, by talking to san diego, that they needed to tweak their program because of lessons learned. they also looked at the question of age or length of service or was it the city's matching relationship is, so they have looked at those scenarios. if it appears that none of that has been entertained up here. whether that will work or not work, i have no idea, but the fact is we have not even advanced that discussion yet before we decide to let this program son said at all. >> there was an editorial page about a year ago saying that the san diego drop had been written and -- as the san francisco drop program, and it would not be talking about eliminating it. one of the things that just about broke san diego was promising a 9% interest return on the money for the drop.

that is why we negotiated a 4% return on the money. the second thing is we have our office is continuing to pay their retirement contribution while they are in the drop. under the current charter amendment that will be considered by the citizens of san francisco, that contribution will go up to about 11% or 12% for active police officers. that is, in effect, a free 11% or 12% going back into the system, and that has not been considered. those are all factors that have not been considered here. the other thing that we considered, and i want the supervisors to understand this, i initially wrote this. i tried to make this the most conservative drop program i could find. i tried to correct the mistakes of san diego, houston, and los angeles by making corrections. one of those corrections was clever example, that event of a surprise disability in our drop program, the clock stops. if they were going to recover

that time, they have to stay the additional time while they're off disability. that does not occur. we also limited the drop program for one year for supervisors, captains, and lieutenants. we did make a lot of changes. but you are right about something. there are amendments that can always get better. there are things we could have done to change this based on the mistakes we found. but i think the charter does not allow us to make some of those changes. supervisor mirkarimi: i just want to tie that circle of discussion -- and does that mean that if there were to be modifications to this program that because it was chartered- amended, we would have to go back to the charter to do just that? >> with the program design, yes. this, like all of our pension plans in san francisco, is in defined in the charter. the changes that kind of get to the mechanics of how the program works would have to go back.

supervisor mirkarimi: that is why i said, could the language have done a disservice by not giving it that pliability on the back end? ultimately, i think that part of this conversation rests on this. what we're up against is inconclusive data, no matter who you are talking to, and the fact that the language in the charter limits our ability to be able to modify much of anything on the fly without having to go back to the voters themselves. >> i think that is true. if we could go back in time, perhaps a caveat should have been added into the language to say we have the ability to make changes to the program at the conclusion of the three years. what we have tried to point out today is that nobody in this room, including ben or cheiron or anyone else, knows if there is a cost to this program. i do not think anybody would stand up and say they know for sure that there is based on

future behavior. supervisor mirkarimi: when you think about it, in light dawned on you that you wished you gave the board of supervisors greater flexibility. >> i did not think i had to do that, because i do not believe there is a cost to the program. but cheiron disagrees with me. it is good to know that you and i agree on something. we always try to meet a consensus somewhere. i think it is a tremendous step forward. supervisor mirkarimi: just on at this, i was expecting more economic gymnastics in this discussion. i do not think we have even mounted the bars. there is such an absence of the information. i was prepared to hear about why this program -- because this is what is going around in city hall, has failed. still, there's no data that supports the supposition whatsoever.

>> i agree. thank you. supervisor chu: thank you. if there no other members of the public who wish to speak on this item, i am going to be closing public comment. we can close public comment and you can ask a question. are there any other members of the public who wish to speak? seen none, public comment is closed. supervisor winner. supervisor wiener: i have a question for gary. i think we all assume universal consensus that we're going to have a major retirement and staffing level problem, whatever we do in terms of drop. >> correct. supervisor wiener: in terms of the officers were going to immediately run-down and enter the program, when we pass forward to, say, three years from now, it seems like those officers will probably be retired regardless. >> we have two things going for

us here that can at least stem the tide of the exit. if you extend the drop for another 12 to 18 months, these 180 to 200 people would put off their decision for another 18 months, which would buy as more time to get back to normal economy. the other people you have to consider here is you have a lot of people with 27, 28, 29 years in the waiting to see and would take advantage of the drop program button may retire early because the program no longer exists. so you'll lose a lot of those folks. we keep going back to the same argument that we're seeing the exit of post-vietnam hires countrywide. so when we're talking about 580 people that can go into this program, all we're doing is we're kind of trying to keep 200 to 300 people around for awhile. but the hiring of new cops is

