we are seeing some glimmers of hope that the economy is beginning to stabilize over the last several years, we have had declines in revenue. just as the economy affects all of us personally, it affects the city's finances. we are starting to see things come back a little bit, but we are projecting a slow and steady recovery over the next several years. one of the very early stages of that -- we are in the very early stages of that recovery. even while our local tax revenues are recovering, we are taking significant cuts in funding from the state and federal government. last year, we were able to protect a lot of services by using about $120 million of federal revenue have our health department, the human services agency. those funds have gone away this year, so that leaves us with a gap that we need to make up.

again, our cost growth -- we have among our wages, pension costs and health care -- we have over $100 million worth of growth in those expenses alone. and the other costs of doing business for the city are increasing at the same time. the mayor, under the city charter, is required to balance that gap by june 1 and submit a proposed balanced budget to the board of supervisors, who will then take up the budget and make adjustments to the mayor of's proposal -- the mayor's proposal, said that is the task before us over the next couple of weeks. one of the things i hear from folks often is that san francisco has a $6.5 billion budget. why is a $305 million deficit such a problem? the main reason for that is that there are different categories

within the city budget. the biggest division in the city budget is the distinction between what is in the general fund and what is outside the general fund. the general fund is the part of the city budget that comes from our tax dollars, property taxes, sales taxes, business taxes, and it pays for a lot of services we need to provide that do not generate their own revenue. it pays for the services of a lot of the department's sitting here. -- a lot of the departments sitting here. on the non-general fund side, we have apartments that bring in their own revenues, and a lot of those are facing financial challenges as well, but they have their own budgets to balance outside of the general fund. mta is an example of one of those departments. about $3 billion of our $6.5 billion budget is in the general fund. $300 million deficit starts to

sound a little bit bigger. even within that $3 billion of general fund, we have a lot of restrictions on what options are available to us. we are legally obligated to pay our pension and benefit costs. we have voter-approved requirements that under the charter require us to spend a certain amount of money on particular types of services, and all those various requirements eat away at our flexibility within that $3 billion, and at the end of the day, we only have about $1.2 billion or $1.3 billion roughly in the neighborhood that is truly flexible, discretionary general fund that we can use to balance the budget. our $300 million deficit, from that perspective, feels much more significant. it is about 1/4 of our flexible general fund, and that is the challenge that we have to deal with and the reason we are here tonight.

as i said, within our general fund, the biggest departments that make up about 75% of our flexible general fund are our core city functions -- public safety, police, sheriffs, and the fire departments. and then our core county functions, which are the human services agency and the health department. those are the departments, the parts of our city that have the biggest share of our general fund dollars, closely following on the list are dcyf, the rec and park department, and others. as supervisor cohen said, we have asked our departments to propose 10% reductions to their general fund support an additional 10% contingency to put ideas on the table, to think about how we are going to be able to close this deficit. we are in the process right now of looking at those ideas and

thinking them through. as the mayor said, we want to hear your thoughts about these ideas as we are in our decision making process. just to kind of put the challenge in perspective, if we took the full 20% from every department and said we were going to put that in our budget, that would only save us about $180 million from this point forward. we are working on other solutions, but the point of this is to illustrate the challenge in front of us and the reason we are having discussions that we have to have tonight to balance our deficit. another point is that going forward, there is not that much improvement on the horizon, and our projections show we will have some difficult budget challenges ahead, so we need to get ahead of the game and try to address our structural costs

earlier so that we are not going through this cycle every year, year after year. projections for the following year are about $480 million. after that, $642 million. if we do make strategic choices and make disciplined choices about how we are going to balance the budget this year, we can chip those future years down. as the mayor said, one of the critical thing is we need to think about is our discussions on pension reform and how those can be used to bring our costs back in line in future years, so we are working very intensely on that process and trying to figure out how we can move forward on that. i do not need to cover this again, but as the mayor said, we are spending a lot of time talking to a lot of communities and stakeholders about how we approach this. i very much look forward to

hearing your thoughts on how we tackle this, so thank you very much. >> -- supervisor cohen: ok, thank you, greg. i also want to acknowledge linda young, the cfo and deputy city administrator. is she? ok, thanks, linda. also, supervisor carmen chu is here. she is chair of the budget committee. stand up so everyone can see you. [applause] . thanks, gregg, for that presentation. over the last few weeks, i set up meetings with the community- based organizations in the district with the head of the agencies that fund them. departments -- part of children, youth, and families and to cover the public health as well as human services agencies. these meetings were a good opportunity for our organization heads to speak directly with these agencies about what they are seeing and hearing on the ground in the district.

