san francisco, and we do not have that. it looks like we have a second class classification here in the city that has the damage -- a detrimental to back on people's private lives and their health, and i would say as well the work that is being performed and how it can be performed more effectively, more efficiently, and with a great deal of the experience that people can provide had a permanent level. i would like to see that there could be some greater emphasis on this. i know negotiations are going on, they're closing quickly, i believe. but in the budget that is falling, there will be worked about moving forward to move people on a more permanent level. knowing there are the unintended consequences that can happen based on civil service exams, but to the extent that we can move people to a more permanent status to have that level of

stability in their lives and the work that is performed in the city and county i think would be worthwhile to do. i do appreciate the concerns brought forward by people in the community and the challenges at the city to be able to do that. but i think it makes a lot of sense to provide that kind of work environment that we give the public that kind of level of experience in the services that we provide to the city. supervisor chu: thank you, supervisor avalos. i also want to thank the departments for providing their presentation. i enjoyed hearing some of the bahamas will tackle the issue of overtime, particularly the mta. i appreciate their work on this issue. we had two items that we heard. we have also heard public comment. i spoke to supervisor avalos, and i would like to entertain a motion to file both items three and four. ok, we have a motion to file both items, and we will do that without objection. thank you very much. [applause]

ok. can recall items 5, 6, 7, 8, and nine together? >> item number 5, ordinance de- appropriating $8.5 million consisting of $5 million in salaries and $3.5 million in fringe benefits and the fire department operating budget and reappropriating $8.5 million to overtime in order to support the department projected increases in overtime. item six, de-appropriating $3 million in fringe benefits and the police department's operating budget and re this is a breeding $3 million to over time. item seven, ordinance de- appropriating $320,000 consisting of two hundred $50,000 in salaries and the public utilities commission clean water department operating budget and rea breeding to under

$50,000 to over time. hetch hetchy power department. item number 8, recognizing revenue losses above $31,477,332 i need to permit a public health and appropriating $67,629,934 of senate bill 1128 reimbursement revenues2. revenues5,620,000 of surplus to our hospital revenues. $6,555,007 of general fund reserves for losses to support additional expenditures in the department of public health. $13,090,000 at laguna honda hospital. dollars in -- a $27,077,609 for a debt service reserve in fiscal year 2011-2012.

number nine, ordinance appropriating the money for nurses' salaries in the department of public health in its fiscal year 2011-2012. supervisor chu: thank you. we will probably continue number 9. we do not have a report. number five, six, and 7 are all de-appropriations of sellers or fringe benefits and re appropriations two overtimes to of those items do not require additional general fund support. item eight, the department of public health, however, does have a level of general fund reserve that would be required in order to make that action whole. i just wanted to note that. from the mayor's budget office, we have someone here. do want to provide opening comments or it would like to turn it over to departments? >> thank you, supervisor. i do not think we have any comments. we're happy to let the department's comment. supervisor chu: for item five, we have the fire department

budget. >> did afternoon. i am from the san francisco fire department. before you, which as it did earlier in items three and four, we are seeking reallocation from a line-item in our salaries to overtime. it is important to note that we're not regret sending -- requesting additional funds, as you stated. with the number, $8.5 million, we came up with that initially based on the the six-month controller's report. additionally, when we did some analysis of the spending in the fourth quarter of last fiscal year, we were at $9 million. since that time, we have been successful at working with the comptroller's office, recognizing that the budget analyst recommended not $8.5 million to be reallocated, but $5.57 million. we have had discussions with the

comptroller's office -- controller's office and the revised proposal that we believe we can live with, recognizing that if something unforeseen happens or we have more retirements, that we do have the ability to come back. hopefully we will not have to. we discussed $6.67 million. supervisor chu: great. to the controller's office, would you like to add anything to this number? in terms of methodology, would you like to talk about the difference between the budget analyst versus the number you have spoken to the fire departments about? >> the difference relates to different projection methodologies. the initial supplemental appropriation and the analysis that mr. rose completed here is related to taking the last pay period view of the world and basically streamlining the projection forward for the remainder of the year.