inevitable. this is something the city will have to deal with, regardless of whether the drop is renewed. supervisor wiener: can i ask the controller to respond? if you want to. >> just a general comment? supervisor wiener: the opposing point of view has been articulated. i am curious to know what the controller thinks. >> we're dealing with a limited sample size, and that point is fair. that is made clear in both our report and cheiron's report. we're fundamentally trying to evaluate a pilot program based upon three years of data and a limited set up participants. the judgment relies on whether you think the program is keeping people launderer or whether it is encouraging people to retire

earlier. it is always going to be very complicated to determine when you're looking at what someone's retirement date was and what the motivating factor was for that and whether it had to do with wage increases or employment conditions are other dynamics. i think the point about a limited samples that is absolutely fair. however, we do have data from that limited sample size. and that limited data does indicate to us, as it does to cheiron, that is this -- that if this program is renewed in the behavior we see during those three years continues, it will bring additional employer costs to the pension system of about .25% of our payroll costs in the city. could behavior change in the future or could we benefit from more information from a longer time span to draw that conclusion? absolutely.

however, what we know today, if continued, that cost would end, not in the coming fiscal year, but the fiscal year after. and if we saw a change in behavior that led us to believe that officers were staying later, we might avoid some costs in terms of academy classes or the things. those costs will not outweigh the payroll costs. fundamentally, i agree with the point that the sample size is limited. i disagree with the point that it is based upon no information. it is based upon very detailed demographic and permission of every participant that has gone through the program thus far. supervisor chu: thank you, supervisor wiener. thank you to the controller for that explanation. as we think about what we're trying to do over the next five years, we have seen a number of different things come through.

the five-year plan speaks to pension reform. many of the partners have been very instrumental in making sure we're moving in the right direction with regards to pension. it is with great hesitation that we take a look at, potentially, a program that even know if there is limited data, it is going in the opposite direction, which is to increase our pension costs of $6 million every year. i take the points that are being made about the limited scope, a limited duration, and limited time in which the drop program has been in effect to heart. no one is disputing that fact. but there are certain things we should know. one, there was a comparison between other jurisdictions. but truly, if we wanted to make a true comparison, we would have to take a look at how those plans were designed and how those drop programs were created in order to see whether there are actually comparable. teselle los angeles and san diego has extended their drop and we should, too, i do not

think is a fair thing to say because of the program incentives. the other thing is, given the general outline of what it is that we actually -- of what it is that makes the cost neutral, it has to do with the fundamental behavior and trying to predict whether people are actually retiring when they were originally going to any way or if the program extends the time of service. my hesitation with extending this program is the fact that, even if we were to extend it for a year are two years, i do not think we would get any more conclusives or bigger evidence than we have during this three- year time span. if that is the case, why don't we really try to plan and, say, at the end of june 30, what is the problem we have to contend with? how many people have enrolled, and how does the city plan for that? whether it is looking at the academy classes or looking at other things to make sure we

have the robust staffing we really need. if we were able to tweak this program in a way that actually did extend some once service -- for example, if it was not automatic that someone would get a drop extension, but if someone said on their own decision that they want to retire now, and that it was discretionary for management or whoever is to ask if it would consider staying on for an additional two or three years, that would guarantee that we actually were extending someone's years of service. the way that the charter is written, we have no way of making that kind of tweak to ensure that we're receiving a cost savings. for me, my real hesitation in this is, one, we're moving in the opposite direction of what we're saying we want to do with pension reform and looking at our five-year financial, we know we need to make significant strides. second, i am not sure that even if we extended for 12 or 18 months that we would get more

data that shows how behavior changes. i think the only way we really can say for sure how the behavior works is if we were to actually change the way the program is structured, which we can i do, even with an extension. we would have to go back to voters. those are my thoughts about it. but i do appreciate the comments that have been made on all sides and the actuarial presentations. supervisor mirkarimi: i have a question. related to what supervisor wiener was speaking with you about and what has been referenced in some of the public comment -- has there really been any nexus to show that because of the attrition rates that we're projecting over the next five years and the probability that academy classes are not forthcoming in the next 12 to 24 months, how do we actually answer that question other than lateral hiring?

