with disabilities from fee-for-service into managed care. so basically instead of getting paid a certain amount when somebody comes into our hospital for a day, we get paid a flat month -- flat amount per person per month. so we -- the reimbursement structure has changed. as we've implemented that change, and as we've done analysis, and this is for san francisco, but also statewide, of the impacts of that change, it turns out that the reimbursement under the new managed care model is less than counties had been receiving for the -- under the fee for service payment model. so the counties and the public hospitals have collectively been working with the state and federal government to see if there's a way that we could draw enhanced federal revenue to

partially make up that gap. and so that program needs to be negotiated through both the state and federal government, and the process of those approvals are underway. if it's approved, basically the federal government will authorize us to make a payment, and then we'll get federal matching dollars on that payment for a portion of the amount that we've lost under the transition. so it will be effectively going back and trying to retroactively make up some of that lost revenue to the safety net providers due to that transition. >> supervisor mar: in the slide it says timing is uncertain. is there any estimate of when that would happen? >> the negotiations are in progress, and so our expectation is that we're hopeful it can happen within the next six months to a year. it's possible that it could happen by the end of this fiscal

year, which is why we wanted to note it here, so that you understand what the scope of possibilities is for our year-end. but we really don't know because there's no analytical way to project it. it's really just a matter of when the federal administration signs off on the approvals and gets the notifications out to the counties to pay. >> supervisor mar: from the slide it looks about 29 million plus any updated revenue from the nine month report would be returned to the general fund so it's in some ways possibly going to cover the potential deficit of the general fund that we're dealing with today? >> yeah. if these payments were to come in, it would reduce the amount of general fund needed for the department. and i don't want to -- i want to be careful not to overset expectations because these are dollars that we don't have in our hands, and we've only really got three months left of the

fiscal year. but, absolutely, if they do come in that would reduce our general fund draw, and we would be very happy if that was the case. >> supervisor mar: and i'm appreciative of supervisor wiener's questions about the structural problem since 2009. in the budget and legislative analyst report on page 8, mr. rose and his staff make reference to the process that the health commission is going to go through within the next two months to have public hearings on suggestions and policy directions for the the department so that we can correct the structural deficit for the future. in those two months, it looks like it's the health commission but also these hearings that input's going to come from the public. could you elaborate about that process. >> sure. absolutely. we have multiple processes that we do every year. we try to make as much of an effort as possible to bring people into the deliberative

process about our budget. so a couple of things that we'll be doing is we of course will be having continued hearings at our health commission, later this month, we will be having a budget hearing at the health commission, following hearings in ma may as well to discuss particular budget proposals, that we have a group of service providers, cbos and organizations that we meet with periodically, to get their input and thoughts on what we're doing. we will be holding meeting of that group. we have additional processes for outreach and public input through the mayor's office, cbo-stakeholder meetings, hearings out in the community. and then we've also got a public hearing that's focused on budget and financial planning at the commission. so those are all open to the public, and opportunities for

discussion. >> supervisor mar: thank you. >> thank you. >> chair farrell: is there anything more to the presentation you want to cover? >> just the only item is that the board of supervisors budget and legislative analyst worked with us closely on the legislation. they made some recommendations, which we're in agreement with. we thank them for their work and for helping identify some places where we could trim this down a little bit further. >> chair farrell: supervisor breed. >> supervisor breed: thank you. i know this is not great news, but it's better than what we had anticipated news. and i'm really happy that there are creative ways to try and figure out a way to deal with this huge deficit. i did have a more specific question. i noticed that some of the concerns, specifically with laguna honda hospital, were cost

of materials, supplies, especially pharmaceuticals and food to meet patient care. and i know that the number of patients from the old laguna honda decreased in the new laguna honda. and so i guess part of what i'm trying to do is understand why was there an increase in something like food, or even pharmaceuticals, when the number of patients have been reduced. >> yeah. that's a good question. and in fact, what happened is during the transition from the old building to the new building, the budget was adjusted. and actually what happened is that the budget was adjusted during that transition too far downward, based on the reduced number of materials and supplies consumed at the new hospital. so it was reduced downward to reflect the reduced number of patients, but it was a little bit too far down, and there's a gap. and then that gap, as we see

every year, we have a rate of growth in our costs, particularly for pharmaceuticals, but also for medical supplies. this is much faster than the rate of inflation. and so we've tried to kind of make little adjustments to try to catch up to what our actual expenditures are. but you can see that we haven't caught up, and there remains a gap, where our expenditures are slowly creeping upward and our budget is not matching it. so that's a good question. >> supervisor breed: i wanted to also mention, and this is for something to potentially look into in the future, one of the things that i think -- i don't know if i've mentioned it publicly or not, but my grandmother's been in laguna honda for maybe nine years or so. she gets three meals a day and with each meal she gets coffee and she doesn't drink coffee. so i see that as wasteful. and i'm hoping that we look at