the alternate that our three offices have discussed is using a seasonal projection that accounts for the fact that overtime spending has to be different at different times of the year. if we adjust for seasonality over the last three fiscal years, we arrive at projected overtime spending of $6.67 million for the fiscal year as the chief indicated. so that would be approximately $1.8 million lower than the supplemental appropriation that is before you and approximately $1 million higher than the alternate methodology that mr. rose has used in his report. supervisor chu: thank you for that explanation. if we have no questions, why don't we go to the budget analyst? we will alternate between the department in the budget analyst reports. >> madam chair, members, our recommendation as has been indicated is on page 7 of our

report, and we do recommend a reduction of $2,925,906, and that would result in an increase of over time of $5,574,094, instead of the $8.5 million that was requested. just a clarification, we did use an average of the pay periods, not just the last one. if you accepted our recommendation, it would result in a 20% increase in the overtime. we believe that our recommendation is reasonable. thank you. supervisor chu: thank you, mr. rose. let's go to the next department if there are no questions. that is the police department. >> good afternoon. i am from the police department.

in comparing the controller's recommendation, the estimate, we agree with the recommendation based on the nine months of data. supervisor chu: ok. do you want to speak to the overtime, sort of generally what you're seeing in the department? >> right, i referred to the numbers earlier in the presentation of the estimated $1.4 million for the occupy demonstration and operations that we saw in the latter part of last year and earlier this year. as well as dignitary visits and other unexpected operations that we had to staff with overtime rather than on-duty personnel. supervisor chu: ok. if there are no questions, why don't we go to the budget analyst report? >> as shown on page 6 of our report, we are making a recommended production for your consideration of $474,532.

that would provide an additional $2,525,468, instead of the $3 million that was requested. supervisor chu: thank you. the department we have not yet heard from, public utilities. >> good afternoon. assistant general manager and cfo of public utilities. before you here today, i would like to give the three key updates. overtime is a very small part of our budget. we're used to staffing 24/7 and responding to rainy weather. we have tried to staff up appropriately. we have had a number of retirements. in particular, we lasted a work force succession planning analysis that showed almost 50% of our employees are eligible for retirement by 2014. we had about 10% turnover last year. i have been doing a great deal of permanent hiring in

particular. with that being said, we have some of vacancies, and we're filling those in particular in our power house operations. the item before you today, and i understand the budget analyst support our request, is actually a reduction in overtime year- over-year for both our waste water operations as well as for our power generation facilities up in moccasin. while i am asking for a supplemental consideration, it does show year-over-year decline. thank you. supervisor chu: thank you. to the budget analysts. >> madam chair and members, this request was for 3 diandra $20,000 of additional overtime -- $320,000 of additional overtime. actually, our analysis indicates that the department needs more than that, needs $746,000 more,

but they can live with in this request of $320,000. we recommend you approve the ordinance. supervisor chu: thank you. finally, the department of public health. >> supervisor, yasser from the mayor's office. the department is on -- i am from the mayor's office. the department is on their way. they will be here momentarily. if you like to speak on the larger supplemental or if you like to move on, it is up to you. there supplemental includes a lot more than overtime. supervisor chu: i think we might benefit from having the department present given that there is a large number of general funds that would be required. so i would like to wait for them to come to present it. >> they will be here momentarily. supervisor chu: great. colleagues, do you want to just perhaps have some conversation around dph's budget quickly,

just a general overview so we can take public comment and move on to the other items? >> supervisor, the supplemental before you on the the part of public health addresses some amount of their overtime problem which was discussed earlier today by the department themselves. it also includes primarily salaries and benefits of both hospitals, which is sort of a problem that has been continuing. we have seen it supplementals of similar size in the last three years for both hospitals related to salaries and benefits. the department though, unlike other years were the have been able to cover their shortfall with increased patient revenues, is experiencing some significant state revenue reductions this year. one large component is in the general fund. it is the state plan amendment for mental health. it is about $25 million that the

city has lost of that revenue stream. they are also seeing reduced m edi-cal reimbursement rates at laguna honda. the other side of the revenue is that the department and the city had received 66 -- $67 million in revenue of previous reimbursements for debt payments related to liquor in a honda debt service because of that is helping -- related to laguna honda debt service. we are recommending to put $27 million of that on a reserve to essentially fund future debt service payments. we estimate that between that $27 million reserve, future reimbursements we expect the state to give, and some amount of interest earnings on a pot of money, we will no longer have to make general fund contributions to look in a honda debt service.