>> iowa agree with supervisor wiener and hit -- i agree with supervisor wiener and his comments. the city faces a democratic challenger in the police department that will need to be met through a mix of a number of different activities through the next five years. it will need to include hiring additional officers. it should include civilianization of certain functions within the department. that is true, frankly, whether we extend this program or not. if we were to extend and we did find that the extension that officers to stay longer, it would be marginally longer. fundamentally, we would still have the fundamental issue at the end of it that we have a large portion of our police department, like other pockets of our city work force, that are really going to be retiring in the coming five years, and we need to have hiring plans in place. supervisor mirkarimi: if it

relates to us calculating the impact of what drop was about, it really was not a study that gives us juxtaposition to show this is what could help us in lieu of us being able to not have to do academy class is over the next 12 months 24 months in dealing with the retirement rates. >> the limited data we have from the trial period would lead us to believe that drop is actually having a counter fact, that officers are actually retiring sooner than they would have without the program. that is the experience of the pilot period. but whether the behavior would continue in the future is in the conversation about how big the sample size needs to be before you are able to pull apart all these different factors that influence is someone's retirement. supervisor mirkarimi: if there was not any of the limitations

that existed on that question of it having a counter of fact, what would be the response by the controllers office on how to correct that? so that you correct it so that it would not have that particular fact. >> i know that we are aware of nuanced differences between drop programs that exist in different places. we have not specifically studied the question of how we can tweak the dynamics of drop to make it achieve cost neutrality. we can do that if it is the pleasure of the board and you decide that you like to pursue a subsequent charter amendment to change the mechanics of the program. we would be happy to provide some of that analytical support. supervisor mirkarimi: actually, i do not agree with the comment that supervisor carmen chu made that we do not know what caused neutrality is. in the absence of not having our own definition of cost neutrality, that gives us a see-

saw of us trying to figure out what is at the heart of the debate here. because we do not really have the premise. by us not being able to study, i think, the design of this program in comparison to other jurisdictions, that leaves us a little bit feeble and trying to figure out what we could have done to make it better while they have gone through the same or similar experiences. >> i do think the charter is a fairly clear on the definition of what we need to report in terms of cost neutrality. the implementation drop of implementation shall not result in any net increase costs -- the implementation of the drop shall not result in any net increase cost to the city. it defines a cost increase of only .25% of payroll as not an

increase. it does not create a band of costs that are increased but only marginally. supervisor mirkarimi: that is at risk of going back to the earlier point that if you're using this city cost detail of that $55,100 as part of the variable of looking at where the cost neutrality or debt increases are, then i am not sure that that is an exact number that i would rely on. >> i agree that is not an exact number. it takes into account the significance drivers of training costs. i think it is actually very conservative, in favor of cost neutrality for the drop. it does not include the fact that an entry-level police officer to the costs about a third less than a retiring police officer. that difference in cost is probably significant. that is very hard to model and very hard to quantify, so we left those factors out and

focused on the main drivers of the incremental cost. supervisor mirkarimi: thank you, appreciate it. supervisor chu: supervisor wiener. supervisor wiener: i just want to use this as an opportunity, similar to my question earlier about deferring capital costs and really shooting yourself in the foot in the future. that by continuing not to find academy classes -- it has been a few years now. the budget process and product are very strong, but i am disappointed with the lack of academy classes. we're really shooting ourselves on the foot. you cannot immediately have those officers on the beat. by the time you budget for class and plan for a class and recruit for it, go through the class and field training, it is several years from the moment

that you have the political will to fund the academy classes to actually seeing tangible benefits to those academy classes. even if we were to budget for in the academy class in the coming fiscal year, and i hope we will, it will still be several years before we see any tangible benefit from that. sometimes there's a lack of political will to make the hard choices, so we're not investing in the future of our police department. with or without drop, we have a real headache on our hands come two or three years from now. i just wanted to make that point. thank you. supervisor chu: thank you, supervisor. supervisor mirkarimi. supervisor mirkarimi: and 2 _ supervisor wiener's point, there will not be any ballooned -- and to underscore supervisor wiener's point, there will not