i would like to ask a representative from each meeting group to come up and talk about what we discussed. first up, we have the executive director of young community developers to talk about what transpired in the dcyf meeting. >> [inaudible] supervisor cohen: turn your microphone on me -- turn your microphone on for me. thanks. >> well i will talk loud. [laughter] [inaudible] 1 of the things i do, just to put a little perspective -- i spent a couple of years working with the department of children, youth, and their families, and one of the things we had to do over those couple of years, unfortunately, was make a lot of budget reductions to programs throughout the city.

i definitely know the task that you all have a head. i sympathize with you. i have been in your seat, but i also put that perspective in place so you can understand you should listen to what i have to say because i have been in your place. in all seriousness, i have asked to recap the conversation we had on march 17 with department of children, youth, and their families director, supervisor cohen, and a lot of district 10 cbo's pier that was an open forum for us to start talking about budget priorities and the results of some of the cuts that may happen and the prospective cuts we would incur. in the dialogue, we know we suffer from violence issues and people feeling unsafe in our district. we also know that funding is dwindling each year, so we have

to figure out a way to make sure we can continue to provide the best services for the community with the fact that dollars are dwindling its funding reductions are occurring year after year. so the four things that were identified out of the meeting, and this is the recap from the notes that were provided from our supervisor's office, is the need to preserve and enhance specialized team and after- school programs geared again, summer is on the way. we talk about violence prevention, violence reduction, and safety. we need to talk about programs saying funded and that there is something for our use in these communities to do -- our youth in these communities to do. that just gives you an example of the fact that these dollars are dwindling. if we lose those, just imagine how many people we are putting out on the street not having access to programs. the other -- the second thing we talked about is the need to preserve and enhance youth

development and employment opportunities. our youth need jobs. our adults need jobs. we know about the high unemployment rate, particularly in district 10, so we need to make sure we prioritize programs that can get our youth working in increase these lots that are available. to the real years ago, there were over 10,000 specialists lots for youth. now, we are talking less than a few hundred. that is a big decrease. providing dollars to make sure that we are able to keep young people and people employed are definitely heinie. then, the need to reallocate funding to incarcerate. instead of incarcerate, use those funds for prevention services. we know that we are providing services for prevention, that we can actually keep people from being involved in the system. we know the amount of money we

spend to incarcerate. and the last thing -- our supervisor is giving me the key to speed up -- is preserved and enhanced funding for family services. folks cannot go to work if they do not have adequate child care. we need to make sure we work on the programs and continue to provide services so that folks can receive child care. truancy prevention is used. thank you for the opportunity. [applause] supervisor cohen: all right, our next presenter who is going to present very briefly is the executive director of the bayview hunters point foundation. he is going to talk about keeping waste from the department of public health meeting. i also want to acknowledge barbara garcia. i do not think i acknowledge her. she is here at the table.

>> good evening. our meeting was a public health meeting and represent some but not all of the providers in district 10 that are funded by the department of public health. our conversation focused on a public health approach, which is moving not just individuals but entire communities to health and wholeness. we came up with priorities that kind of look like this. we wanted a budget that supported coordination among and between all providers across funding, program, and department silos. we wanted budgeting that would help in the development of social capital. we wanted to see budgets that promoted prevention, which includes access to healthy foods and folks actually purchasing them and eating them, access to safe exercise, and people actually exercising and

enjoying the benefits of a, and supporting programs that improve personal habits. of our health status, only about 10% is because we go to the doctor. id% is what we do, our own personal habits. finally, we looked at some key health issues in district 10 that we thought were important to be looked at in the context of the items i just mentioned. that is trauma and stress -- ongoing traumatic stress, posttraumatic stress, and in a recent training on african- american health, we had -- that the department sponsored -- a syndrome called post-slavery stress. there is a book out on that. what is her name? i cannot remember her name.

