supervisor chu: welcome to the regular meeting of the budget and finance full committee. my name is carmen chu. i am joined by supervisor at los, superviso-- avalos.

>> please silence all cell phones and other devices. speaker cards should be submitted to the clerk. item one on today's agenda is hearing to consider the impact of flat year-to-year budgeting. as well as the consideration of increasing cost of businesses and-or cost-of-living. with the city to extend the delivery of city services. supervisor chu: thank you. you have called item number one. the item is brought to us by supervisor avalos. would you like to say a few words? >> supervisor avalos: thank you for taking part in this hearing. taking a look at the cost of doing business. this has been a big concern of

mine over many years. we've seen with the budget deficit the constraints on government have also been a huge constraint on carrying out the services of government. clearly a big part of the services that are provided by government are provided by nonprofit organizations and non- profit workers. with our budget deficits we have given a fairly flat or a flat allocation or corporation for nonprofit organizations to carry out important services be the child care or senior services or outreach to communities for our different departments. what nonprofits have received in terms of -- for their budget has been flat from the city. as the cost of doing business in san francisco rises with rent and health care costs rising, that flat allocation that we

give to nonprofits to carry out services is something that does not meet the great demands that are on their budgets and their results in workers not being compensated as much as i can. as well as nonprofits having to fold. we see it nonprofits have done great work to streamline themselves and often have worked together joining their administrative functions with other non profits. we have seen that we cannot just continue to expect that they will have to live with a flat budgeting. we need to consider this year especially consider moving forward with the way of meeting some of the demands that have in their budgets with rising costs. this hearing is to look at the what the history has been in terms of nonprofits receiving funding from the city and non-

profit workers will discuss with their concerns are. i want to thank president chiu for his cosponsoring a meeting. you have comments? president chiu: i was happy to join supervisor avalos in cosponsoring this hearing. like all this i have been concerned about our nonprofit organizations and their ability to do their critical work. as we know, doing that work for lot less these days. as we continue, as we have been cutting to the bottom, we are often cutting to the bone and cutting phone with what nonprofits are able to do. and want to thank the budget office for conversations to have started on this topic. we're in challenging budget times and everyone is bearing the burden of helping to do with the significant budget

deficits we still have. it was important to have this hearing in part as the administration is considering various budget balancing solutions, as labor contract negotiations are continuing, as the city is thinking about how we balance not just this year's budget but next year's and the first to your budget to consider these questions and consider the role of the nonprofit community in providing what you do for our san franciscans. i'm not a member of this committee and i do have a meeting in a little bit i wanted to comment and think the mayor's budget office for their thoughts about this and thank all the providers that are represented here today. i have had conversations with workers from nonprofits and we know it has been very difficult. thank you for being part of an ongoing conversation and i do hope we will have some good answers and next steps as a result of these hearing. supervisor chu: thank you. to members of the public, there

are a number of people who are standing, if you can find a seat, please find a seat. we're in the process of setting up an overflow room so you can view it and hear it. even if you are in the overflow room, we will make sure you have the opportunity to speak during public comment. do not worry that we will not able to do that. supervisor avalos? supervisor avalos: thank you. this hearing will have three different parts. we will hear from the comptroller and they have given a cost estimate of what cost-of- living increases would be. we have a breakdown by department. we might have from that information that is here available for the public as well. i'm not sure we have enough copies for everyone but there will be on the screen. we will hear from the budget director. on going discussions around c.o.l.a.'s in the budget.

i have several names i will be calling up and asking questions to extend their public comment time so we can make it clear -- a clear presentation on what they're facing in the can provide testimony about what they are facing. that will be the main focus from the non-profit side. we will have general public comment for folks to come in as well. just so folks know. we have a lot of people here and we want to hear from all of you. we will have that in two minutes. so we can have more time for people to come through and not have to leave early because the had to wait a long time. with that we can go to leo levinson. mr l. levinson?

>> thank you. i am the director of budget and analysis for the city comptroller's office. i well -- will have a brief presentation. we were asked to look at the overall spending on nonprofit service providers throughout the city and as you can see on this pie chart, the bulk of the spending is in three departments primarily. the large majority, the department of public health. we have shown that split in two between a -- uc and the non- uc contracts are split up. the human services agency with $131 million and the department of children to me is, and families with $55 million.

the rest are smaller dollar amounts. on the next slide, is a more comprehensive list by department. i have that for reference but will not go in the till streets department. looking at the history, the first shows the consumer price index for the san francisco area. in 2007 and 2008 so we can compare with what we have seen. the shares -- shows cpi and going up and down, small in 9- 10. one of the funding costs was for the subset of human service agencies and department of public health outside of uc.

there have been no other increases provided through the budget. uc has received more regular cost-of-living increases. there portion of the department of public health budget. president chiu: could you explain why they got that bump? >> i would refer to the department of public health. i was not part of that. there are negotiations each year. it is a very large factor. the other departments did not receive an increase through the budget process. there may be individual increases negotiated an individual contracts within the overall budget constraint of each department. this does not mean that no other nonprofit provider is received increases on their individual contracts. this is looking at the budget process in terms of the resources provided to the department for their contracts.