all of those pieced together, we urge you to support the supplemental. supervisor chu: thank you very much. i believe the department of public health has returned. come up and explain the submittal before us. there is a number of different moving pieces to it. explain in detail. there is a number of changes in revenue. some revenue loss, some revenue increases in your budget. there is also expenditures that have exceeded what our budget currently is, in addition to the general fund reserve being asked for and a debt service for a reserve being requested. can you walk us through the pieces? >> supervisors, i am from the department of public health. i apologize for being late. we came as soon as we heard. i do not have a whole lot of detail prepared for you for the two reasons that this was

covered in the controller's six- month report and also the budget analyst report did a very excellent job of summarizing what is going on here. but i have that additional detail. if you have questions, i will talk through the big picture. then please feel free to clarify. so, big picture is that the supplemental before you today is consistent with what was projected in the controller's six-month report, so the impact to the bottom line for the city and the general fund does not change compared to what we saw there. this revenue would be sufficient to get us through the end of the year, operating at existing service levels. there are a couple reasons that we're asking for the supplemental. the two biggest categories of reasons our state and federal revenue losses and our spending

pace, particularly with salary and benefits. the two largest issues on the revenue side again are items that you have heard about in previous reports. one is a delay in implementation of a state plan amendment that would allow us to draw down an additional revenues for mental health. that is about a $27 million impact to our general fund revenues compared to budget. we do anticipate that that is going to be implemented next year, and some of that funding has been rolled forward into the next year's budget. but it does create a hole in the current year compared to budget. the second major revenue issue is a loss of funding at laguna honda hospital. the governor's budget implemented a reduction to the daily rate for skilled nursing facilities. that has had a very significant impact at laguna honda. $30 million that is offset by some supplemental federal

revenues, but we assume that that is gone. it is currently being litigated, so there is a possibility it could come back, but we will not know that and some point significantly in the future. between those two items, about halfway through the year we are predicting a $40 million plus revenue hole in our budget. the second item is on the expenditure side. this is a historical pattern for the department's or we have, for each of the last several years, started with the budget and then revised that budget as we moved through the year based on what our salary spending is the most years we have been able to cover the spending above the budget with medi-cal and patient revenues without actually dipping into a general fund. this year is it different, predominantly because of the major revenue shortfalls that

came along with our expenditure increases. in the past we have had higher expenditures, but we have had higher revenue to cover the good of this year, we cannot cover them. if it was not for the shortfalls that we would not have had to reach into the general fund. the sources are three -- there is, as you said, $6.6 million drop from the state revenue loss reserve that was appropriated in the current year's budget. the remainder would be funded through department of public health revenues. the largest of which is the $67 million in revenue from sb 1128, revenue that reimburses as for costs associated with construction of laguna honda. and the rest being in patient revenues, medi-cal, in general

operating patient revenues at the hospital. the use of the supplemental, again, to cover the cost of salary and fringe benefits and materials and supplies, and as you heard from the mayor's office, to fund a reserve that will allow us to pay future debt service at the mehanna without having to use general funds to cover the -- at laguna honda without having to use general funds to cover those expenses. that is the summary. if you have questions, i am happy to try. supervisor chu: thank you. in terms of the two large swings in the sun, $67.6 million from senate bill 1128, which is a positive for us, a loss of funding or revenue. can you speak to whether we expect that these are going to be continuing trends? are these sort of changes we expect to continue through the next fiscal year, and are any of these pots of money just one-

time? >> that is a good question. the answer is it is a combination of the two. on senate bill 1128, the bulk of that funding is one-time. there was a payment that is a retroactive payment for multiple years' worth of debt service expenditures, so that is a one- time cash-up payment. however, there will be some ongoing debt service funds, but those will not be available to balance. there will be used to pay down the debt service at laguna honda unless there is a surplus over what we projected. the other operating revenues, some of these revenues are projected to increase into the base, and our budget submission into the mayor's office, we have predicted substantially increased revenues, and that is part of how we were able to meet our budget requirements.

