oftentimes, we will have a vendor come in and pitch a great idea, and i'm sure it is frustrating for us to tell them that we cannot just contract with them. that they have to meet city requirements for contract in, and i think the office is doing all they can to streamline the process to make it easier and faster. we also have a great tool in the city which we call the computer store that the office of contract administration manages where vendors who want to provide services or commodities can subcontract to a preapproved vendor and thereby have a contract vehicle where they can provide those services. it does require them to develop some type of relationship or vendor agreement with a preapproved vendor, but it is a process that a lot of states use peer they call the master services agreement, and a lot of

other services used to allow those small vendors that do not have full-time lawyers, that do not have the knowledge of complexity of government contracting to quickly provide services to the city without having to go through what they sometimes see as an onerous process. we are happy if people want to talk to us about it, to try to give some guidance on how we can connect them with the right contacting authorities in the city. supervisor kim: that would be helpful, and also as the province keep that in mind as they did contract thing, the delay in areas of technology where things are changing quickly. i do not want the city to be left behind because it is easier. and i get it -- it is easier to contract with folks we have been contacting with already, and i see it regularly with the approved contract that we begin to folks we have been contacting with, that it is generally an issue across our city departments. around city-wide broadband and wifi access, which i am glad

this is listed as one of the goals -- i wonder if you had any more specificity if there is a time line, the way you are evaluating neighborhoods based on lower income households or percentage of seniors, and what kind of our approach to the will be our ability to partner with private companies. do we have a timeline? >> absolutely. this is where we do have a project. we had set up the steering committee of some department heads and books we think have a good connection to the community office of economic development, we met last month and talk about a list of potential sites that we felt were good potential sites based on need of the population, distribution around the city, ease of implementation from a cost and complexity standpoint. i am happy to share with you and anyone else interested what that looks like, and we think we can rapidly bring some of those sites online in the next few months. supervisor kim: we will start

providing free wifi in the next few months? we have a plan in place in terms of whether it will be going? >> we have a large list. we know we cannot do them all in three months, but we would like to approach three sites every three months and bring up three sites and on, and we think that is doable. supervisor kim: that is great. it would be great to get that list and have the policies developed. i am very happy we are doing this report, and i know it is a positive step forward. while all the goals are laudable, it is hard to see how we are actually going to do it, where it will happen. i think my last question was around moving from traditional pc's to a virtual pc. i wondered what our plans were to do that. i know we have to invest in hardware, i assume, in order to

share -- ensure that they run as fast as pc's do, and while i am not worried about virtualization, i wonder if the city is able to invest. workers will be frustrated at computers moving slower. kind of your thoughts are around that. >> you are right. this is a project that is in its infancy, frankly. this is one of the ideas that was brought to us by the private sector when we met with a lot of the private corporations and private sector folks who said this is where they were investing their time and money for their workers. you are correct that they have the luxury of perhaps more phones and better technology than we do. so we started a pilot in this. we do not want to stifle our workers. we do not want to make it worse for people. some departments in the city had very good networks, a very good equipment that would probably not see the benefit of a project like this. where we see the project benefiting is those small

departments whose technology budgets have been cut or their equipment budgets have been cut, and they are perhaps working on pc's that are five or seven years old that are frequently failing or they do not have the money to replace. we actually have the data center consolidation projects already made a lot of those initial investments. it is the same technology we use to virtualize servers. it is looking at an opportunity to leverage technology we have already invested in. we are trying to look at smaller, underserved departments that have come to us begging for use computers, whenever they could get to improve their usage, and see if perhaps this supervisor kim: i do not want to discourage looking into that. those are just some of the concerns i had about moving in that direction. i am happy looking at that direction. the last question i have is not an area i am super familiar

with, but looking at open source software. i know for a lot of the software we by there is often a free alternatives. worrying about security and all of that, -- >> we actually passed a policy encouraging departments that any time they do and rfp for a solution, that they consider open source software for their solution and hope we can save the city money. we have had some limited success and there is concern about the sustainability of that model, there is a concern it will adopt a big critical to the operation and maybe the people whose support will go away, but we are continuing to look at those opportunities to see if there is perhaps an expensive commercial version or free open source version.

