businesses with municipalities in the same manner as they conducted their businesses with individuals. i learned recently about a program whereby money was provided to elderly people who had not been paying for the property tax. i'm in that situation. i was informed, although i might be eligible, the fund has been eliminated. i believe it's a california program, and california doesn't have money for the program. third blow, now that i have not been paying for my property tax, i'm impacting san francisco's financial situation. meanwhile, so i understand, we

all, the american public, are subsidizing the low interest rates at the benefit of the financial institutions. in my regard, we are either part of the problem, or we're part of the solution. i'm requesting of san francisco that it act to communicate to the financial institutions that say there are consequences to their behaviors. i'm requesting if san francisco has lost money, however much, that you ask for its return. thank you. >> supervisor avalos: thank you very much. i'm going to call a couple more cards before the next speaker. annie sims, elliott cats, and ian hadel. >> i'm elliott cats. i don't know what happened to the other person. 35 years ago, i founded an

organization here in san francisco that currently produces the ethnic dance festival with the hotel tax fund. in those days, i was fighting for the cultures of the minorities. there was a very strong effort to keep the ethnic minorities down by hotel tax fund giving all their money to the, in quotes, white cultures. that has been balanced out. now i see a similar kind of situation happening with the way the banks are treating the minorities, taking advantage of them and so forth. last week, i sat here and i saw people literally crying with tears in their eyes, people with hiv, people with the catholic charities of america, pleading, don't cut back their budgets, their lives depending on it. i'm here to basically say that

you have an obligation for -- not to turn your backs on people in need. and if there is an opportunity here to have additional funds, you should not just simply say oh, we don't want to be bothered, let's wait and see. there's too much at stake here. the lives of people are at stake. the homes of people are at stake. the health of our children, the education of our children. so, please, stand behind your obligation. that's why you were voted in. people trusted you. please don't turn your back on them. thank you. >> supervisor avalos: thank you. next speaker please. >> good afternoon. my name's annie, and i'm a member of seiu 2021 and a city worker for -- i'm disappointed the city took so long to notice this problem which have exist

since 2007, and i have been sacrificed because as a city employee, i have been doing -- give taxes since 2007 and at that time my minor son that was in high school, second year into a private high school because of this crisis that the banks created, now i have to give back to the city, i have no choice but to pull my son out from a private school because he's achieved scholarship was cut due to -- in order deficit. so at least if we're doing something i'm really wishing and hoamg that san francisco will take ownership and leadership of this project, and be the leader to -- up with other counties. so hopefully we'll get down to this and find out how much was due back to the city. because i'm tired of the

continuing to pay back as i have nothing to give back to the city anymore. and also, want to know that the bank not double dipping. they have been triple dipping us. first is the interest from the loan, the swap. secondly as the foreclosers and also the bank has been charging us penalties for being late, and also the increasing our interest, to -- interest rate and also late fee. so the banks are double dipping us for too many years. it is time to put a stop to it and get back what is due back to us. thank you. >> supervisor avalos: thank you. next speaker please. i recognize former supervisor chris daly. >> thank you, supervisors. my name is chris daly, i'm the political director of sciu local and a vested san francisco employee retirement system. when i was sitting here, hearing

from that there were losses due to the libor fraud in the retirement system i couldn't help to think back all those times that i sat over there, listening to chamber of commerce talking points about how public pensions are breaking the bank. today, we definitively heard it's the other way around, it's actually the banks that have broken the san francisco retirement system. you'll have to excuse me if i seem a bit incredulous, after a city presentation that was pretty much devoid of resolve to aggressively pursue the city's losses, due to bank fraud. but if you wade through the minutia of staff presentation you basically come out with this. the city lost millions of dollars, whether it be the airport, the retirement system, you know, the general fund

investment pool, various places. san francisco lost millions of dollars due to libor fraud. and anything other than an aggressive response to get every nickel of that back is not worthy of the city and county of san francisco. colleagues, we were all here one month ago today to discuss the city's efforts to cut wages for some of the city's lowest paid job classes, classes disproportion eely occupied by men and people of color. i think that we thoroughly addressed that issue a month ago, with the exception of the amount of city resources, staff time, and expenditures to pursue those cuts. and i'm talking about multiple staff at dhr, calling jurisdictions all over the region to get data on 45