that includes some continuity of the medi-cal and safety net care pool revenues. some of what you are appropriating here today are one-time items, but those will be offset or partially offset by baseline growth in the revenues at the hospitals. supervisor chu: great. with regards to the $25 million, that is the surplus from general hospital revenues. can you speak to that? what would that come from? >> there are several categories. again, they are outlined nicely in the budget analyst report. but there are several categories of expenditure -- of revenue increases. the biggest single one is revenue from the safety net care pool, a pool of funds that is available to designate a public hospital to draw for their expenditures for low-income and uninsured individuals. that pot of money is allocated according to a formula agreed to

buy the state and federal government. we are in the process since we are early in we aremedi-cal waiver, the agreement in that allocation, and we're learning as we go about what our share of that coal will be. we have increased our projection based on our latest information by about $16 million. that is projected to go forward into next year's budget, although it is, to some extent, a moving target as we get information over time. the other pieces are really just our base medi-cal and patient revenues at the hospital. and the amount being appropriated here are substantial increases, but as a percent of our total revenues to relatively modest. those revenues change depending on the number in security and mix of patients at the hospital.

depending on who we have filling our beds, we can have increases or decreases in those various revenue sources. in addition, part of this is recovering and closing out accounts receivable at the hospital for prior years. some of this is catch-up payments. some of it is growth over power base. we try to be conservative to the extent we can within our budget constraints. so some of this is just a very modest, roughly 3% upside, over our base budget projections. supervisor chu: thank you. why don't we go to the budget analyst report? >> madam chair, supervisor kim, we concur with the projected budgetary shortfall for 2011- 2012 with respect to san francisco general and the gun a honda, including salaries,

fringe benefits, and in the case of laguna honda, materials and supplies. that is about $41 million. we also concur with the $27 million, which is an allocation of state revenues for the debt service reserve fund for the previous week issued -- previously issued clp's. the main point we're making in the report is mr. wagner is correct. consistently the department of health comes in with several vigils at this time of year. in this case, as he has mentioned, and also last year for the first time that i can remember, there was a use of general fund monies to pay for these projected shortfalls. $6.6 million in this particular subject legislation. we believe the department should more closely evaluate the situation and that when they submit the budget to you in in

june, perhaps this situation can be avoided. i realize that you cannot ever totally accurately project state revenues and patient revenues. but it seems like there could be a more realistic evaluation in our judgment of the situation. supervisor chu: thank you, mr. rose, for those comments. are there members of the public who wish to speak on items 5, 6, 7, 8, 9? >> good afternoon. my name is douglas dep. as usual, i have to give mr. rose credit. he really knows the real story. you should listen to him, because he's usually right 99.9% of the time. as usual, the department of public health is saying it is

using revenue. in my opinion, it is in management and has been for a long time. hopefully mr. wagner will be there to clean it out. it that is why he was appointed, to clean it up. i would suggest that supervisors use a 2003 report given to all the supervisors at that time that is focused on san francisco in general and how badly-run the revenue stream was and how badly-run the computer system was. i should know. my department was one of the main ones examined in that report. hearing this discussion of items five, six, seven, and eight kind of brings back memories when i was reading about bernie madoff's reports. he was very convincing, very convincing. so many people, affluent people, believe diane bernie madoff. hopefully we are not going to be misled like in the bernie madoff example. i would also like to remind all

the old-timers, there used to be a card game in new york called 3-card monte. hopefully we are not being given a three-card monte by the department of public health. thank you. supervisor chu: thank you. any other speakers? seeing none, public comment is closed. we have heard public comment in department presentations. item number six, the police department's request, can we take the budget analyst recommendations without objection? ok, we have a motion to approve the budget analyst recommended reduction of $474,532 to request of $2,525,468. we will do that without objection. on item number five, a request for a originally $8.5 million, the budget analyst recommended reducing that to a level of $5 .574094.

and reflecting the seasonality that we would expect during the summer months. do we have thoughts about that? >> [inaudible] supervisor chu: ok. we have a motion to amend. i would suggest that we amend the level down to the $6 ,672,963 level, because i believe there is seasonality associated when people take time off and over time is required during the summer months. is that the amendment? ok. so we have got a motion to amend the appropriation down and the reappropriation to $6,672,963, and we will do that without objection. ok, to the items. item number nine, we're hoping to continue this item. do we have a motion to continue for a week? motion to continue item number 94 a week. without objection item 6, 7,