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, and eight were not recommended for amendments. can we send these items forward with recommendations as is? ok, we have got a motion to send items 7 and 8 forward as is. without objection. items six -- 5 and 6, we requested reducing the appropriation amount down and made amendments. can we entertain a motion to send that for to the full board as amended? ok, we have a motion to send items 5 and 6 forward. without objection.

thank you. we have one more item before us. item number two. >> item number two, resolution authorizing the director of public works to execute an amendment to the executive structural engineering and consulting services for the war memorial executives -- veterans building seismic upgrade and improvements project to increase the not to exceed amount from $2,758,445 to $11,621,721. supervisor chu: thank you very much. i believe we have a member from dpw on this item. beth, good to see. >> i will just open. good afternoon. those are the director of the war memorial department. as you know, the veteran's building seismic upgrade and improvements project has been previously before you and approved. we are under way with the design process. this is a public works project. and our project manager tara is

here before you today to ask for approval on at the structural engineering consultant contract. and i will introduce her. if you have questions, let me know. thank you. >> good afternoon, supervisors. yes with the dpw project manager for the veteran's building site improvements project. and seeking your approval for executing an amendment to the engineering -- executive structural and engineering services agreement. i would like to go over briefly the selection process. by which we retained sgh. we went through a competitive solicitation, issued a request for qualification. six teams competed. interviews were held, attended

by representatives of the human rights commission. and sgh was the highest rankeds team highestgh is a pre minute -- was the highest ranked team. they have been in san francisco for almost 40 years. they have 80 employees. 27 of whom actually live in san francisco. sgh provides this project with an atom -- added bonus in did have significant experience in building envelope analysis, which has to do with water leaks throughout the building which is critical to our project to be able to seek the problems and five -- and find solutions. we entered into an interim agreement for a program and validation phase. this is a fairly typical practice for large and complex projects where we really have to define scope a little bit better

to determine whether this aligns with our budget and then finally negotiate the fees. this has been done for public safety building and general hospital types of projects, which is critical for us. it is an interesting historic building, almost 80 years old, and there were many unknowns. so we did some water testing of the envelope and developed a plan for replacement options, and we have a number of specialized consultants such as acoustics, theatrical, and so on. we needed to, before negotiating a fee with them, we definitely needed to find out how much we were going to do and whether our budget accorded it. we used this for negotiations. we have finally defined the project. we're comfortable with it. we are including a number of alternates to be safe. we would like to go forward

towards completing the design and getting the project constructed. supervisor chu: ok. thank you very much for your presentation. if there are no questions, why don't we go to the budget analyst report? >> madam chair, supervisor, this is a fifth modification to a previously awarded competitive agreement. it would increase the agreement by -- from $2.8 million to $11.6 million. the department has provided us with, in our judgment, the necessary documentation. we recommend you approve the resolution. supervisor chu: thank you. are there members of the public who wish to speak on item number two? >> as you know, supervisors,

from time to time we talk about types of small contractors in the city and county of san francisco. but what i would like to state, having worked for the presidio san francisco, is that we need to give opportunities to our veterans when it comes to this complex. i know of two lbe's, veterans, who have the necessary qualifications. i am going to encourage them and other veterans so that they participate in getting jobs with this contract. this contract should not go to someone that lives out the veteran's. towards that end, as i stated, i am going to do whatever it

takes to get some of our veterans involved. it is true that sometimes the prime bid is for a certain figure, but what has been happening again and again, and i am not saying anything about this case, is that once the primes get in, then they start the amendments. and before you know that, it becomes a joke. and i am not referring to this case, but again and again this is the way the primes do it. they bit, they low bid, and once they get in and get the necessary amendments, and i know in this case the budget analyst did not state that these amendments are necessary. this also gives me an opportunity to tell the chair of the budget and finance committee that we have to be cognizant of the fact that many crimes low bid, and once they get in, they

make this amendment. thank you very much. supervisor chu: thank you very much for your comments. are there other members of the public who wish to speak? seeing none, public comment is closed. supervisor kim? supervisor kim: thank you. regarding our last comment, do they qualified -- >> i forgot to mention that. we had a goal. this is for a consultant contract. we had a goal of 14%, and that was set by the human rights commission for this consultant contract. we are now tracking 27%. so it is doing really well. supervisor kim: 27% for what category? >> we had an lbe goal for the consultant team of 14%, and

we're now tracking 27%. so sgh and their consultants provide the 27%. they themselves are not an lbe. we have 12 other consultants better part of the team. many of them are lbe's, the mechanical and plumbing engineers. supervisor kim: thank you. i know with some of our construction projects, they have partnered with a program to help get our veterans back into construction employment opportunities. tjph has committed to hiring 50 veterans this year for construction jobs. i am curious as to whether the war memorial building project is interested in doing something similar? the building is dedicated to our veterans, so it is even more appropriate to take that extra step if we can. >> that is great. we definitely are going to do outreach. we're starting to look at our

construction management general construction contract. we're going to put out an rfq. i am working with a veteran at hrc, so we're going to see how we can try to do an outreach to veterans. supervisor kim: i think it would be great to work with our veterans affairs commission, because they are very tied into our veteran community in san francisco. they are very committed to finding increasing employment amongst our veterans as they returned. also, you know, another program has been particularly helpful to some of our construction companies doing work here in san francisco. >> that is terrific. we will report back on that. supervisor kim: thank you. supervisor chu: thank you, supervisor kim. thank you for the public comment and presentation. can we move item two forward with recommendations? we will do that without

objection. do have any other items before us? >> that completes the agenda. supervisor chu: we will be returning not at 1:00 p.m. today but at deep -- but at 2:00 p.m. today for the full committee session. but this subcommittee is adjourned.

>> hello. you're watching the show that explores san francisco's love affair with food. there are at least 18 farmers markets in san francisco alone, providing fresh and affordable to year-round. this is a great resource that does not break the bank. to show just how easy it can be to do just that, we have come up with something called the farmers' market challenge. we find someone who loves to cook, give them $20, and challenge them to create a delicious meal from ingredients found right here in the farmer's

market. who did we find for today's challenge? >> today with regard to made a pot greater thanchapino. >> you only have $20 to spend. >> i know peter it is going to be tough, but i think i can do it. it is a san francisco classic. we are celebrating bay area food. we have nice beautiful plum tomatoes here. we have some beautiful fresh fish here. it will come together beautifully. >> many to cut out all this talk, and let's go shop. yeah. ♪ >> what makes your dish unique? >> i like it spicy and smoky. i will take fresh italian tomatoes and the fresh seafood,

and will bring them to other with some nice spoked paprika and some nice smoked jalapeno peppers. i am going to stew them up and get a nice savory, smoky, fishy, tomatoy, spicy broth. >> bring it on. how are you feeling? >> i feel good. i spent the $20 and have a few pennies less. i am going to go home and cook. i will text message u.n. is done. >> excellent and really looking forward to it. >> today we're going to make the san francisco classic dish invented by italian and portuguese fishermen. it'll be like a nice spaghetti sauce. then we will put in the fish soup. the last thing is the dungeon as crab, let it all blend together. it will be delicious. when i could, i will try to make healthy