some highlighted departmental and city-wide cost that the report of sam's. -- assumes. it will cost the city of $32 million increase in fiscal year 12-13. that is a choice for the mayor and for this board. those bodies have made a different choice in prior years. it also assumes inflation on non salary items. contracts, grants this is where the conversation about non- profit, where we assume the cost associated with that and make a choice about whether we're able to find that cpi or not.

we also see projected in this shortfall some significant new cost associated with the capital investment. our public safety building as well as the san francisco general hospital. you can see $18 million over two years for the public safety building and $170 million for the general. $65 million is expected to come through private fund-raising. i would also point out to you one of the other things that is included in this is the cost of implementing federal health care reform. that is a disclaimer. the district electronic medical records implementation, those sorts of things. that is costing the city $12.9 million.

the next slide addresses reserves. overall, there is $11.2 million change to our reserves for fiscal year 12-13. that is due to a couple of things. we will be making an increased deposits into the budget stabilization reserve of about $21.4 million. we also will be increasing our deposits into our general reserves. as you recall, as part of our financial policies, increased the deposit into the general fund reserve. it has been at a level of $25 million. next year, we anticipate finding

adds approximately $31.5 million. -- funding at approximately $31.5 million. we do not expect we will need to spend all of its and we will not need to appropriate that the $31.5 million to fund the general reserve next year. supervisor avalos: i am sorry, kate. on page 9, there is 11.9 increase for subsidies. it seems like a big amount. can you explain that? >> of course. i apologize. in prior years, we have been able to read knife -- refinance certain debt. that has allowed us to decrease the transfer. last year, we brought able to offset that transfer by $11.9 million. we're not assuming that this year.

supervisor avalos: ok. >> finally, last year in the budget, we used all little over $4 million of the park reserve for onetime capital expenses. this production does not assume the use of any of those. -- this projection does not assume the use of any of those. the final page is a summary of what the controller went over at the beginning, showing you the projected deficits for the next four years. starting at $170 million and increasing of to a possible five under million dollars. -- $500 million. the mayor issued budget instructions to department back

in december, requesting 5% reductions. 5% is worth $58 million. if we were to receive all of those reduction targets, that would make a dent in those deficits. year two remains challenging. at this point, my office is working for the proposals from departments. i will say that while some departments have submitted proposals that meet those targets, there are many departments that are proposing significant increases to their service levels, to funding levels. there is more work to be done on that issue. either of us are happy to answer any questions you may have. supervisor kim: i have a quick question on slide 10.

i was curious on the background. what is that? why was there a decrease? >> the city has a policy that was passed as part of prop c several years ago, which requires that any funds that are on spent by the park department are deposited into a reserve. that reserve has been available for the department through the budget process. last year, there were funds available in that preserved -- reserve. supervisor kim: when you say a decrease, that is $4.4 million, it was used in the reserve last year? do we know what they were used for? >> i do not have a list of the

top of my head, but we can provide that to you. supervisor kim: thank you. supervisor chu: thank you. colleagues, if there are no questions, why don't we open the item up for public comment? >> supervisors, we are lucky to have a controller who i have observed for many years who has the best interests of this city. having said that, the controller and others cannot describe in

detail the disparities that we find all over the city and county of san francisco. they may say unemployment rate is around nine, eight, or whatever. in the southeast sector, we have hot spots where we have 50% unemployment. that affects the whole budget. in this city, we have the filthy rich, the 1%, and the 99%. at one time, you supervisors made $38,000. today, 116 +. in a way, you are part of the filthy rich.

so, in all this budget talk, we need to find compassion. we need to find ways to think outside the box to help those who are suffering daily. thank you very much. supervisor chu: thank you. are there other members of the public who wish to speak? public comment is closed. before we move on, i should offer our budget analyst any opportunity to speak. this is a report that was done jointly. is there anything you would add to it? >> we did work with the mayor and budget office and we do concur with these numbers.