classes, obviously discussions with the mayor's office, legal strategies in the city attorney's office, fighting, you know, the big, you know, sciu purple union, and to dut these wages. -- cut these wages. all of these resources and do you know what the san francisco examiner reported as the savings of the city's proposal to cut those 45 classifications was over the next two years? $76,000. the city will save by going after some of the lowest paid workers in san francisco, and mickey and team had it together. they spent huge amount of resources. now we have a situation where we have millions of dollars in losses, due to bank fraud. and the city's presentation -- >> supervisor avalos: continue. >> thank you, supervisors. i appreciate it, supervisor avalos. you came here prepared, and have

brought into the light a subject matter that is relatively complicated, but i think you presented it in a way that's very popular and easy to understand. so i thank you for your leadership on that. >> supervisor avalos: thank you. and we'll thank colbar for that. any other member of the public who would like to comment? please come forward. >> just want to say -- my name is jurisa. i used to work at san francisco community college. i worked there 24 years. i was the lead custodian. ima proud custodian. imstill able to work but i had to leave because i could no longer do four, five buildings, you know, where the people are gone, you know, they've died or something's happened to them and they've not been replaced, staff has not been replaced. yes i know the college has had

its fair share of problems. but the workers are still working. they're still doing their duties. and you know, mr. avalos, i tell you, we love you. we thought you were the best fit. and i'm usually never wrong. i'm glad that you are still what we thought you were. you know, i did a lot of walking. i've walked for everybody in here at some point. walking the neighborhoods, being in it bayview, wherever. i had to move to oakland because i couldn't live here. i can't afford it. i got a one bedroom apartment. i forsake that, trying to have a home, because that wasn't going to work out. but you need to know that you can't serve two masters. you will either help one or you'll do the other. you can't do both. and there are people who deserve to, you know -- even if you can't get back but five cents or whatever it is you've got to get

we need to look out for one another. that's why we were all put here. this is a town that, you know, is well advanced in terms of being diverse. you know, it's because we all are put here to help one another. we're not here to just be -- you know, just talking and looking around. and, you know, i guess since i moved to oakland i feel like, as the kids would say, i feel like i've been played. you know what i mean. played means, you know, where people play you, and, you know, then you sit there and you say, wow, really, i thought they were my friends, you know. and i could remember when you all laughed. you said you all get out there and walk for us, and we going to take care of you. so now i am 63 years old. i'm still strong. but i had to leave because i couldn't do four or five buildings a day. you know what i'm saying. that's hard work, honey. when i started, i started here, at this city hall, with diane

feinstein. that was the mayor when i started work. i shined and buffed floors every day. i'm still able to do that, but i knew that my health was going to suffer if i kept that up. you all please help us out. don't leave us unattended. we know everybody. you know the bank, it's always a game. we know that. but i learned something from j. z. he said you can't knock the hustle if you're not helping nobody. thank you. >> supervisor avalos: thank you very much. next speaker please. >> my name's steve bristow, a business agent with 1021, born in 1949, a little bit older than the last speaker. i'm a married man which means i get an allowance. the other day i parked in front of starbucks, ran in to get my coffee, in there not more than

three minutes, i came out, there was a citation on my vehicle for parking. the second thing that occurred to me was, when i opened it up, my god, this is a stiff price to pay for a cup of coffee. being on allowance, i had to go back and plead with the spouse to try to find money to pay for the ticket. the consequences of it is i'm not going to park in front of starbucks without a bag of quarters anymore, ever again. there is a consequence to that. there's none for the banks right now, absolutely non-, unless people go after them for what they have done. and what they have done 800 -- is it trillion? 800 million to the world, and they're fined a total of what, 20 or 30 billion altogether, it's just not right. there are no consequences. san francisco needs to take a lead in this. thank you. >> supervisor avalos: thank you very much. any other member of the public who would like to comment?

