being $60 million, it was over $40 million. so we have now been accruing that amount of money owed back to the school district. it must be repaid between 2015 and 2018, unless there is an extension of the baseline, so there is a potential to be forgiven what we have expended is the baseline is extended. now, moving on to the reserves, contingency reserves, we have the rainy day reserve, which was approved back in november 2003, and in this, deposits were made in years when the general fund growth exceeded 5%. it is nice to think back to that time. it actually rose to be over $100

million before the latest downturn. we project that the general fund revenues will be less than the previous year, and, by the way, this looks at total general fund revenues, not just the discretionary that we looked at in the past, so there is an impact here in terms of what we are able to withdraw, with federal and state, and they also have an impact elsewhere. it triggers a deposit. so under the terms of that reserve, the budget may appropriate up to 50% of the balance but no more than the shortfall compared to the prior year to the general fund of the city and up to 25% to the school district, which is discretionary on the part of the board. the school district does not automatically have the right to withdraw that. that is a decision by the board.

the school district actually started to be able to withdraw before others, and that was withdrawn in the last year. chair chu: can you just describe what the triggers are in order for the school district to withdraw? i think they are different than ours. >> less than the previous time -- i forget the exact. there is a provision for an adjustment from the previous high. for example, if we were still below our high but above last year, we still might be able to trigger. there is the inflation adjustment for what the school district receives, and we reviewed the school districts and numbers. they present us with their own report that distinguish discretionary revenues, and their calculation, average daily attendance figures that they show the state to show what is

happening with their inflation- adjusted per pupil revenues. chair chu: so what this slide is telling us is at the beginning of the next fiscal year -- actually, in the current fiscal year, what is the current balance? there is a starting balance? >> that is right. we adjusted it after we closed the books last year and did not withdraw as much last year because the revenues in the end came in a little higher than expected. chair chu: walk me through this. >> sure. chair chu: we withdrew 6.1 for the school district. that leaves us with 33.4. and we anticipate, in the current budget year, should the board approve the school district's request, that would be 8.4 potentially, and do we expect the city to withdraw also or to be in a position to

withdraw? >> this is a preliminary number. our current revenue tracking, and we will be coming out with a more formal report in the joint report later this month, so we do not consider this to be the official projection, but based on our current projections, the city would be able to withdraw $16.70 million next year. again, if we increase some 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