captioned by the national captioning institute --www.ncicap.org-- supervisor chu: hello, about an to the regular meeting of the budget finance committee. -- welcome to the regular meeting of the budget finance committee.

our klerk today is mr. victor young. are there any announcements? >> please turn off all cell phones. if you wish to speak during public comment, please submit a speaker card to myself. items act upon today will appear on the board of supervisors agenda, may 10, 2011, unless otherwise stated. supervisor chu: thank you very much. please call item no. 1. >> item #one. hearing regarding the city's five-year financial plan, a requirement of proposition a (2009). supervisor chu: thank you very much. this is the first time that it is required. we put together a five-year look into the future and so the hearing's purpose is really to be able to have us all

understand what the five-year outlook looks like and what the plans might be to bring the budget into balance in the longer-term. i believe that the comptroller's office is here, but before we do, did you want to make any comments about the five-year plan? >> members of the committee, the comptroller's office was going to introduce the plan, mr. wagner was going to present it. i think that perhaps it might be prudent to skip this item until mr. waggoner of our lives. supervisor chu: sounds good. please call item no. 2. >> item #two. hearing to consider release of reserved funds, recreation and park department, (2008 clean and safe neighborhood park bond, ordinance 231-08), in the total amount of $3,752,737 to fund the park forestry program, community opportunity fund program, and the neighborhood park contigency fund program. supervisor chu: thank you very

much. we have a representative from recreation and parks? >> good afternoon, supervisors. we are just here today to follow up on a reserve that was placed over one year ago on general obligation bond funds from the 2008 clean safe neighborhood park fund. there were three reserves placed. there was a reserve placed against the forestry fund, the opportunity fund, and the neighborhood park contingency. my understanding of that reserve is that it was placed particularly on the forestry program until the recreation and park department could complete the community process to develop clear, transparent guidelines for how those funds and those priorities would be funded through those projects.

we can be in a community task force at work with them over the span of one year to develop clear guidelines for the distribution of funds on public safety. right now identifying sites where we are aware of forestry stocks that are dangerous to passing cars and to develop a prioritized list of sites. the community by weekly fund met by weekly for a year to develop guidelines that have been published, released, and adopted by recreation and parks. those guidelines try to reward communities who are not only requesting improvements for their part, but are also really willing to dedicate their own sweat equity and fund-raising powers to help develop improvements for the park and

develop ongoing stewardship for those projects. both programs have had guidelines developed. we feel that we have met the board's request when they placed the board's reserved. we are requesting release on each reserve. supervisor chu: can you go into more detail about the adopted guidelines? how does that process work, generally? >> we settled on ultimately having three rounds of awards for the community opportunity fund, with a fourth round if and when the final million dollars placed on reserve, pending the completion of the other parks projects -- so, of the pending completed projects, $1 million has been placed on reserve. pending the completion of the other parks projects, we have

another source of contingency. for the remaining $4 million we have three rounds of printmaking. as well as an initial round that we budgeted around 500,000 and ultimately bound up awarding over 600,000. that was because of the strength of the acquisition of the be received. the guidelines, again, evaluate the acquisitions by a community task force as reviewed for criteria around the faultless of the application, how prepared of a community group is to deliver the improvement, the amount of volunteer hours, sweat equity and financial resources being brought to the project, as well as overall need within the park. that is the high level summary of the guidelines developed supervisor chu: thank you --

developed. supervisor chu: thank you. let's go to the budget analyst. >> good afternoon. for these reserves, there were three programs. we were recommending reserves on the fourth program as well as the neighborhood park contingency fund for the fallout for which the department provided a detailed spending plan. for the opportunity fund, the department, there is a $643,000 discrepancy, difference, between the requested release reserves and the actual spending plan. so, we are recommending that the board continued to reserve those funds and release a total of