be any ballooning of the numbers. even if we were to put in an academy class and nine months from today that we get out of the budget process and we begin to project for a new year, we would not realize the material benefit of that recruit from until 18 months after that seven-month time span. so we're looking at the delayed response a two and a half years now. i do not know how we answer that question on attrition. maybe this is a good time to start talking to the deputy sheriffs. >> thank you. are there any other questions or comments from the committee? we have already taken public comment and closed public comment. i want to thank the actuarial and department heads and the folks who have been involved in this. again, thank you to the poa for

coming in and bringing your folks as well. can i entertain a motion for the item before us? >supervisor chiu: i want to associate myself with the comments of supervisor wiener. it is a difficult budget situation right now, and the costs that have been attributed to this program are more than i think any of us would have wanted to see. i absolutely agree that whatever we can do to look into new potential academy classes and giving that forward, that would be the ideal way to go. we will see what happens to that in the coming weeks and months depending on what comes back with our budget analysts and tally proceed in the coming weeks. but i think at this time, we need to move this forward to an old man decision. i ask that we move this forward without recommendation, as we can continue to have

conversations with the various stakeholders. supervisor chu: we have a motion to send the item forward without recommendation at this time. can we do that without objection? ok, thank you. do we have any other items before us? >> beckham pleads the agenda for today. supervisor chu: thank you -- that completes the agenda for today. supervisor chu: thank you. we are adjourned. >> here we are at the

embarcadero. we are standing at one of locations for the street artists. can you tell me about this particular location, the program? >> this location is very significant. this was the very first and only location granted by the board of supervisors for the street artist when the program began in 1972. how does a person become a street artist? there are two major tenants. you must make the work yourself and you must sell the work yourself. a street artist, the license, then submitting the work to a committee of artists. this committee actually watches them make the work in front of them so that we can verify that it is all their own work. >> what happened during the

holiday to make this an exciting location? >> this would be a magic time of year. you would probably see this place is jammed with street artists. as the no, there is a lottery held at 6 in the morning. that is how sought after the spaces are. you might get as many as 150 street artists to show up for 50 spaces. >> what other areas can a licensed street artist go to? >> they can go to the fisherman's wharf area. they can go in and around union square. we have space is now up in the castro, in fact. >> how many are there? >> we have about 420. >> are they here all year round? >> out of the 420, i know 150 to sell all year round. i mean like five-seven days a week.

>> are they making their living of of this? >> this is their sole source of income for many. >> how long have you been with this program. how much has it changed? >> i have been with the program since it began 37 and a half years ago but i have seen changes in the trend. fashion comes and goes. >> i think that you can still find plenty of titis perhaps. >> this is because the 60's is retro for a lot of people. i have seen that come back, yes. >> people still think of this city as the birth of that movement. great, thank you for talking about the background of the program. i'm excited to go shopping.

>> i would like you to meet two street artists. this is linda and jeremy. >> night said to me to print them -- nice to meet you. >> can you talk to me about a variety of products that use cell? >> we have these lovely constructed platters. we make these wonderful powder bowls. they can have a lot of color. >> york also using your license. -- you are also using your license. >> this means that i can register with the city. this makes sure that our family participated in making all of these. >> this comes by licensed

artists. the person selling it is the person that made it. there is nothing better than the people that made it. >> i would like you to meet michael johnson. he has been in the program for over 8 years. >> nice to me you. what inspired your photography? >> i am inspired everything that i see. the greatest thing about being a photographer is being able to show other people what i see. i have mostly worked in cuba and work that i shot here in san francisco. >> what is it about being a street artist that you particularly like? >> i liked it to the first day

that i did it. i like talking to mentum people. talking about art or anything that comes to our minds. there is more visibility than i would see in any store front. this would cost us relatively very little. >> i am so happy to meet you. i wish you all of the best. >> you are the wonderful artist that makes these color coding. >> nice to me to. >> i have been a street artist since 1976. >> how did you decide to be a street artist? >> i was working on union square. on lunch hours, i would be there visiting the artist. it was interesting, exciting, and i have a creative streak in me.