ways in which we can reduce that kind of waste. and, also, one of the other things i want to mention is the fact that i know since the new hospital is open, yes, there are less patients, but dinner has been delayed, and some meals have been delayed by over an hour, which means that there's been a challenge in adjusting to the new larger, i guess, size of the hospital. i don't know what the details are around there. but i do know that there have been some challenges. and i know that we're dealing with this deficit, and we're looking at cost savings, and we're looking at what we need to do as a city to improve on services. and so i would just ask that some of those things be taken into account with that hospital in particular. i'm not sure what the other issues are at some of the -- our

other facilities, or where we can save costs. but clearly there might be an issue around a need for additional staff support at this particular hospital, to meet the need. and again, i don't know how that plays itself out, but saving money for years of waste with coffee may not equate to a significant impact in the budget. but things like that could help us readjust our priorities so that we are serving the population appropriately. >> and we're looking for every penny. so i'll bring those issues back and raise them with operations team at laguna and we'll see what we can find out for you. >> supervisor breed: thank you. >> thank you mr. wagner for your report. i think just from my perspective, i want to thank you for coming before us today. it is obviously disappointing i think to everyone that we're here, and voting on what we're voting on. and i think the message from my

perspective at least, and i think from this committee, i think we're all focused on what we're going to be doing next year structurally. i think the time is now for no more band-aids and figuring this out for the long haul. i look forward to that dialogue. i know it will be intense and i look forward to working on that. thank you. >> chair farrell: if there are to further questions for mr. wagner we'll go to our budget report. mr. rose. >> harvey rose: the bottom line of this request is $46.1 million. and this request, if you look at page 6 of our report, in table 3, it's paying for miscellaneous salaries, permanent salaries, temporary salaries, premium pay, holiday pay, and -- so it's a 46 million request while it is true that the bulk of the revenues are not coming from the general fund, they're coming from within

the department, supervisors, if those funds did not -- were not needed, if there was not this deficit in salaries and overtime, then those revenues would cause the general fund to have -- to need less general fund in next year's budget. so it's -- the bottom line is this is a deficit. and fortunately, there are revenues that can help pay for this. but if they didn't have the deficit, those revenues would fund next year's budget. on page 4 of our report we pointed out the proposed supplemental would appropriate, as has been pointed out, $12.7 million from the state revenue loss in general fund reserves and that's shown in table 1, page 3 of our report. i know the supervisors know this but there are two additional sup premental appropriations pending before the board of supervisors, the public defender's office, 751312 and the sheriff's department 3,458.970.

if the board approves it the state revenue loss reserve lch no balance and the general fund reserve will have a remaining balance of 21.3 million. on page 7 of our report, as has been discussed by the committee, fiscal year 09-10 through 12-13 the department of public health's budget for both hospitals, san francisco general and laguna honda, regarding salaries and -- and for laguna honda materials and supplies has resulted in shortfalls and the department has needed supplementals during that timeframe. the serious thing about this supplemental is that there is a very significant amount of general fund moneys going towards the supplemental namely the 12 million combined with the state revenue loss reserve fund as well as the general fund reserve. our recommendations are on page

8 of our report. we recommend that you reduce -- and this is based on a detailed review of the actual expenditures to date, as well as the projected expenditures through june 30, we recommend that you amend a proposed supplemental to reduce by 1,1222, which would reduce the general fund reserve appropriation which would be a direct general fund savings from 4.3 million to 3.92849 secondhansimilarlyto 44.857. that's the revenue side. on the expenditure side we recommend that you reduce the proposed ordinance to reduce the expenditure appropriations by 1.222, which include san francisco general hospital fringe benefits reduce that by 550,000, reduce the laguna honda salaries by 5 22,000 and reduce

materials and supplies to laguna honda by 150,000 and that totals up to the 1,222,000. we recommend that you approve this ordinance and i would be happy to respond to any questions. >> chair farrell: thank you. do we have questions for the budget analyst in seeing none, thank you ver mr. rose, mr. wagr and to ms. garcía, department of public health. i've spoken with her on a number of occasions and appreciate their intent to take care of this long-term. any members of the public that wish to comment on item 2, please step forward. >> hello. good afternoon, supervisors. is this working? my name is gus feldman with 2021, i am field representative

