first >> perhaps true, everyone. if i may have your attention, please. welcome to the friday, september 30, 2011 meeting of the board of supervisors and government audit and oversight committee. my neighborhood -- my name is david combos, the chair of the committee. i am joined by supervisor mar ferrell, as well as the board president, david chiu. the clerk is andrea. we want to thank the following members of sfgtv for covering this meeting today. mark and nona. madam clerk, do have announcements? >> yes. i ask that you turn off all or

ringers on phones. please fill it is bigger card. you may turn it in to the right side of the podium. we want the motion for the committee report on the october 4 board of supervisors agenda, unless otherwise stated. >> thank you very much. as was indicated, this is a special meeting of the government audits and oversight committee. those of you who are here, thank you for your presence. we're working on getting an overflow room in the event that we needed more space. once we know what that overflow room will be, we will announce it. let me simply began by noting that this is legislation that i introduced, and i want to thank my colleagues on the board of supervisors who have been co- sponsors of this legislation, beginning with supervisor cohen, supervisor mar, supervisor

avalos, supervisor kim, and supervisor mirkarimi. i also want to think it the very broad coalition that has worked together in the last few months to tackle this very important issue, beginning with the progressive workers alliance, the labor council, and so many small businesses that have also been impacted by this issue in that have come forward throughout this process to voice their opinion about this important matter. let me simply begin by saying that, from my perspective, and i have been on this board for three years now. there are times when we tackle issues that become a defining issues. the finding in the sense that not -- they not only address specific policy concerns that underlie the legislation, but issues that define who we are as a city. and in my view, this is one of

those issues. the process that we have followed in drafting this legislation has been a long process, a carefully thought out process, that has led us to reconsider some points of the legislation. and as introduced in its latest iteration, the legislation is a modification of the original version. after hearing from a number of individuals, including business owners, including members of the business community, there were some points that they raised that our modification addresses. so we have before us what is already a modified piece of legislation that really tries to strike a middle ground, a balance, on what is a very complicated issue. but let me make a couple of key points about why it is so important for us to make sure that this legislation is voted on as soon as possible. this legislation, first and foremost, gives workers a

chance to receive routine medical procedures after working for several years. the way that health care reimbursement accounts work, by definition, they place workers who are covered by those accounts at a disadvantage, vis- a-vis, workers get health insurance. luckily in san francisco, the vast majority of businesses covered by the ordinance are doing the right thing, but there is a small security, 13% of businesses that are primarily relying on these accounts. these workers, if they're lucky enough to be about to get work full time and work in entire year, at the most can accumulate about four thousand dollars in these accounts. we know that many of these workers are accumulating a lot less than that. some of them, a few hundred dollars, and it runs the gamut. when you put that in the context of what it dictates to get basic

health care in san francisco, you can see why this is so important. if you look at the mill workers and the way they are impacted by this liberal -- if you look at the mill workers in the way they are impacted by this loophole, the average cost of childbirth in san francisco without any complications is $16,000. $16,000. that means that a female worker working in a restaurant in san francisco has to work four years to be able to pay for what is, by most accounts, we would agree something that is a very basic procedure and is the essential to the well-being of the family. childbirth, $16,000. when you put that in the context of the proposal that has been put forward by the chamber of commerce, when they want to cap the amount of money that is accumulated in these accounts to four quarters in one year, you're telling that female worker that she can only have $4,000 of that $16,000 procedure

covered by health care. i am very lucky that as a supervisor, i have excellent health insurance. i am very lucky that if something happens to me or my partner, we have the ability to go to the hospital. and i am not in the position to tell that was meant, that family, -- to tell that woman, that family, that is to baggage she gets pregnant, even though she works full time, goes to work every day, that $16,000 procedure is not going to be covered. only a fraction will be covered, and the rest of it has to come out of your own pocket. i do not think it is fair for me as a policymaker, as a supervisor, to expect anything less than what i am getting as an elected official. but it goes beyond the worker. it is also about what happens to consumers. i cannot tell you the number of

