the second and third public sector organization in the state. in san francisco we will be doing with other hospitals. the goal, they came in with a 0% labor increase this year. the goal is to reduce costs by better coordinating care. all eyes are on the city and county of san francisco in terms of being successful when it was announced. it begins on july 1. we were working closely with blue shield to stay on top of those utilization numbers. >> do you expect we will be seeing that in the upcoming budget year or the year after? >> i hope to see savings associated with that in the form

of it lowered ratings increase and negotiations are scheduled to begin in september or october. remember, they are just beginning this process in july. they will be basing rates on utilization this year. both physicians realize they will not be able to grow in terms of the health budget rate as realize. health-care costs continue per person on health care benefits. for that you could hire a computer programmer in india. controlling health-care costs is key to keeping jobs here in san francisco. we have to control those costs can be sure that the doctors are on the same page with us. >> the last question that i have

pertains to one of the items pulled out by the budget analyst. the plan analysis of the city planned, currently we have blue shield, kaiser, and an option for city plant. can you speak about the expectation for when that process will begin? >> completely funding the professional service line, the analysis needs to be done tomorrow. only 8% of the membership are enrolled in the plan. the primary payer is medicare. early retirees and active employees. what you have is a group of employees staying in a plan where they can go to any doctor that they want within the health-care network but it is still a much broader network. there is no management of their

care. what are our options in terms of that? i am hoping that there are many. probably only two or three, but it needs to be done with recommendations to the health services board. otherwise it will continue to become more and more expensive. supervisor mirkarimi: just curious -- is there any conversion of service being provided through the health service system for people that are being asked to supplant that level of service in alabama >> not that i am aware of. are there employees being asked to enroll, is that the question? >> yes. >> and not continuing to be enrolled in the programs now.

>> not that i am aware of. when employees are laid off they get help subsidize benefits for five years and have cobra for 18 months. many of them, when we call and say we have terminated benefits, even though they have paid for dependents, they are desperate. >> it can be very region supervisor mirkarimi: cobra can be read supervisor mirkarimi: jaycee -- supervisor mirkarimi: cobra can be very expensive. >> and we refer them to help the san francisco so that they can enroll and so that their kids can enroll. the local public health insurance programs. supervisor mirkarimi: do we have a class of employees that are not in the system but are being

asked to be a part of a healthy san francisco's system? >> there is a class of as needed employees that are a part of the san francisco health plan. so, yes. the answer is yes. they become eligible when they have worked 40 hours. the director of the department of health and human resources, we actually did an analysis of what it would cost to bring them in. because of the services provided with an hmo being much broader, it would be more expensive than what was budgeted for. the good thing about that is that those tend to be younger employees.

the risk adjustment, and we are all about bringing in younger people to lower the risk pool. supervisor mirkarimi: thank you. >> thank you, a supervisor. >> as both of the comptroller and a budget analyst has reported this year, the budget will increase by 4.5%. $283,000 more than the original budget. totaling $71,981, 100% our general fund reductions. still allowing the increase in the department.

we will be happy to work with of the department. supervisor chu: thank you very much. we will see you back here next week. thank you. next we have the department of human resources. >> good morning, chairman, supervisors. if he would like i can begin with an overview of the department and high-level changes in the programs. then i would be happy to suggest the questions that came up in terms of health services and those initiatives. by way of the overview, we have in our budget nearly two-thirds

of that as the payment of workers' compensation claims. medical and temporary disability benefits. basically, we are the conduit through the city's insurance program as it is paid to injured and retired former city workers. that is the largest part of our program. we have possibly 20% of our cuts in salary and benefits. professional services is 11%. tuition reimbursement programs are negotiated with labor unions to reimburse employees under the terms of their labor contract. training, workers' compensation, and additional services, examination consultation, etc. we have a small amount going to

the city attorney's office. just a basic overview. we have three areas that have changes of any significance over the prior year. the first one is the city hall program. this is a program that is typically for recent college graduates to expose them to public service and introduce them to the public realm. it has been very successful. sadly in recent years it has been restricted to the apartments that our enterprise funded. we simply administer the program so that they appear as they are in fact working in various departments. we receive work order funds for them. this year we have participation from the comptroller's office. this is to be held to that in a future year that the general fund department will continue this unique program.

workers' compensation is increasing by five for a sense i'm because of increasing medical costs payment benefits. i would note that this is favorable to the statewide average where other public agencies are anticipating 10%. we are banking on better experience programs for claims and have been coming in under the state average and hope to continue to do so. some of the things we have done to help to improve our claims administration this year, we went to a largely paperless processing system that we think will yield significant improvements. that has also enabled us to fully comply with state recording requirements and avoid some of the massive charges that other public agencies have been exposed to buy failing to meet those reporting requirements. the most significant change in the budget from this year to

next year is in fact a labor negotiation project. as you know, we bargain on a cyclical basis. burt -- virtually every labor agreement with the exception of public safety is up next year. larger than 2006, which was our previously largest labor project. it will all be up for negotiation next year and there has been some discussion where we told them we would be willing to start almost immediately in those negotiations, but we cannot assume that we will need fewer resources to conduct those negotiations. supervisor chu: you said that 30 of them would be open? >> including registered nurses and public safety department.