we will be monitoring the budget and presenting recommendations in the main engine budget review. supervisor chu: thank you very much. do we have a motion to continue item one to the call of the chair? [inaudible] item 2. we have a motion to do that. and a second and we can do that without objection. thank you. item three, please. >> item #3, hearing to receive update on the department of children, youth, and their families. supervisor chu: thank you very much. last, we have the department of public health who came before us and a hearing on the status

of the ryan white finding. -- funding. it provided us an opportunity to provide feedback. this is a series of departments coming forward to us about we can provide that early feedback. today, we have ccyf. i will turn it over to you. >> good afternoon. i am the director for the department of children, youth, and their families. it is my pleasure to be here today to share with you the

budget that our department submitted to the mayor's office in late february. as you already heard from the mayor's budget director, the mayor and mandated that all of our department submit a 5% ongoing general fund production for fiscal year 12-13 and 13-14. in addition to all that, the department needed to also propose a 2.5% contingency plan that could be matched -- met any time over the two-year budget cycle. are 5% general fund reductions equates to $1.4 million. once again, for our general fund budget reduction, it equates to $1.4 million.

for fiscal year 13-14, it equates to $2.4 million. that is because we are supposing to use one time savings to meet the target for 12-13. as a result, in 13-14, we would need to -- to meet the fiscal year 12-13 target, we are proposing to use savings because we do not feel that it makes sense to reduce our contracts at this moment in time. all the contracts are in their last year of a three-year contract cycle. we believe that we will be able to meet the 1.4 reduction through savings based on historic fiscal year's spending

patterns of our department will work orders. there are usually of moneys that remain in each one of the grants or work order accounts. as a result, we are proposing to use those funds to meet the 12- 13 target. using these funds will allow us to continue to focus -- supervisor wiener: in the past, the department has proposed to eliminate all of the add backs. are you not doing that this year? >> we are not proposing to eliminate any funding toward services this year. we are proposing to meet our 12- 13 budget target through savings left in grants as well grants, as well as department work orders.

supervisor wiener: is it your sense that the department has moved away from that philosophy, or is it just happenstance? >> we are fortunate that the target is so low. it is sad to say that $1.4 million is low, but in comparison to previous years where we had to make budget cuts of up to $6 million to $10 million, this seems doable. in terms of a policy conversation for restorations or augmentations for budgets, we can definitely engaged in that conversation. i think that within the charter mandate there is a three-year planning process. we set out our funding priorities and, as a result, we really rely on that policy to guide funding during an supervisor wiener: -- funding.

supervisor wiener: when the board of supervisors may repeatedly add back in for a repeated priority, it probably sends a particular message to the board, budget parity as policymaker. i just wanted to put it out there. at some point, a pattern emerges. supervisor chu: thank you. a quick question. given the news that we have seen on the joint report, did dcys receive an additional allocation? i imagine that it did, in the amounts that get allocated. >> can i just say that for us, we are basing the presentation

today and what we submitted to the mayor's office in february. let's supervisor,hou childrense fund is a property -- sued -- >> supervisor, the children's fund is a property tax fund. it should lead to good news in the projections in the fall in the library preservation fund. i do not have those numbers at my fingertips, but could easily find them out. supervisor chu: ok, thank you. thank you. anyway, in order for us to meet our fiscal year 13-14 target, this is the first year of our department's new allocation plan, essentially this will have

new grantees in programs. we will manage to make that cut, if at the end of the day we have to make that cut, or if there is growth in the children's fund we can make other solutions. but if we can make that target, it will be through the rfp process. in terms of the first year allocation plan, will the process for driving allocation plans be released in the coming budget year? >> after i finish my budget presentation i will give you a preview of the children's service allocation plan. supervisor chu: ok. >> so, this next slide, i wanted to show you a historical representation of the budget for the past three years and two years coming forward. as you can see, fiscal year-10 -- fiscal year 10-11, it

impacted the budget. given the great news from our controller today, and the mayor's office, we are seeing an upward trend in the children's fund. we hope to see an upward trend in our children's fund revenue. supervisor chu: supervisor avalos? supervisor avalos: do you have the change in general fund support from 10-11 through -- sorry, 9-10 through 10-11? the children's fund increase in the general fund, do you have any idea what that was related to? >> the number? but it was related to? -- what it was related to? >> in 9-10, it was 20, the next