consumers that i have heard from in the last few weeks who are simply appalled that they, as consumers, go to restaurants in this city, and they are charged in extra feet, 2% to 4%, as the public -- supposedly to cover health care, and we find out that the bulk of the money is not going to the worker for whom that consumer is paying that extra for, but in fact, is pocketed by businesses. i never thought that i would say this. but they got for the "wall street journal." -- thank god for the "wall street journal." thank god that at least one paper in this city to be time to actually look at the facts and look at what is happening in san francisco. you have restaurants, like wide market, a michelin start restaurant, that has collected

more than $100,000 from its consumers, from its customers, supposedly to pay for health care for their workers, and they are, in fact, only spending $12,646 of that $100,000. as a policymaker, i am not in a position to tell consumers that it is ok for them to be deceived, but it is ok for them to be told that they are paying for something that, in fact, is not happening. and that is not the only restaurant that is doing it. you have wayfare tavern. the collected $63,000 last year. it only paid $6,000 in health care. this is not just about workers. it is also about consumers. but it is also about tax base. because we know that those workers, who are working every

day, when that health care is denied to them and they need coverage, which they will need coverage, they have to go somewhere. and we know that that means it will go to san francisco general hospital, which means that you and i, as taxpayers, will be paying for that service. in a sense, we, as taxpayers, are being charged twice. because not only are we paying as taxpayers, those of us to go out and are lucky enough to enjoy some of the amazing restaurants we have, we also pay as consumers and customers to those restaurants. i do not believe that is right. i do not believe that is the kind of city we are. so that is what this is about. it is about whether or not we're going to protect certain crucial points to go to the court dignity of a worker. i believe that the intent of our law that was enacted by the

leadership of the then- supervisor, that was voted for by the entire board of supervisors, that the intent of that law was too, in fact, provide health care. i am grateful that the vast majority of businesses in this city are actually not only complying with the letter, but they are complying with the intent and the spirit of that wall. but this law has a loophole, and that happens, and it is our obligation to make sure that that loophole is closed. and it is for that reason that i respectfully ask my colleagues today that we take the time to hear public testimony, to hear from the workers, to hear from the small businesses that are playing by the rules and are being damaged by this. because the vast majority of them are not playing on a level playing field. let's not let one group, a small

minority of businesses, not play by their rules. so i asked my colleagues today after listening to the testimony to police forward this legislation to the full board, so that after weeks and weeks of consideration, we can finally have an up or down vote at the board of supervisors. with that, colleagues, i will turn it over to you. do you have any initial comments? so that we can hear directly from the citizens of the city and county of san francisco. president chiu. president chiu: thank you, mr. churkin a first, i want to take -- to thank you and the community voices for bringing to as a very big issue that needs to be addressed. i strongly support the original legislation and the help the san francisco program that has resulted from its implementation. i am proud, as i think we all are, to live in a city where

our employers have a legal obligation to provide health care to their employees. and i certainly support the idea of needing to close this loophole. i think it has been very troubling the there have been employers or not paying what others have been, that there are some employers are a disincentive to do the right thing, to limit usage and otherwise not provide notice, and the fact that we have only had 20% of usage, i think we would all agree that that is not acceptable. that being said, as i think folks know, i do hope that we can figure out how to do this in a way of accomplishing the main goals of supervisor campos' legislation but do it in a way that does not dramatically increase costs for businesses that right now, today, are struggling to stay afloat. and that the folks know, last week i introduced a potential alternative to what we are considering today that as a number of things. first of all, the alternative

that i introduced would eliminate the use it or lose it nature of current hra's. and it would take care of the so-called january problem where an employer tries to get reimbursed for health care needs in its january only to find that money has expired at the end of december. we can achieve this goal by requiring that at least a year's worth of more of health care dollars must always be available to an employee. the alternate that i have proposed also strengthens a notification requirements by mandating strict requirements of quarterly notifications and strict requirements around the prominent posting of information for employees. my all time it -- might alternate also addresses what supervisor campos raised, that the "wall street journal" reference to this issue of false consumer advertising. my alternate states that when an employer says that they're charging a healthy san francisco surcharge, they need to let the city know that they're spending

