projections, say in the property tax or the payroll tax, that number could shrink, or it could increase,this is really a point. supervisor chu: how much did we have in the rainy day fund? >> 116? somewhere around there. supervisor chu: we have significantly drawn down on that reserve. >> we will get to the other reserve that was created last year by unanimous vote. because it allows for 75% to be

withdrawn, it allows for a very rapid depletion. it leaves you with only a year or two to use this. it could take us through future downturns that might be longer. these other columns -- we would have to get 160 million. that was another concern.

there is a general reserve in each year of the budget. prior to last year, it was not a requirement with budget policy. the had pretty much stayed flat as expectations. it was considered to be a small dollar amount. as part of prop a, the comp troller's office was charged with reviewing the other jurisdictions and recommending revisions to the policies which was done. for the first time, the board itself passed a set amount, and set a target for the general reserve to rise to 2%.

it wouldn't be too much of a budget shock when it first came in. this general reserve is available for any purpose during the year. it doesn't have the same limitations and can be used with limitations or short-term contingencies during the course of the year. it is available for any purpose that the board desires. it rises to 1.2% and will gradually rise. you can see the dollar amounts involved. this can be changed by the board, but under the terms of the charter provision in

general -- supervisor chu: just a quick question for you. beginning in 2013, we start to increase it. >> even in the short run, we could pay our bills. that is part of that concept of you have a certain number of months. there are those that have

higher, but it was in a range that was recommended. >> just to a elaborate a bit, the general recommendations were between 5% and 15% that they be maintained. of a $3 billion budget, we are talking about numbers that are over $200 million. what we reviewed, we have a rainy day reserved. and we have the general fund reserve in aggregate over a longer period of time. they will approach and lead the recommendation. certainly, the stand alone is 2%, a very small reserve. >> i know you have been in

conversations, that is particularly important to the extent that we go out to purchase bonds. >> the rating agencies are very concerned with the general reserve practices. they don't so much to look at a single reserve as they looked at what the balances are available. there are some other residual balances. the city intends to grow its reserves going forward. supervisor mirkarimi: thank you.

just a couple quick questions. on the graph, why is it sometimes that we don't include staffing or facilities? >> we include those in the revenue letter each year. it would be directly tied to revenue rebels. that is certainly something that we include in the revenue levels. supervisor mirkarimi: there is something about the discussion about the expenditure question. what about the bass lines that are not on here?

>> there are other expenditure requirements. and the audit function is another percentage of the city's budget. there is also the substance abuse treatment requirement. supervisor mirkarimi: with that same outlook, because of the requirement that supervisor elsbernd and i have been pushing forward, with regard to that same answer, why not include this? >> it is a portion of the baseline. it includes in kind services.

it is required as part of that total. supervisor mirkarimi: it is supposed to be leased on scale or proportion. am i wrong? >> you are correct. it was approximately $2 million of the total money, the school district has agreed to those offsets. i don't think there is any feeling as long as you're within the total value dollar. it is not solely under the discretion of the board to make this determination. supervisor mirkarimi: that is

helpful to know. footnote it, that's all. supervisor chu: to the extent it he would be happy to have a conversation with the school district, i would be happy to work with your office. thank you. >> so the next slide, on the stabilization reserves, a new reserve was created last april to augment the rainy day reserves. the purpose was to allow for a more extended cushion for the city given our experience at the rainy day reserve. and i have the chance to deposit money sooner. this is supplemental to the rainy day reserves. under the terms of this

reserve, it can come from three volatile revenue sources, and these include property transfer taxes above the average of the past five years. and not already appropriated as a source for the subsequent year's budget. that would feed this reserve. and finally, non-property asset sales of those occur. withdrawals from the reserve are triggered also in the case of a revenue downturn. the terms are supplemental to the rainy day reserve and it is intended to provide for at least three years of support for the city of the budget -- city's budget. plus the stabilization reserve is no more than 10% of

reserves. if or when we are able to reach that level. we do it just for changes in the rates. the results of the rate change are not considered part of the average. there are also a couple of smaller reserves that are written into the charter. there is the budget incentive reserve created some time ago that allows for 25% to be carried forward and used. this is also allowed to be

suspended when the controller determines the city's financial condition. it was suspended given the major budget shortfalls, so this has not been a major factor. there is also the recreation and park savings that was written into the charter that says the recreation and parks department gets to keep any savings. it will be dedicated to capital. there was $1.2 million carried forward that was appropriated. from the prior year. as a reminder, we are going to

be reviewing them. by the end of march, the five- year financial plan in early may. i would be happy to answer any further questions. supervisor chu: thank you very much. any other questions from the committee? just confirmation with regard to the budget stabilization reserve, we don't have any balance in there? >> that is right. supervisor chu: you probably aren't there with anticipating the five-year horizon. >> it is really unforeseen revenues. you probably but did them in terms of the -- budget them in terms of the year's end. we are not doing that at this

point. supervisor chu: ok. thank you. why don't we open this item up for public comment if there are no other comments from the committee? any members of the public that wish to comment on item number one or two? >> yes, walter. ♪ i feel the earth move under my feet i feel the budget raining down ooh, when i see your place it's always like the month of may ♪ ♪ oh, city hall i want mental health better that way i feel the earth move under my feet