ok, i cannot hear it. violence as a public health issue -- this includes domestic violence, street violence, and institutional violence. chronic disease. environmental challenges. and that there were a full range of treatment modalities within our community. finally, the question we asked was this -- what is the collective vision for our city that we all share and what? who is leading in an effort to craft this vision? who is included in the discussion? supervisor cohen: thank you. [applause] ok, our final words will come from the executive director for the bayview hunters point multipurpose senior center. she will talk about highlights from hsa. >> good evening. what we talked about in general was the concern that the aging

population is increasing rapidly in san francisco and how was the aging network going to survive all of these budget cuts, given all the cuts we have had thus far? i would say in comparison to the previous groups, we spent a lot of time talking about, "we have been cut." then there, done that. then cut many times and have a lot of experience trying to figure out what to do. our particular departments have always done their 10%. what we came up with was other departments do not, and it is not fair that some of the departments get away without getting their 10% cuts, and year after year, department on aging and other departments have to come up with their 10%. there was a fairness issue that came up in our group, and a lot of it was around changes to pension reform and health benefits. our staff do not have pensions at all, and they always contribute to their health benefits. everybody has to take a hit, then everybody takes a hit.

that really was a prevalent theme in our group, but we also talked about creativity and how we can get other sources of funding besides the city and the supervisor cohen was interested in working with us. and how we can work with people to get more support for the services that we are operating. we were all open to that. we are all trying to do that, but, obviously, we need to do more of it because we understand the city only has so much money, but we will support for that. we do not want to be told just go out there and go get it. we need support from the city and others to understand that supporting the services is really important. i would say just from my perspective, the san francisco foundation, i give them a lot of applause for focusing on gas services and the real needs in the community. they have really rearranged their funding to fund that, and we need others to look at that

the same way because we are serving some of the most vulnerable people in san francisco, and we have been cut and cut, so we were trying to get some fairness and equity in the way things are cut, and we really appreciated supervisor cohen's leadership in moving forward. supervisor cohen: thank you. [applause] okay, one last housekeeping rule -- if you are on the edge, if you could move in and fill some of these center seats in this section or the road you are in, we still have people that do not have seeds that are standing up in the back that i would like to welcome in and help them get a seat. go ahead, take a second, and move in. thank you. also, i want to remind people to be thinking of questions, and we will still be coming around to collect questions for folks. next up, we are going to hear from our department heads.

again, we will talk very briefly. they will introduce themselves and talk about how their department is preparing for the upcoming budget. and then, after the finish, we will begin with the question. maria, let's start with you. you can stay seated if it is easier. >> good afternoon -- good evening, everyone. i'm the director for the department, children, youth, and their families. thank you to the supervisor, the mayor, and apart for coming out tonight, and to the residents, particularly of district 10. for our department, we have a blended funding source within our department. we have something called the children's fund, which comes from property tax revenue, and we had general fund, which is what mr. wagner explained earlier. within our general fund, we are

looking at a possible reduction of $5.7 million. our proposal for meeting this reduction is primarily to reduce a particular funding source that came into our department after mayor newsom last year submitted a budget. these are supplemental allocations to our budget by the board of supervisors. they came into our budget to restore funding cuts that we made to programs that had received funding from our department's previous years. right now, we are looking at reducing $5.7 million from these $7.5 million restoration or supplemental add back into our apartment. we believe back by doing this, we are preserving the intent of

the policy work that we have worked with our communities over the past two years, in creating -- we were closely in creating, planning for how we allocate dollars, particularly to two major policy documents. our community assessment where we went out and talk with community members about the primary needs, and thank you to shaman wilson, who very eloquently expresses needs, with child care, after school services, and youth employment. these are all the areas we prioritize within our department. we went through an allocation plan, which is to say if we have this much money, how do we then allocate those dollars into meeting these needs, and that is what we did last year or two years ago with community members as well, and we came up with a plan on how we did that. then, we took that plan, and then we implemented the plan through a competitive process.