year it was 28.5. generally supported by the board of supervisors. and then in 9-10 for children's fund it was $47.2 million, the next year it was $41.4 million. we have seen a decrease in the children's fund that was probably because of decreased property values. does that offset the decrease in property tax? is that essentially what was determined? i do not remember. >> so, in fiscal year 10-11, the department, we had to make some severe cuts to children's services programs. because of that decrease it was a devout -- desire of the board

of supervisors to prioritize children's services. we were able to offset the children's fund deficit cut restoration to our budget. >> that is correct. >> in this slide i just wanted to show you what our total budget was for the department. it totals $120 million. this includes $40 million of the sfufc past use funds. you will see that our department may show $120 million, although we do not program all $120 million, it is the $120 million minus the $43 million. this is the actual breakdown of the budget without school

district transfer funds. as you can see, children's fund continues to be the largest portion of the budget. childrens fund continues to decrease slightly, augmented with state and federal grants. as you can see, those are staying consistent. this is the breakdown of our budget by category. the main point for this slide is to show you that the bulk of our funds continues to go to community-based organizations, approximately 66% of our budget goes to cbo's. 27% of the budget goes to department to work orders to provide direct services to children, and families. a 11% goes to operation support. operations support includes things such as evaluation and

assessment, capacity building and technical assistance for our community based organizations. so, that concludes the portion of my budget presentation portion. i wanted to take the opportunity to share with members of the budget and finance committee our children's services are 2013- 2016 children's allocation plan. unless there are any questions? >> [inaudible] >> so, one of the key provisions of the children's amendment, the charter amendment that increased the department, is for us to have a three-year planning process. last year, many of 2011, became before the board of supervisors to present our community needs assessment, which is a process where we went into all 20

neighborhoods in the city and prosecuted stakeholders in different providers, getting them to assess the need within the city for children, youth, and family services. we are in our second year of that planning process. over the past several months we have also gone out to our community and key stakeholders to discuss what we should do with all the identified needs that we found within the community. within the past several months we have presented at various community meetings, particularly within the department, the outcomes of those planning processes. so, we have now created our children's services allocation plan. we will not talk to and present this plan to five commissions within the city. the department of public health,

humans -- human services agency, probation department, as well as the youth commission, to vet the plan yet once again. we will come back to the board of supervisors for approval of the final plan. when dcy started building this plan, we wanted to set key guiding principles. i wanted to address the supervisors questions around what guides the allocations. these are the principles that we believe our court to supporting children's services in the city. and we want to memorialize all of these principles in our document. particularly at a time of finite resources decreasing or perhaps even increasing, we want to be able to go back to these principles to guide us through those decisions and how we allocate funding.

so, these are the four guiding principles with a mind based on what is working. honestly, it is continuity of services. if we can continue the great work we are doing through our partnerships with public sector entities, as well as our community based organizations, drawing on data to make sure that we are doing makes sense. we continue to use a primary lends to look at the work we're doing. one of them is by age, primarily first in five. school-age, five years old to 18 years old, and then transitional age use of 18 to 25. looking at our work through the lens of neighborhood to make sure that we are clear that when we talk about services that are citywide, ought to be sure that we are also clear when we are talking about services that are concentrated in to specific neighborhoods.

finally, to look at our work through the lens of risk factors. some of the children in the city have higher needs, such as the needs for children who have disabilities, lgbtq youth, homeless youth, english language learners, and undocumented immigrant youth. the third principle is to champion strategies that events that. we want to invest in proven approaches, drawing on our successes to date, to make sure that we leverage the expertise already within the community. finally, we want to focus resources where we have maximum leverage and impact. that means we need to continue to partner with public departments and community-based organizations.

supervisor kim: can i ask a question? basing it unavailable areas for data of greatest need, do we have census data about where kids 70 -- 0 to 17 are living? with a breakdown of other needs? >> part of the planning process for this creates what we call it an in-depth need, which i can show you, as we have an index of needs broken-down by zip code. children population is page 9. and -- so -- >> [inaudible]

>> so, this is just a pictorial representation. the darker colored areas show the highest need in the city. the lighter ones show the lowest need. the need matrix that we use is comprised of a children's population, as well as data from the human services agency, data from the school district, as well as census data. what took the data from the census -- supervisor kim: through what used to -- do you determine need? >> median income, referrals, school district graduation rates, and total population. supervisor kim: wou. -- wow. >> actually, this is the document i was looking for.