we certainly hope we do not need to spend all this money, but we might. for as a professional services covers the potential for contacting labor negotiations. there appeared to be continued economic constraints that streamline the process similar to what we did with our internet based workers' comp management systems. hopefully we implement over the next year and electronic form of administration tuition reimbursement programs that work closely with the comptroller's office that we think will ultimately achieve the significant efficiency and reduce the need for some of this

paper heavy and resources of the transaction. that is our plan for navigating. if you like i will note that we have reached agreement with the budget analysts office, thank you, for their excellent work has always. i can address some of the questions that i heard earlier. if you have others, i would be happy to as well. i know that the supervisor had a question regarding the public retirement system and deputy sheriff in particular. we have 1000 employees in the purrs or calpurrs program that are not in the san francisco retirement program. the deputy sheriff system has virtually identical benefits to those provided by public safety or police and fire.

as you know, we have entered into negotiations with labor partners and have an agreement amendments going to the board and you will be hearing more on that very soon, i am sure. an element of that does address membership. first there is agreement that new hires, in the public employment retirement system currently, they will come into benefits in this san francisco employee retirement system equivalent to what we will be adopting. they have had better investment strategies and certainly have found that the rates were significant to the lower levels. interspersed going forward, we

have unions that upon mutual agreement, that is it we are able to reach agreement, they would move in. it is a comparable plan. plants that provide technically the same benefits they now receive. we do not reach agreement with them to move, then we will in negotiations to achieve cost savings similar to those which will be affected by the cautionary measure that would apply to the employees. so they are participating in pension and benefit reform in a unique manner which addresses their membership in the pers system. i hope that addresses your question. supervisor mirkarimi: it did. hr is the hedge, but i am trying to lead up from the two other

departments those that are implicated in the administration and negotiation and processing, i think, of these objectives. i know they are very much on our radar. is interesting to see -- it is interesting to see what this process is in terms of how it is being managed. it sounds like it is not adversarial, which is good. sounds like it is not antagonistic, which is good. people get to be pretty uppity when it comes to talk of conversion from their system. when it comes to the posse of san francisco employees that are being asked to consider some manage retreat, that is what i find interesting. i wanted to hear from a couple of the departments, which is why i asked it a couple of different

ways, how this is being approached. if it is approached in a mutually agreeable way, i think that is the right way to go, and i wanted to hear what resources are being applied towards these objectives. >> you bet. we have had consultation with the retirement system on this and the city attorney's office as well because it is very technical. as you point out, we have people in seiu, people in the provision offices, district attorney's office as well, so all of those are also members in different programs. supervisor mirkarimi: which is a pertinent subject because today's category before us is public safety, so that is what is the itemized before this committee today. you have a substantial portion of people that we're entertaining on a 1000-person front, so i think it should not go unnoticed. but if you were not able to

achieve any of this conversion, would this be a valid change? >> no, actually, what we are doing is that the ballot provides the option. it says if we mutually agreed to go into the plan for active employees, these are the plans that they would be in, and it lays them out, and it also sets forth that we will achieve equivalent savings if they do not go through the negotiation process. we achieved our savings either way but in a way that the members are more comfortable with and they do not feel like they are being forced into it. should this go forward, we would not need another change to the charter. i believe there is a question about the as-needed employees receiving benefits but not in the health-care system. people will remember who were here at the time that in 2006,

we reached an agreement with our largest labor organization to create a health plan for people who did not qualify for membership in health services under conditions of the charter. these are people who work as needed, is there characterization. temporary exempt employees. some of them worked very sporadically, but some of them work again for months at a time on a regular basis and have significant hours, although not quite enough to reach the eligibility rule for the health service system coverage. so we negotiated a fund of money, $2 million per year, and negotiated a program, and we enrolled those individuals in it. it is not a comparable benefit to that enjoyed by active full members of the health service system.