$3,008,800. supervisor chu: i understand that the reservation on the remaining portion is because the department has not yet awarded it two different entities through the process? >> correct. supervisor chu: let's open this up for public comment. are there any questions at this time? >> my name is john cunningham and i am a executive director of the national growth in golden gate park. historical context, 20 years ago we entered into a unique public private partnership with a private group called the golden gate park. not only was it were -- restored to an international landscape, we did receive the

federal designation of the only memorial specifically designated to hiv and aids. we have raised the money through our own sweat equity and fund- raising. the cost of the memorial exceeded $2.5 million through private funds. this year we have decided to go forward and continue the restoration of this land market area of our cities park, specifically golden gate park, which is a crown jewel. within golden gate park there was the original victorian falls. we have put a plan in place and have met diligently with community opportunities to restore it to its of original splendor. as well as to bring back habitats and complete green and recycle water systems. should these funds be delayed in

being released, our ability to leverage money and sweat equity to move the project forward will be greatly inhibited. i can tell you that having a non-profit -- having been a non-profit fundraising professional, i have had multiple meetings with the administrators of the grant, as well as operational personnel. [tone] i encourage you to release those funds. supervisor chu: thank you. next speaker, please. >> good afternoon. my nameless [unintelligible] for 59 years. i would like to speak on behalf of this item with a cautionary note. i would like to issue a warning to make sure that all of the

trees that were identified as needing trimming corpse or being cut down have been done before this money is released. specifically, that would cover the grove where they have one unfortunate lady. and also the trees that in my opinion, needed treatment -- read -- needed trimming along the park boulevard and alongside the hiking area of mount davidson. and obviously, golden gate park in john mclaren park. i think that we should maybe have a short discussion, sheer or some other time, to assure the public that those trees that were identified in past programs have been worked on, so that this way it would give us peace of mind so that we do not have another unfortunate lawsuit. thank you. supervisor chu: thank you.

>> good afternoon. my name this [unintelligible] and i would like to urge you to release the community opportunity funds at this point. our organization, as well as different fund best groups out there have been working in support of the opportunity fund for the last year. the first round was immensely successful. what this grant does is allow people to get excited about their parts, even though they may not have received grant funds through a total renovation funds. communities are coming out of the works. every workshop we have held, community members that have never been a part of the parks system in a formal way are coming out and offering additional money. it is a very exciting process. one that we feel very supportive of. once again, we really just urge

you to go ahead with this. thank you. supervisor chu: thank you. >> my name is [unintelligible] also of san francisco parks trust and i would like to urge you to release these funds as they assist in the designing an application of applying for funds. it has been well supported by the community through the process and has created a lot of engagement for many different part groups around the city. we are very excited at the next phase and would like to encourage the funds to be released. thank you. supervisor chu: are there any other speakers that would wish to comment on this item? seeing no one, public comment is closed. after having heard from not only

the public speakers, but my own conversations with neighborhood speakers who have gone through the process, i have heard nothing but positive things about how the process is working out. it seems like something depth has really enable communities to engage in ways they had not before. given the fact that there are reserve statements set forward in the process to enable this community granting process, i would suggest that we release, as the budget analyst recommends, the entirety of the force program and contingency fund. can we do that without objection? thank you. let's go back to item number one.

>> good afternoon, supervisors. we are happy to be here to talk about this document that deals with structural budget deficits. it might be overstating, but this is the first time we have had this conversation as a city where we have gone forward on

multi-year financial plans for consideration in an effort, as part of recent reforms, instituted in the city in recent years to deal with nagging and persistent budget deficits. as a brief reminder, the context for the steps taken by the city in recent years, ever since six years ago the city is now actively and engaged in multi- year capital and technology planning efforts. we see the plan every year. this year for the first time you will see a five-year technology plan coming before this committee in proposition 8, which was approved by the voters a couple of years ago. we instituted other changes in the city to look p up -- to look beyond the picture and begin planning for it. some of those changes included

changes that were labor contractors to come before with the annual budget to speak to each other in a way that they might not necessarily have all in the past. the mayor on the board has adopted a policy flowing out of proposition 8. this is in preparation for next year, really, where we will shift into a two year budget process from the one year. generally speaking, why do this. what are the benefits of long- range financial planning? taking a step back and looking at the city's financial practices, ratings agencies know the same thing. we have very strong controls and track records for balancing annual budgets managed over the course of the year for balance mints. it has always been a strength of

san francisco and others. we have work to do when it comes to planning beyond the annual budget. indicators that we noted here, moving to the board of supervisors at the time, as a city we had to close deficits over the last 10 years to bring the budget into balance and renegotiated labor contracts, asking the voters to approve tax increases. all of these in some way or another are symptomatic of deficits in the long-range financial planning. at its highest level, what is the hope for these financial management tools? that we do a better job of managing the boom and bust cycle in the city. a simple chart here that shows