supervisor avalos: do you see it possible that there will be some nonprofits working with the department that could have got a cost-of-living increase while others did not or the uniform you would expect? >> the budget is on an overall basis for their contract services budget. within that they have the freedom to negotiate individual contacts -- contracts. john karr you noticed on the slide, the second bullet. 2007-2008 was last time there was a cost of doing business increase of 3.45%. that was broken down between the board of supervisors and the mayor's office. is that correct? >> i do not remember. supervisor avalos: what was the last time there was a doing cost of business increase? >> prior to 2007's 2008? i do not have that information.

we can get back to you later. supervisor avalos: was there a trend the city was doing with nonprofits in terms of the contract thing? >> we will get that for you. supervisor chu: a question for you. the slide show that the departments did not report doing cost of business increases. i wanted to know how is it that your report takes into account with when there are contractual changes? so if departments have asked for a different level of service, a different type of service or expanded service within an organization, how do you account for this? >> we would have to drill down to the department to know specifically what had happened. this is not a history of the overall budget for non-profit organizations. that would show a different trend and i'm afraid i do not have those numbers in front of me now.

there are decisions that relate to the provision of services and there are reductions because there is a smaller need for service or cuts because there is an increased need. that would be a separate thing that would change their budget, aside from actual increases for the same level of service to help with the increased costs of doing business. it would be hard-pressed to disaggregate that without a conversation with the department. what we're reporting here is through the budget discussion there is an actual amounts on a macro level on the department's budget to allow for an increase in the payments to nonprofit providers for the same level of service. the last time i am aware of that discussion happening on a broad basis was in 2007-2008 increase. supervisor avalos: think you. -- thank you. supervisor chu: we have opened up a second room, an overflow room. room 263 and you'll be able to

see the televised hearing. when we go to general public comment, we will make sure you have the opportunities to speak as well. please make your way to room 263 down the hall. supervisor wiener: thank you. this is not directed, this is a more general comment for the presentation from that departments and also members of the community who are here. let me start by saying i certainly believe and i think we have a lot of consensus that our nonprofit partners provide critical services for us as the city, often in a more cost- effective way then we would be able to do it if we tried to do it ourselves. i cannot imagine what it would

be like if we did not have our nonprofit partners providing some of these critical services that are culturally competent and derived from many years of experience. it is also important, we want to pay people well. i think our nonprofit workers certainly deserve the same kind of inflation, at -- inflation indexing that others received. i think i am sympathetic to the request that is being made. what i would ask the department to focus on and what would ask members of the community to focus on, when you're making public comment or in the future as we go to the budget process, it is not enough just to say we deserve a raise. i think we all agree that folks deserve or raise. i think we need to know our

ideas of how that gets paid for. it happens in one of two ways. either that $581 million number stays the same and to give raises and it has to come from somewhere within that pie. or will increase the $581 million and i know there is talk of revenue measures. revenue measures are hard when we have a spotty history of passing them. if we do not get new revenue, where does that come from? keeping in mind we have -- will experience several million dollars in federal aid to be cuts as well as the discussion about not having mta pay its work order to sfpd traffic co. which would be a $9 million or $10 million hit to the general fund if we brought that out of mta. we're balancing a lot of things. we would be interested in hearing feedback especially from folks in the committee and nonprofits that if we're right

to spend this $10 million or $50 million, whatever it is that is being requested for pay increases, how we pay for that and the balance. those are the kinds of conversations that we have to have because in the absence of revenue measures, i hope that we're able to get some new revenue. if we are it becomes a zero sum game. that is what i am interested in hearing from people because there's a lot of insight and wisdom in this room. supervisor avalos: that is important to talk about but i think that is what we get paid the big bucks for as well. in terms of looking at how we can find the additional revenue is the work we do in terms of proposing measures that could go to the ballot for revenue. also intrinsically together, are the fact we have to preserve our nonprofit services and part of that preservation is figuring out how to do a cola.

we will see a lot more non- profit services go away. i think basically we need to make sure that we're keeping these services a life. >> one last slide. supervisor avalos: a couple of questions. there are contractors who have contracts that have a built-in cost of doing business on the profit and poor profit side. that is quite often the case, is that correct? >> , yes, each contract has its own terms and what happens each year. i can be the case. supervisor avalos: can you give any examples of contracts you might know of? >> i do not work with most of those contracts on the kind of detail. i am sure there are others here who could provide those examples. >> example would be a lease where the city enters into a

multi-year contract that guarantees certain rental payments and often you see that as escalating. that would be an example of an escalating lease. an escalating contract. supervisor avalos: we talked about ucsf has a c. o. l. a. and it will negotiate an agreement with the department of public health. within that agreement there will be a c. o. l. a. that is built- in? >> that is what i understand. supervisor chu: kate. >> it is true that every year the city negotiates around a c. o. l. a. with uc. we have fudned. weve