i think that should be our ultimate goal, to get them into a comparable benefit. the way it works is if they work a certain number of hours over time, they are able to enroll. we have had discussions before, and i hope we will continue to have discussions with the health service system to move these individuals into the health service system purview even if not the same plan initially. because we believe they are the experts in health benefits management, so that is our continued conversation we hope to have with them. supervisor mirkarimi: there is a little bit strange irony that the home health-care workers would not be enrolled in the same health system and that they would actually be on the fringe of being asked to go through healthy san francisco, which is not the same, really caliber of assistance, i have to say that it is a standout in the for a

classification of workers, they do not make much money to begin with. they really are paid very little on the minimum wage. i cannot expect them to afford cobra at the rate that they bring in, so if there was a redesign in trying to bring them in, this is a lower class of worker that i think would merit more considerably. and for this classification, something that has come to my attention -- it worries me a little bit, and it obviously worries them a little bit as well. >> we are not involved in the creation of that benefit. we simply had a similar group, which was a lower hours, lower- paid group, which we built into their permit, but we would certainly value the opportunity to work with the in-home support services program and the health

service system to identify ways to improve coverage. supervisor mirkarimi: thank you, director. supervisor kim: i do not want these questions to come across as nit picky, but i am curious because some had leftover funds, so other departments may also do this, but i am curious what we use facility rentals and vehicle rentals for. >> we have primary public safety examinations where we have, -- as you know, and public safety, they are entirely promotional. we have to administer examination system times 800 applicants, and we do not have any facilities large enough. we also have to in order to avoid the appearance of favoritism, we have to bring in the examination graders from outside from police departments and fire departments across the country. we fly these individuals in that

house them. they have to be on readings panels interviewing candidates and scoring them and scoring their responses to written examinations. we do not pay them for it, but we fly them here. we hope they want to come to san francisco, and we put them up, and occasionally, we have to rent large facilities. our second facility is on cesar job as st. -- chavez street. last year, we had a video-based exam that we administered over the course of a month in groups, so we were able to use our own facility for that, so that was a cheaper way of doing it. supervisor chu: thank you. just a question from me -- you spoke about the largest changes in your budget primarily having to do with preparing for upcoming labor negotiations the department will have to spearhead in addition to a non-

general-fund its city hall fellow work order. on the workers compensation component, can you remind me -- you talked about the increase, but are the claims of budgeted within your department? >> we actually -- and i have our deputy director here, so he will tell me if i answer incorrectly, but it is kind of direct billing. not even really work order. this assumes what the cost will be, and we would say to the fire department, if they have an unusually high number, they will give us more money to pay those claims, so the departments have workers' comp in their budgets. supervisor chu: in the mayor's budget, it shows total workers' compensation costs over the years, and it shows the trends as high as 2007, and it dips down somewhere in 2009, and it looks like our trajectory is going up a bit.

i am wondering if there is a trend where we are seeing claims going up, and what is that attributable to? the rising cost of medical costs, or the incidence of more claims? >> it is not really the incidence of more claims. it is the increase in medical costs, primarily. we have taken steps to reduce our cost in addition to the electronic processing, i have described. we implemented net worth brighter networks, but this is something over which we largely do not control. we are getting our economies through the administration. supervisor chu: the final question that i think is a pretty important topic -- can you give us an update on civil service reform and what the next focus of the department will be? >> certainly. we have a list of issues we have identified and presented to the civil service commission, which we are hoping they will address

soon. we continue to be interested in rule updates, for example. as you know, the board approved the employee relations ordinance, and there are now civil service rules that conflict with that. it is our intention to work closely with the commission to address issues of concern, and they will take those in the order that they desire to do so. supervisor chu: is there any big proposal going forward, or a number of different small items going through the commission? >> i would not say there is one dramatic proposal, very dramatic from last year. supervisor chu: perhaps we could have the civil service commission speak to the progress. thank you. and before we go to mr. rose's report, i did pass out a sheet that shows an amended project closeout list from the budget analyst, so you should have that before you.

>> madam chair and members of the committee, our recommended reductions are detailed on pages 13-15, and a total $91,000. of those recommended reductions, 100% our general fund reductions. 26,500 or about 29%, our ongoing reductions, and it with style -- still out an increase of 1.9% in the apartment's 2011-2012 budget. we also recommend closing out prior year and expanded general fund incumbrances. as the chair just stated, we have revised that she'd and given the committee a new amended sheet, which totals $217,618, together, our recommendation would result in and said it $361,708 in savings,

a savings of $309,118. as i understand it, the department does concur with our recommendations. supervisor chu: thank you very much. given the amended document before us, and then the balance of the recommendations, can we take those without objection? ok, we will do that without objection. thank you for your presentation, and we will not be seeing you next week. ok, the next department is the civil service commission. for this department, we do not have a budget analyst report to go along with it, so we will be looking for the department head to provide some context. >> good morning. anita sanchez for the civil

service commission. the budget is a bare bones budget to carry out the merit system provision of the charter to provide qualified individuals for the city and county service in a fair and equitable manner. the commission is appeals and policy-making body. the department handles appeals and requests for hearings, conducts merit system review, inspection services and audits, and performs a limited role in the administration of the employer-employee relations ordinance by conducting wreck -- representation and the certification and legislation of unfair practices charges involving peace officers. as mentioned, there is no report issued for this budget. i would be happy to respond to any questions you may have. i believe the committee wanted some update on