for 1600 workers at san francisco general hospital. right now, the report's certainly feeling the crunch of the budget deficit that was discussed today. and i think it's most -- i think feeling this most vierly, in the fact that many department directors, or division directors i should say have been directed to put a halt to all future hiring, our current hiring, and that has created a situation in which workloads have become unmanageable. it's created a situation in which patient care is being jeopardized, and which both patient and staff safety is being jeopardized. in the psychiatric unit it has been reduced to 12, the graveyard is staffed by two people, one rn and one psychiatric technician. we're concerned about this. as mr. wagner pointed out really well in his presentation, the

full implementation of the affordable care act presents great opportunities for dph to bring in much-needed revenue. i think the approval of the supplemental at this time is critical. we can't allow the department to enter into 2016 without full staffing, without the tools that it needs to really present itself to the public as a viable healthcare option, and hopefully get that and take advantage of those opportunities for revenue. thank you very much. and i hope that we have the full support of the committee for the supplemental. >> chair farrell: thank you very much. next speaker please. >> i'm brenda, i work in the medical clinic out at san francisco general. we're in the process of implementing the affordable care act right now. so i will tell you that part of it is they have these excellent standards that are going to be attached to the amount of revenue that we get. so if we don't meet these standards, and a lot of it is related to satisfactions of the

patient, that means no long lines for wait, no waiting to get your phone call picked up, all these things are going to be judged. and the amount of revenue that we receive from the federal government is going to be based upon whether we meet all seven of these standards. so when i hear them talking about cutting people's salaries at a time like this, when one of the things that you're going to need, you're going to need high performing, high productive employees, who are not miserable because, if they're miserable, because their salaries have been cut, guess what, the budget is going to be cut anyway because we're not going to meet the standards. and so all of us are trying to do that. i'm on the service excellence, where we're trying to change the tone at san francisco general, to change the way things are done at san francisco general, to make sure we do meet those standards. so if you cut people right now, that's just going to -- it's going to blow it all up. and we may not meet those

standards because there's no way that two people, working on the nursing unit taking care of 10 patients is going to meet that standards. it's just not going to happen. it's humanly impossible to meet the standards that are going to be placed upon us, once this gets implemented and full -- so i give credit to the head of the hospital. she's been working really hard, sue, barbara garcía, even people like me, everybody, we're all in this to make sure that this works. because we want public health to remain strong like it is. we want to still provide the best service that we can, like we do. but, you know, all these little things, you can't -- you can't undercut us. so this is not the time to be cutting public health. this is the time when public health really needs to be built up. you know, i'm almost to the point now where i feel like there needs to be some sort of bond measure or something so that public health isn't constantly short every time. the bottom line it's not getting

enough funding to perform at the level that's required of it. i mean that's the structural problem we have. is that it's not getting enough money to perform at the standard that you need it to perform. so i hope you really take that into consideration. >> chair farrell: thank you very much. next speaker please. >> good afternoon. my name is -- and i'm with 1021, a field representative for city funded nonprofits. and i want to speak in support of the supplemental. i think that since the economic downturn, we've seen year after year, just incredibly devastating cuts, and i think that this year we're blessed with a better budget, and that we need to share the wealth, and physically with our most vulnerable residents of the city. we can't see the level of cuts that we've seen, year after year. the department is completely -- there's just nowhere else to

cut. and we have to take care of our vulnerable people. we do. so i hope that you vote in support of this. thank you. >> chair farrell: thank you very much. next speaker please. >> i'm rebecca, i'm an r.n. public health nurse with the city and county of san francisco. one of the things that gus mentioned was, in the psychiatric unit, and when you start cutting staffing, it becomes a health and safety issue for our workers. and the potential for people to get injured, and assaulted, goes up. so it's so important to be adequately staffed in public health. and i'm just asking for your support on the supplemental bill. thanks. >> chair farrell: thank you very much. are there any members of the public that wish to speak on item no. 2? okay. seeing none, public comment is closed. colleagues, we have the supplement a before us. we have recommendations that the department of public health as

agreed on from our public analyst. could we entertain a motion to accept the recommendations of the budget analyst and amend the appropriation? so moved. we can do that without opposition. can i entertain a motion to move this item forward as amended. we can do that without opposition. thank you very much. mr. clerk, can you please call item 3. >> the clerk: 3. hearing to receive an update on the human services agency's budget for fy2013-2014 and fy2014-2015. >> chair farrell: thank you very much. colleagues, this is one of the opportunities we have to hear from one of our larger city agencies before the crunch of budget season to give it preview into their budget picture for next year. i also -- i know we have trent -- here, the head of our human services agency. i'd also like to recognize in the chambers with us former supervisor bevan dufty who is here. welcome back, supervisor dufty.

