations. first of all, i would like to commend the members of the grand jury for continuing to join in this discussion about pension and benefits reform that we have been having in this city and in

these chambers over the last several years. surely, we agree that this is a serious issue. in san francisco, just like every other local and state governments around the country, we have been experiencing growth and benefit costs, health care, retiree health, and that has been the subject of much discussion among all of us. i do certainly acknowledge the importance of this issue. as these costs grow, less money is available for the things that we want to do in this city, provide health care, public safety, fill potholes, and we need to continue to be proactive about how we address the growth in these costs. one thing i do want to point out that i think is important,

despite the challenges we face with the growth and these costs, despite the issues pointed to in the report, there are some really important things that the city and county of san francisco has done to address these issues. while we have continuing challenges, it is worth pointing out that there are some things that we have done that put us ahead of the curve on addressing these issues. just last june, the voters approved proposition d, a pension reform charter amendment that was put in front of them by the board of supervisors. it was put together in collaboration with labor, the mayor, the board of supervisors, and other stakeholders. i think that was a significant step. on other benefit cost growth

issues, the city of san francisco has been a leader in health costs. we put to the san francisco voters a measure that helps us begin to fund our liabilities for other post employment benefits. that was led by a number of individuals in this room, a especially supervisor elsbernd. that is an example of where we have gotten ahead of other cities and we have been proactive about addressing benefits. one of the things i like to point out, and this report, the person reading it might give the impression that our retirement system is not doing well. to the contrary, it is one of the better funded and the best managed retirement systems in the country. i just want to put that out there as context while we walk through these responses. while we do have some challenges

ahead of us, it is important to a knowledge that we are doing something very well and we're continuing to work on these issues. lastly, i think we have a lot to do on these issues, but i think there are a number of recommendations in this report that have either a factual legal, or feasibility issue associated with recommendations. we have some concerns about the wisdom and the city's ability to comply with those recommendations. supervisor chu: this is not so much a question for the mayor's office, i am more just wondering, the report that we had before that was pretty lengthy with a number of recommendations, we're responding to this because it is

our obligation to make sure that we respond to the request for the board to respond, and it is generally very important subject matter for us. will we be able to go through some of the specific findings and have the department's response to those items in particular? it will help us in drafting our own responses and will better help us understand specific things in the report. will that be ok? their findings to think people disagree with because the state of the fact that our pensions are guaranteed by city charter or federal state provisions, those are not the ones i am interested in talking about. the other ones that are substantial, i like to share their thoughts about the responses. i was thinking we might be able to get on finding a-1.

the finding is from the grand jury report, san francisco's retirement benefits are financially unstable without significant cutbacks in jobs and city services. i know the departments have a response, so i'm wondering if they would be able to respond to that finding in particular. good afternoon, supervisors. finding a-1 is not one that we specifically responded to. we do have responses on some of the other items.

>> supervisors, and in particular, supervisor chu, with a-1, the san francisco retirement system is one of the best funded plans in the system. we are funded at 97%, due in credit to the elected officials of the city through the years have never failed to make a contribution. we are also recognized nationally as a very solidly funded plan. the plan is here, and the fact that we are perhaps being combined with other funds in the country that are seriously underfunded is the perception i think that is bring brought to bear that does not apply to our

system. supervisor chu: does the controller's office have anything about the finding? >> not on that particular finding. we have seen a it summarized well. the overall financial management perspective is a very important one. this finding in particular, you have seen the response that we are among the best funded pension plans in the country. we can respond as we go along to specific findings about how the city has addressed with the financial management approaches have been. i am ready to do that on a number of them. supervisor maxwell: when it says that the retirement benefits are

financially unsustainable without significant cutbacks, what you're saying is, that is not the case? >> filling in the overall financial management and budget picture, one of the issues with this report that i think mr. wagner touched on, at the underlying issue, the grand jury is not wrong about this. it is not a surprise to anybody who has been involved with the city's financial management where we have a significant and growing pension cost, and other employment benefits that are significant and the unfunded. among the important financial priorities, the city has been trying to find ways to chip away at those liabilities and control the percentage of payroll which is the pension costs, and keep it from overtaking it the bulk of our total