tumbling down ♪ supervisor chu: thank you. are there other members of the public that wish to comment on item number one or item number two? public comment is closed. can we have a motion to continue item #one to the call of the chair and file number two? without objection? item number three, please. >> appropriating general fund reserve for the ethics commission campaign finance fund for fiscal year 2010-2011. supervisor chu: think you. -- thank you. perhpaaps we can start off from the controlelr's offic --

controller's office to explain whtaat this is. then we will go to the analyst's report. >> supervisors, i think this is the first supplemental appropriation. this is the process where the board appropriates money outside of the budget process. this was an item introduced by supervisor avalos. the city borrowed money from the public financing campaign fund that is required both as a function of the city charter and the board adopted ordinance to balance the annual budget. there were conversations regarding making this money available for the fun began as

needed to meet requirements of the upcoming mayoral election campaign. i know you have a very detailed report that talks through the available balance in the expected drop. supervisor chu: thank you. budget analyst report? then ethics commission. >> i'm from the budget and legislative analyst's office. i want to refer you to page three-five of the report. under the government code, the board appropriates money based on the fund each year.

the mayor's budget actually took about a total of $7.3 million from the balance thieu'to balane budget. there are annual appropriations each year. in addition, you will see the board of supervisors has also approved a supplemental appropriations to this fund that will total about $1.8 million. this supplemental appropriation ordinance will appropriate another $1.3 million of the general fund reserves. it would restore the balance if it is appropriated.

i believe the ethics commission can speak to this. there is very rough estimates. without this appropriation, up to about $4.7 million, there would be a fund balance of about $300,000. if this committee appropriates -- [inaudible] supervisor chu: thank you very much. ethics commission. >> good afternoon, supervisors. i don't have a prepared statement. i am here to answer your questions about this. i do want to point out that

although may oral public financing was available in the last mayoral race, it was not used. our assumptions and our estimates are based on a lot of conjecture and a little empirical evidence. we have done the best we can to come up with numbers that are reasonably comfortable. supervisor chu: i believe the sponsor of the legislation will be on his way, so i wanted to let the committee members know. can you walk us through this? it is a pretty important thing when the committee is considering supplementals because it is coming out of the general reserve. can you walk us through the anticipated need for the mayor's race?

>> i am working on the assumption that the candidates are going to qualify. based on the prior history of individual candidates, there could be as many as 10 or as few as six that will qualify and have the potential to raise the full amount to hit the caps. the working no. i am using, they can raise the full amount that they are allowed to, hundred and $75,000 each. -- $575,000 each. that would be available with the current balance in the anticipated deposit into the fund at the beginning of the fiscal year. supervisor wiener: i am just curious in terms of projecting for a mayor's race, to what

degree will they happen to the fund? -- tap into the fund? we have never really had a -- we know we have a track record to make intelligent projections. it's so much bigger. in terms of the ability of mayoral candidates to raise up to $500 checks in san francisco, i'm curious what your thinking on that -- what you are thinking on that? >> in the last race, hot the amount of money raised was in excess of $6 million. there has to be a saturation point somewhere. i don't have any way to tell. there is only so much money

available to all candidates. it has to be somewhere between $5,000,000.9999999 dollars. -- between $5 million and $10 million. i am comfortable assuming that the lease eight candidates can raise $575,000 each. some of them will have the fund- raising prowess beyond that expenditures will probably allow those candidates to be able to continue to get matching funds. the independent expenditures, does that answer your question? supervisor chu: just a

question. i understand the calculation for the mayor's race, it looks like you are assuming six candidates will receive a current $900,000 maximum for to get to the $4.5 million? the ceiling could be raised if people fund raise to match. they indicate that what you have reported is that you will need $4,000,000.700000 -- $4.7 million. we have five candidates raising $575,000. >> the $4.7 million estimate was based on the fact that there are

currently six candidates that have raised in excess of $50,000. six candidates currently have raised in excess of $50,000. we know this because there are filing requirements in the public finance race. any time a candidate raises in excess of $50,000, they have to report to us that they have surpassed that. they don't have to report back to us again until they have raised in excess of $1 million. and there is a big gap between the first report in the second. -- and the second. it isn't due until the end of july. to have an accurate count, you will have to listen to this of reporting of the candidates -- th the self-reporting of the

candidates. six candidates had raised a combined total of approximately $800,000. we assume that six candidates before the end of this fiscal year would all qualify giving them -- it would mean a total disbursement of $300,000. we assume that at least two candidates will raise an additional $50,000 that would add another $400,000. three of those candidates would raise an additional $200,000. that would be $2.4 million. one of those candidates will raise an additional $400,000, $1.6 million for a total of -- supervisor chu: the $5.4 million

is based on who has qualified so far? >> yes. there are at least two more candidates that will be able to raise those kinds of funds. supervisor chu: even under your conservative estimate of of the candidates are able to raise however much it is, even if all of those candidates were to raise aggressively in the next three months and you were able to get to the $4.7 million, how much do we have in the current account balance? >> in just over $5 million. >> we have enough to be able to cover that. >> we made some rough estimates

to make those assumptions. we decided that based on current numbers, a candidate that already raised 200 could raise more. supervisor chu: with regards to the current balance, there is the anticipated deposit? >> the statute requires two. -- $2.75 be deposited each year. that brings us with the 5 million that we already have. it will be that way if a candidate to back out. as you know, there is another $5.5 million.