i don't know if you or someone else wants to start the presentation. hold on one second. i think you're green lit. >> good afternoon, supervisors. trent rohr, director of the -- agency. nice to see you again. i have a presentation. so what i want to do is give you a pretty high level view of our 730 million dollar budget, talk a little about some initiatives that will be before you in june, that we hope to have funded in our budget and then talk to you about sort of the big piece of our budget this year, and the changes have a lot to do with what's going on in sacramento. and the good news is the better revenue picture in sacramento is directly benefiting us as an

agency and us as a city and of course the clients whom we ser serve. >> chair farrell: i want to recognize chief financial officer who is here as well as ann hinton from the head of our department of aging and adult services. thank you for being here. >> thank you. to start off with our reduction plan which is small when you keep in mind that our budget overall is over $730 million. so our 3% general fund target is about -- under $1.4 million, that we can meet in 13-14 and 14-15 with increased revenue, principally from the state, and then some non-salary underspending, just scoring those savings and that's typically in the contracts area. so there's no service impact or staffing impact for meeting our reduction target. so this shows our budget in the current year, and then the budget year, in 13-14 and breaks

down what the human services agency looks like. you know that the human services agency is comprised of two city departments, department of human services and department of aging and adult services. the yellow slice there represents the admin support for both departments. so basically they support -- the department of human services and department of aging under the rubric of the human services agency. you can see roughly the breakdown, almost two-thirds of funding is for department of human services, a quarter for aging and adult services, and then under 15% for program support which is really another name for administration. so we contract support, i.t., personnel, and the like. so sort of a key thing to keep in mind about the human services agency's budget is we are largely funded by federal and

state sources. roughly a third federal, a third state, and a third county general fund. it's not exact. it fluctuates from year to year but that's sort of roughly how it plays out. and then, furthers, a lot of what is funded are entitlements or aid. so it's important to know that because those aren't funds that we have any discretion over. these are entitlements to families, single adults, to our seniors, whether it's getting support for food assistance or cash assistance through welfare programs, providers under hiss. it's hard to see on the slide but sort of upper right green section, the 16% ever operating general fund, some of that is a required match or maintenance of effort to draw down the federal and state funds. and that's about $45 million. so if you take the $45 million out of the 111, that's about

what our discretionary general fund is. so roughly $750 millio0 milliont we consider general discretionary fund. in other words funding that we as an agency, the mayor, and of course the board of supervisors, have discretion over and set your priorities through that funding. the next slide shows where we spend our dollars. and it really breaks down sort of our major program areas. adult services is lumped into one big slice but that represents a lot of programs, mostly supportive services, which is providing in-home services for seniors and disabled results to allow them to remain in their communities. you see program support, admin, the next largest is family and children services, which is child welfare, childcare, adoption, services to families whose children are at risk, or victims of abuse or neglect.

the bulk of the 130 million goes toward services like adoption assistance. the next largest is everything from front end street and emergency services to our emergency shelter system for single adults and families, through the back end which is supportive housing for families and single adults. in the middle between the shelter and permanent housing is transitional housing, services to help stabilize homeless individuals whether it's case management or employment services, and these service are principally provided through community based organizations, our community partners. as proposed for 13-14, i'll point out a few of the changes. and of course i said it's good news which means increased funding for us and primarily from the state and the feds. large increase in homeless services, you'll see from 88.9

million to 102 million. this represents a bit of a reconciliation for our federal mckinney dollars. the grant cycle and the federal fiscal year don't exactly match. they don't match at all, our local fiscal year. and so every year when we apply for these grant funds they come in at a different time. so we're trying to get a solid and standard way of recognizing that in the local budget and avoid the fluctuations we might see year to year. it doesn't necessarily represent new money but trying to make it a little simpler to make year-to-year comparisons. some of the -- another big piece is a shift of transitional housing for our youth and/or homeless service area which is not a new program but it's budget mechanics shifting that. we have funding for expansion of housing for families and single adults. some through our federal application process.

and then funding for possibly a new emergency shelter in bayview hunters point, 100 bed shelter. in our adult service area, you see about a 6 million increase. that's principally an increase in ihss for an increased case load which is representative in wages and benefits. and i want to point out the black segment in the upper right because it represents a significant increase investment by the state into our calworks or welfare to work program. in january the governor proposed about 160 million statewide to increase our work focus in our calworks program. which translates to increased funding for our community partners to deliver employment training services as well as increased employment services staff to help our families move from welfare towards self-sufficiency. some of that will also take the form of increasing our subsidized employment program