i know we use a number of open source solution for getting our work done. supervisor chu: i think a number of people would be interested in the wifi rollout. if you could distribute at two members of the committee and members of the board, i think people would be interested in where those sites would be. the plan in itself is more in general and sort of an overview of the technology programs that are happening. to be used more as a general planning document. one of the programs i am concerned about is the justice project. this may not be that tied to do about i would like to bring folks afford to give us an update about what is happening. this has been with the city for a long time and i think it is about time we get a debate about

what is happening. supervisor chiu: i have a hearing request that has been with the mayor's office for quite some time. i know there has been some transition in leadership but i have been told that the justice group, the newly formed justice team is ready to present. if we can have that with public safety. supervisor mirkarimi: we also had a preliminary with public safety. supervisor chu: why don't we go to public comment on this item? are there any members of the public who wish to speak on an item #8? seeing the, public, it is closed. -- the seeing none, public

comment is closed. why don't we move this item. do we have a motion? supervisor chiu: motion to move it with recommendations. supervisor chu: can we do that without recommendation? item #9. >> a motion extending the deferred retirement option program. supervisor chu: this is an item we have a number of people here to present. i know they will be providing the primary presentation from the comptroller's office and i want to recognize other individuals in the room today -- [reading names]

>> hello, supervisors. i'm from the comptroller's office. there are couple of slides i might be referring to. there are copies for the public here. i am going to go briefly through the summary findings. i'm happy to take questions after. after me, the actuaries, a city may be wishing i had talked longer. just a brief bit of background, in 2008, this was proposition 8 -- a voluntary program to encourage police officers to

continue working beyond the date they would have retired and reduce the need to recruit, hire and train new officers. there is an admonition that the program because neutral to the city. that is the phrasing that is used. the comptroller office has asked to make a finding on the subject at this point. the eligibility requirements, just briefly by way of background, to being dropped to 25 years of service and 50 years of age and then one or three years depending on your rank and eligibility. while someone is in drop, base receive their pay and benefits and make pension contributions. their pension benefit level is frozen at the point which they enter the drop but would have gotten if they retired at that point. pension payments, i including cost of living increases are placed in a tax-deferred account and they get a lump-sum pay off

when they leave drop. that is the basic description. a very quick look at the demographics of people in the drop program. we will speak more to this as well. the data that we looked at, by january, when the report was issued, from the beginning of the drop until january, to under 52 officers had retired. 169 of those, 67% for to is updated and 33% did not. here is the breakdown by rank. police officers have a three- year time frame of eligibility. lt. and captains have one year. gary has more recent numbers for what has happened since january, but that is a brief look at the demographics.

if you look at what has happened within drop -- that is what has happened since dropped, this is a very quick view of the retention in the program. just to explain it a little bit -- here are the first group of police officers who entered. this is a useful member to explain what has gone on. the median eligibility use -- a police officer could stay in the program for three years. how long did they stay? the people who retired used 37 present site of their eligibility or about one year, the same ordeal -- same order of magnitude as sergeants and lieutenants. i will come back to that a little bit later.

in summary, on the cost neutrality finding, in the simplest of terms, is drop encourages officers to work longer than they would have the outcome of the potential for cost savings are realized. the savings come from deferred training and deferred a health benefit costs. cost comes from changes in the retirement benefits. if it encourages them to work longer than they would have without it, the cost savings potential are realized. if it is other than that, they are not realized as well. our analysis hinged on what was the behavior when people enter drop?

in general, if you look at the fact we drew attention to in the front of the report, prior to drop, 12% of officers age 55 with 25 years of service would have been predicted to retire. this is based on many years of behavior in their retirement system. since the drop, 33% of officers have retired or enter drop. there are only a few years of data in that probability but that is what has happened and the retirement system can talk more about that. you can turn to the question of what happened -- understanding the change in behavior and

linking it to the police department's actual cost -- a couple of things can happen to a member's behavior. those who entered drop before they plan to retire may work longer than without. others may be retiring as they would have without drop. if you look at the last slide, the probability so far is members entered the drop before they would have retired without it. during the time they're in the drop, workers may exit after a day otherwise would have retired. too few members have retired to determine the actual additional service the city gained from the drop. taking together the effects of a

change in retirement behavior, the summary costs were if you take those two graphics together and if the program were made permanent, this is the scenario described in the report, the change in actuarial assumptions the consulting actuary would recommend to the retiring board would be to amortize the $52 million cost over the normal amortization time for the change in their benefit levels. we translated that into the standard way retirement cost increases are viewed over 20 years -- over a 2.5% change in payroll right now. that's the cost model for the retirement system. we look at taking every year of service demonstrated from the drop. over 30 months, there has been approximately 169 drop officers

with an average of 12 months of services. over 30 months, if you look at the record and training and benefit costs that are deferred, we calculate that to be $55,100 per deferred year. if you assume every year served in the drop was an actual credit and deferred cost savings to the city, take those 68 times 55,000, you come to 3.7 $5 million in savings to the city. -- $3.7 5 million in savings to the city. the cost is significantly larger -- significantly larger. we made the finding, it is summarized in the front of our