that money on health care. if they are not, they could be facing significant consumer actions. the ordinance makes a number of other changes, but i also want to mention one final part of my alternate. which is, are there any legal issues with what is being proposed? and the language does get challenged in a court, and the court fines for those changes, which i do not think what happened, and i have included supervisor campos' language in the alternate that i have. so that his language would then prevail if anything would happen in court. all this being said, i do understand that there many issues at hand. i look forward to hearing the testimony. i also want to let folks know that what i proposed as an alternate is simply a starting point for a discussion, and i look forward to other potential ideas of things that we could do. i am not necessarily wedded to the deadlines and the dates and specifics. but my goal is to figure out a way for us to ensure that all

employees of the health care that they deserve, but again, to do this with as minimal of an impact on companies that we know, we have heard from our city economists, will be laying off hundreds of workers if the current version of legislation passes. all this being said, i certainly respect and appreciate all the work that has been done. i hope we are able to move this forward in a good way. i do look forward in the coming weeks to the alternate i have introduced and having a fuller discussion at this committee, and i look forward to hearing from everyone today. thank you. supervisor campos: thank you, president chiu. supervisor farrell. supervisor farrell: thank you. i will save my comments towards the end. but i would like to a knowledge that i believe someone is here from our mayor's office, jason elliott, and want to give you the opportunity to speak. >> thank you. i am from the mayor's office. before i begin, i would like to

know if there specific questions. ok, first of all, i think the most important thing to state is the mayor's appreciation to supervisor campos for highlighting this issue, forcing the city to acknowledge it and deal with it in a very real way. the mayor believes deeply that this is a loophole, and it does need to be closed. the credit for that is due to supervisor campos and his staff and the coalition they are working with to solve this issue. that is the most important thing to stress, that there is a loophole that needs to be closed. the mayor has remained focused on how we can close this loophole by providing brought universal health access and the health care ordinance to provide people to have low-cost preventive primary health care in quality settings, regardless of pre-existing conditions. that should remain our role as a city. the loophole is very real and does very much need to be

closed, but it should be done in a way that the ultimate goal is nothing else other than providing health access broadly and universally. it goes without saying that we are identical economic times and many small businesses are operating on a razor's edge. the economy does not release any business from its obligation with the health care security organs, the spirit, and the letter of that law. we have been casting about, speaking to folks on all sides, on all 20 said that this issue, big business, a little business, medium-sized businesses, workers, labor, supervisors, colleagues, and there seems to be a consensus that there is a very real problem that needs to be solved. this is not something we can just sort of approach, think about, and move on. this needs to be felt in a way that respects the goal of providing help access to low- income wage workers.

how do we do that? we were presented a solution, which i would like to offer to this committee as a potential solution. not the be all and end all, not the right way, but just another idea for you to consider. there has been quite a bit of talk on the the sort of two mechanisms. one mechanism or the money would accrue in the hra and the reimbursement account during the term of employment. there is another mechanism proposed by president shoe that would effectively create a rowling system of deposits. there was an idea presented that is a hybrid of those two. if i may, this is simply an idea, i do not have legislation. this is something that we were sort of given very recently. and we have been considering it as a policy look -- policy solution. supervisor campos: if i may, i do not know, quite frankly, as i

have indicated to you in the mayor's office, our door has been opened. today's the first time i hear of any proposal coming out of the mayor's office. we're certainly happy to entertain any proposal, but the point of the hearing today is not to talk about the president's proposal or any other proposal, but actually to talk about the issue before us. quite frankly, i think that in terms of making good public policy, when we talk about a proposal, the devil is in the details. our proposals are provided. once the mayor has his proposal in writing it is clearly delineated so we have all the relevant information, we would be more than happy to entertain that. i also worry about the extent to which we are deviating from the notice. i do not know if the attorney has any guidance on that. >> deputy city attorney, cheryl adams. i think it is reasonable to discuss alternatives within the scope of said the proposal. supervisor campos: ok, go ahead. >> i appreciate your comments.

you're right, the devil is in the details. we're working hard to put something on paper. supervisor farrell asked me to speak about this broadly. the mayor is of mind that in order to provide help taxes, which is the ultimate goal, you could use and the like this, make deposits into hra's . vocable -- make them. vocable. during the 18 months, an eerie vocable expense. the office of labor enforcement would conduct a series of interviews with employees and a service to its employees to understand what they think their benefits are, why they are or are not accepting the benefits. similarly, the labor enforcement would change its survey that it sent to all employers, to ask a number of questions. a few use an