unfortunately, when we implemented that process, we were faced with almost and $8 million reduction. unfortunately, we were not able to fully fund all of those programs that submitted an application to us. during that competitive process, we received $69 million of requests, and all we had available was $20 million. we received 650 applications here in the end, we selected 150 applicants. it was extremely competitive, and it was extremely unfortunate because there are lots of programs that we wanted to fund and could not. it was wonderful that the board of supervisors allocated these dollars, but at the same time, we wanted to make sure that we stay true to the intent and integrity of that competitive solicitation process. a lot of people i see in this room submitted applications to us in that application. once again, our proposal to meet

the 20% reduction for the general fund is to reduce our advance, which came into our department to -- through board of supervisors supplemental allocations. and the remaining dollars, for those of you who are math whizzes in the room, there is $1.8 million that remains after we had the required general fund reduction. -- after we cut the required general fund reduction appeared as you know, the state still has not balanced the budget. thankfully, the feds finally did a temporary budget. right now, we are looking at a potential of significant reduction to child care services. particularly to the first five san francisco budget, and it is anywhere from $11 million to $20 million. if that is the case, a lot of child care providers in this room and within district 10 will not be able to survive.

if this it eliminates the funding that we used to augment our violence prevention program -- if the state eliminates the funniest of will -- of met our violence prevention program, we will not be able to continue to fund a lot of the services we have now. if the state decides to eliminate some of the federal funding if they provide for work force development, we will not be able to continue funding the programs that we currently fun. as a result, we are proposing to hold up $1.8 million, so we can figure out how to allocate. we definitely hope to be able to reallocate to meet the highest needs in the community, and today's meeting is extremely important, and i definitely want to hear from community members what the priorities are. thank you. >> barbara garcia, department of public health. we are one of the largest general fund organizations. one of the opportunities we have is the ability to create revenue. 2/3 of the $400 million we have

we can create revenue to that account, leveraging those dollars. i know it to meet this target, which for the department is $69.6 million, we tried to look at revenues, and we have been able to come up with almost $56 million of revenue. so we are left with about a $13 million cut. we then drove down to all the general fund that we have that we do not leverage other dollars with, and those are just pure general fund. from that, we were able to cut $13 million in order to meet the budget. $4.3 million will be cut out of outpatient programs. the department over the last several years has had stakeholder meetings with all of our ceo's because part of -- with all of our cbo's because part of our service is to our community-based organizations. the cuts will be about $4

million to outpatient programs, and in the only non-matched general fund, there will be about 50% cut of their unmatched general fund, which is about 2% of the entire budget for those services. then, we will cut about $1 million of civil service positions. we will also cut about $3 million out of residential programs. that will represent about a 10% cut. then, we have about $4 million of efficiencies in which we try to find ways of not impacting individuals, but try to be more efficient with apartments. $3 million of that will be asking to outsource our security so we do not have to cut more services. we save about $3 million during that period and $1 million by using the new pipeline and closing our sro's, so no one will lose their houses, and we will be transferring moving people to new housing that is coming on.

that $13 million cut for the department we anticipate at least 2000 people being impacted by these cuts, and we tried to do it so that we would not cut more revenue said that $13 million does not represent $20 million of $26 million in cuts, but trying to be as efficient as we can, looking at the $13 million of cuts. >> good evening. i am a deputy director of the human service agency. our agency was assigned the task of coming up with a little over $9 million in our 10% cut. we approached this challenge with the following principles adopted by our commission, that we want to preserve programs and services that meet basic human needs, and for the human service agency, where our task is working with some of the most vulnerable populations in the city, basic human needs translate to trying to maintain

our food programs, trying to maintain our housing programs, trying to maintain the protection and safety programs, both for young children and for disabled persons and seniors, and to also maintain health care and income support. based on those principles, we were able to achieve our initial cut through some of the same way as the department of public health bit because we also have one of the challenges is that a great deal of our general fund money leverage is state and federal money, which limits some of the options that we have. but what we had done is to reduce some of our administrative costs, reduce staff within the department where we could. we also changed our business practices. for example, in the last two years, we have had almost a 60% increase in the number of persons on food stamps.

because we were able to change our business practices, we have been able to meet that need with about the same number of staff that we had two years ago. we talk about changing business practice and everything for all the departments. these cuts here require us to examine how we are working and how we can work more efficiently. we also have done our best to try to leverage additional state and federal resources so that we can minimize the amount of general fund money that is going to go to our programs. i would see our challenges right now, especially in families in district 10. district 10 families represent almost 40% of all the families in san francisco. the program calworks is now being cut by the state. there will be an 8% grant cuts starting in