report that as of this time, the program is not demonstrating its cost neutrality admonition that was in the original charter amendment. gary will speak to some of the more recent demographics we have mentioned. those are the summary findings and i will leave it to them to walk you through this and areas bst to model that got us there. >> we have a few questions. supervisor mirkarimi: thank you. i supported proposition b like a number of our colleagues because we wanted to help create whatever contingencies to meet the attrition realities the city is confronted by. with some lessons learned, what i am hearing from the comptroller's office is that the hope of proposition b realizing

a certain savings or some cost neutrality is not there. but i'm trying to understand how we arrived at some of these conclusions, starting from what do we define as cost neutrality in this city? >> the charter amendment asks us to look specifically at a couple of items, so i can refer to those. i am looking for the language in

the charter amendment so i can be specific on that front. this section is 88909 and as specifies taking into cost of payroll, expenditures for training police officers and cost of recruits and trainees and field officer training

costs, contributions made by members participating in drop in the city's share on drop funds and and the cost related to the implementations of the program. >> i understand that through that prism, but does the city itself have a definition of costa neutrality? do we on our own operating plane -- definition of cost of neutrality? does that give us a margin of error say 1% above or below whenever the baseline determination is once we enter into these kind of contracts. that is what i am trying to understand. >> in this summary front section to the charter amendment, it refers to a simpler view of it -- shall not impose new costs as a result of the participation of police officers in the drop.

supervisor mirkarimi: it is a little vague to me only because i'm trying to catch up and understand our yardstick compared to other cities who are experiencing the same debate. it seems our controller would like to weigh in. >> we do not have a single definition of costs neutrality we apply to all circumstances in this city. generally speaking, absent other direction, our office would apply an absolute rule to take it at its face. i know there has been conversation in other jurisdictions about drop program analysis. is it within a reasonable margin of error that the cost or savings are within a band and in some places, folks have stood on that to authorize continuing

the program, specifically in our program and i think the retiring -- the retirement system can speak to this -- the ballot system that tracks office to complete the study is absolute in its terms and does not imply or allow leeway in our report to you to say this results in a cost increase. but the cost increase is marginal and simply says the comptroller shall provide a report indicating -- whether it achieves cost neutrality in absolute terms. >> is that a consequence of how the ballot measure was written as opposed to how we made ourselves assess -- does it present a different scenario that may be does a disservice to itself or maybe not as opposed to weed -- as opposed to how we may actually gauge the efficacy

of this program? >> i do not read anything in the ballot language it self that gives the comptroller's office leeway in terms of how we produce this report as far as placing an incredible cost in a larger context. it speaks of absolute terms in terms of our reporting requirement. supervisor mirkarimi: i'm going to reserve the rest of my questions for the actuaries. supervisor wiener: this may be a combination answer between you and the actuaries, but i assume you have seen the response to the comptroller's report and actuarial analysis. i just want to know what the controllers responses to that response. >> at the outset of this

analysis, i think this goes to the question -- part of the difficulty is what scenario you would use to analyze. we participated in asking for the models that underlay the report. the scenario is the range of possible savings using data as of january 1st, 2011. what would happen if the program were stopped as of that date and the cost that would run into the retirement system? then we asked for a second scenario, which was the program sunsets as of june 30th and everyone who was eligible enters it. scenario no. 3 was what with the program cost if it were

continued, if there was a decision made to extend it and became a permanent feature of the retirement system? in the letter and the correspondence back and forth, it had to do with if you assume different counterfactual said buzz. those -- different counterfactual attacks than those. i will let the actuaries comment, but i just wanted to say at the outset that we did try to take a fair look at the range of possible outcomes for the program and those flow into the actuarial assumptions. supervisor wiener: i would ask

that the actuaries respond to the analysis. was there anything in the response that caused the comptroller to question your conclusions or change any of the calculations or anything like that? >> there really was not. these are fairly big numbers. the demonstrated savings to the operating cost of the police department are very small. even if you give complete credit assuming every year of service in drop is and avoided cost for the police department, which is also questionable, that is a relatively small savings. under the range of possible costs to the retirement system, if you think of the retirement behavior creating a range of savings to cost, there is a table and our report that talks

about that. the actual behavior of officers is somewhere in the middle. what we see in terms of officer behavior is pointing to the idea that behavior is going to bring us down on the cost side and not the savings side. those numbers are so much significantly larger than the savings to the police department that minor changes in the view of the actuarial data would not make a material difference. supervisor chu: thank you for your presentation. >> thank you, supervisors. i'm with the retirement system and i just passed out