and seeing none, we can actually close public comment. i want to thank members of the public for being here, and sharing their concerns. i do believe that this it hearing is really addressing a real issue, a real problem. and i appreciated comments from supervisor -- former supervisor chris daly, that there have been choices the city makes about where the city puts its resources, and trying to recover money, and makes a lot of sense that where we see a large amount of real fraud and manipulation, the banks, that we actually do our work, our effort, and fulfill our obligations to workers, taxpayers, and the public to recover any losses. and i want to encourage that from our city financial

officers, and our city attorney, and i hope to see that come together in the next -- very short period of time. let's see. i would actually like to request that we continue this item to the call of the chair. and also want to encourage support from perhaps the budget analyst, mr. rose, if there's a scope of work that you might be able to help us with in terms of an analyzing how we might pursue understanding what losses have been to the city, your office might provide extra help to our financial officers in the city, and what ways that we might be able to have any additional recovery as well. that's something that you can provide some help with? >> harvey rose: mr. chair, members of the committee, we would certainly be happy to

prepare a scope and submit it to you for approval, absolutely. >> supervisor avalos: how long do you think that would take? >> harvey rose: supervisor, could we defer saying how long it would take at this point, until we take a look at our workload and see when we can do this? >> supervisor avalos: i think that's okay but everyone else -- doesn't make sense that you -- >> harvey rose: it would be before budget, supervisor. >> supervisor avalos: thank you. i'm just joking anyways. okay. so colleagues can we continue this item? >> chair farrell: supervisor mar. >> supervisor mar: i'm supportive of continuing this conversation. i think there was a disparity between ace and others, are saying the hundreds of millions of dollars of losses from bank fraud versus what our department reps are saying about what the losses are given the fixed rate versus variable rate loans and

various financial holdings that the city has. so i want to see from the budget our independent budget and legislative analyst kind of what their numbers look like. i think that would have been helpful for today. i also wanted to say that i am also frustrated by the city attorney's response of the wait and see approach. i don't really know what that means. i'd like more specifics on what communications there have been with the other cities from richmond, to san mateo county and the various other cities and counties. and ideas about, as some from the public testimony said, we can take stronger leadership from our city to recover every single penny as people said. i'm looking forward as it comes back to us that we have stronger numbers to look at, but also that we take a more aggressive approach as our city attorney and our city looks at how we can recover money, especially as we go into the budget season. thank you to supervisor avalos and ace and sciu for bringing this forward as well.

>> chair farrell: thank you, supervisor. with that we have a motion to continue this to the call of the chair. can we do that without opposition? so moved. >> supervisor avalos: thank you, colleagues. >> chair farrell: all right, mr. clerk, can you call item 2. >> 2. ordinance appropriating $38,689,454 in the department of public health, including $4,314,849 of general fund reserves, $8,410,605 of the city reserves for state revenue loss, and $2,600,000 from community mental health services; surplus hospital revenues of $6,504,000 in general hospital, $12,560,000 of laguna honda hospital revenues, and $4,300,000 of laguna honda hospital reserve for debt service (senate bill 1128) revenues are recognized, as well as expenditure reductions of $7,389,546 and additional expenditures of

$35,070,000 at san francisco general hospital, and $11,009,000 at laguna honda hospital. >> chair farrell: thank you very much, mr. clerk. we have greg wagner from the chief financial officer from public health to present. >> thank you very much, mr. chair. gregg wagner cfo department of public health. we are here today to request a supplemental appropriation based on our current year deficit for the department of public health. as you all know, we were here last week, and discussed in some depth the history behind our financial challenges, and some of the issues that we have been working with. so i won't revisit all of that. but i'm happy to discuss it further, if you would like. so we'll go through very briefly where we are on overview of the

request to end the budget and legislative analyst recommendation. just as context, we have, in the department of public health, a 1.67 billion dollar annual operating budget. of that budget, about $1.2 billion is revenue brought in by the department through patient revenues, grants, other funding sources, and the remainder is general fund. our current year general fund deficit is $31.2 million. this is an updated projection, as also discussed last week, compared to the controller's six month report. the major causes of the deficit for the department are several. we have a significant loss revenue. we had about $16.2 million

budgeted, assuming we would get an enhanced mental health reimbursement through a program pending with the federal government for several years. that was, once again, delayed. so we have a revenue deficit in our budget. we also have weakness in our patient revenues, primarily due to the transition of seniors and persons with disabilities from a fee-for-service reimbursement model to a managed care reimbursement. the impact of that is about $19 million. and then of course at the same time we have our historical structural problem, which is the difference between our budgeted and actual expenditures, primarily on salaries. that amount has grown, and we have not been able to keep pace with our revenues to make up the difference. just a brief update on where we are, the number in the