you the changes over the last decade. the growth and shrinking that has happened during that time, you can see that the general practice has been that as dollars become available, we spend them. during the time that revenue has improved, we have ramped up programs and headcount in the city, only to find ourselves that when times get worse having to very quickly pared back. so, you see this roller-coaster ride that reflects the city's budget over the last 10 to 12 years. there is a different way to do this that would take a view of the city that says we want to plan for change by a more incremental and gradual way to ease growth and shrinking in a way that causes less harm to our employees and contractors that

provide these services. most importantly to the citizens that rely on those services, the whipsaw can make that challenging. so, the financial plan itself, five years, it is before the board. this document will become some

it is our hope that by selling longer-term hopes and strategies, we can move in more carefully and gradually implement them. when you are dealing with the annual budget 12 months ahead, often, if you know where you want to get and you have to get there in 12 months, you have to resort to extreme measures. if you know that you want to shift money from one program to another within 12 months, you have to do things like laid-off employees and cut contractors. it is a shift by aware where --

in a way where if you are using attrition and turnover with a more careful in gradual planning process, there is a change that is easier to implement the likelihood of success for the strategies. painting a high level picture of what our hopes are for this process, this document is really only as meaningful as it is helpful to the mayor and the board in planning our finances. we would all encourage your feedback this first time as we hope that this will become a road map. with that, i will turn it over to mr. wagner to talk through the document itself.

>> thank you, supervisors. greg wagoner. so, i will walk through some of the contents of the plan. one thing just to say by way of a starting point, we have been developing this plan and trying to emphasize that there is a problem statement in this plan as well as a solution statement in this plan. the baseline projection shows that if you look out on the current course of action, we have a significant and growing imbalance between revenues and expenditures. i think that that is not to take away of this report. we have known for a long time when we publish our reports that that imbalance this. i think that what is hopefully

new and useful about this document is more on the solution side. to say, look, i know that we have this problem and we will start thinking about the big pieces of addressing that. that being said, this chart here is an illustration of the problem. blue lines are projected revenues. redlines are expected expenditures. what this represents is sort of taking a look into the future given our current operations, given no policy decisions that have already been made, saying to let the status quo continue without taking subsequent action. what does that tell us about the direction that things are headed? >> the answer to that is the surprising. even though our revenues are

looking like it will increase, slowly but steadily over the next five years we will emerge from the downturn. we have a corresponding increase in expenditures, a growing significantly faster than revenues. the way that things are right now, even as the economy recovers, we will face continuing deficits as long as our expenditures continue to grow at the pace expected. the total value of these projected deficits, we start with the ones that you know what the coming year. if we take no action, it is expected to be over $800 million in the fifth year. so, just a quick high level overview of the big pieces of

the solutions in this plan, i will talk about each in more detail. i will be happy to answer questions, if you have them. to emphasize something that the comptroller said, this document is not intended to be a budget document. it is a planning document that sets up broad categories or a framework that can be used to make specific budget decisions over each of the next five years. we are not trying to prescribe policy decisions in this document. we are trying to set goals that people can use as an order of magnitude planning goals as we make individual budget decisions on ballot measures, other policy choices over the next five years. these other categories of solutions proposed in the plan as required under the charter

and each year the windup of balancing out the deficit. of course, this is going to require real policy decisions on each of the five years and i do not think that this is easy as a course of action. but i think it is an achievable course of action, although it will require some difficult decisions and some discipline to get ourselves back into a place where we are in structural balance within five years. each of these categories reflects one of our major categories of expenditures, proposes a target for savings and revenues that we could try to achieve in each of the year's planned. the last category is a catchall for additional reductions and annual reductions that we will have to make a rule of in the

plan. to look at these individually -- >> before you go -- supervisor chu: before you go, the inconsistent number is a base case outlook of $283 million. at the last report we had a different number that was north of 300 million. how should we interpret this number? did we get good news? has it been accounted for in the balancing picture? supervisor chu: a good question. the deficit that was included in the joint report has been changed in this projection. the reason for that, we have the nine month report that is scheduled to come out early next week. that is the third quarter report where we look at current year's spending and revenues. as