controller's six month financial report was 45.9 million. that was the projected deficit. we have been working since the first quarter financial report to try to bring this number down. i can assure you the entire department is very focused on this number it, and i'm trying to bring down the impact of the general fund, partially through those efforts, and partially through some revisions and our projections. that number is down to about 31.2 million, which we still recognize as is a very large number but i want to assure you that we have been working hard to try to make it smaller. >> chair farrell: a few questions. so the deficit from general hospital on the revenue side, does in a incorporate the mental health -- program? >> the mental health reimbursement actually shows up

in the second from the bottom on the mental health line, which is about 11.6 million. that's partially offset by some favorable patient operating revenues. in the san francisco general hospital, that revenue deficit is actually due to -- we had budgeted revenues from another transfer program. those revenues didn't come in. so it shows a deficit, but that revenue deficit is offset by an expenditure savings. we didn't have to make a transfer to get those revenues. so if you net that out -- i know this is convoluted -- >> chair farrell: the point being if you in netted that out then the surplus -- the expend tier deficit is greater than shown here. >> that's correct. that's correct. >> chair farrell: and then you're talking 31.2 versus 41.8

highlighted below. >> exactly. so the 45.9 million dollar number in the controller's six month report that ties to the controller's six month report are based on our projections for the six month report. we essentially base those on five months worth of actual data. and since that time, in the few months since we've been able to revise those projections down to about 31.2. the biggest causes of that change since the the six month report are on the next slide. the largest item is on salary and benefit spending. that's from a couple of things. the hospitals have both been very focused on trying to control their costs. but secondarily, we've had our -- when we project out our

benefits, based on our last couple of months of actuals, those are coming in at a lower level so we're able to revise that down somewhat. and then -- >> chair farrell: sorry. again, forgive me if i'm dense but we have a -- the supplemental in front of us is for a much greater number. is that correct? >> yes. so just to be clear -- so there are two issues here. there's the general fund deficit, which is the impact that we have on the general fund bottom line, and then there's the amount that needs to be appropriated, in terms of expenditures. so part of our supplemental appropriation is appropriating revenues from within the department. so those revenues that we're appropriating don't impact the bottom line for the general fund. so we're appropriating, through the supplemental, about 40 -- let's see, 46.1 million in total, that's the total of

appropriating general fund reserve, of appropriating state reserve, appropriating revenues in excess of budget, and reappropriating expenditures. so the total appropriation authority that we need is greater than the actual general fund draw that we're asking for. >> chair farrell: okay. so the supplemental's not changing then. >> the supplementa supplementall changing. the supplemental in front of you reflects the revised number since the six month report. >> chair farrell: okay. thank you. >> so just to go through those numbers, on slide eight, you've got a summary of what's in the supplemental appropriation request. that includes a draw of 4.3 million from the general fund reserve, and $8.4 million from the city reserve for state losses. so both of those pots of money

are effectively general fund dollars that had been appropriated to reserves that we would be drawing. the remainder of the sources for the supplemental are revenues in san francisco general hospital, and laguna honda hospital. in the past, we've historically had our revenues come in somewhat overbudget and used those to cover our expenditure side. we're doing that partially, but not fully this year. in addition to those revenues, we are deappropriating and reappropriating expenditure savings in the general fund to help cover the transfers to the hospitals. and so that bottom line and the number that you see in the legislation in front of you is $46.1 million, including the deappropriation and reappropriation from general fund.

i do want to highlight a couple of issues that are out there, potential revenues that are out there, that could come in positively towards the end of the year. we have a couple of major medi-cal prior year settlements that are outstanding. those are audits that reconcile our payments to what we should have been paid. we believe that we have some potential good news to come from those audits, based on our preliminary data from the state. but the timing of those payments is uncertain and we've actually been waiting for several years for those to come through. they tell us that soon it's conceivable that those could come in before the end of the fiscal year. if so, that would reduce the amount of general fund that we need to draw, we could return those dollars to the general fund to be used for balancing in the budget year. the other item that's out there

is a program designed to enhance our reimbursement for the losses that we've taken under the transition of the seniors and persons with disabilities, to managed care. so if that program again goes through, we expect that it will at some point, but it's unclear whether it will be in the current year or in the budget year, or after. there is potentially some significant revenue upside in those projections. so i'm reporting this to you just because i want you to be aware that there are some potential items of good news on the horizon, that in the nine month report or by year end could reduce the draw on the general fund that we're asking to make in the supplemental appropriation. and if we do receive any of that news, we'll obviously report it to you, and to the controller's office to adjust the draw. >> chair rr