exceed from the construction company. however puc explains tht justified because they encountered additional cost in unanticipated site conditions. on page 18 we report the resolution does not include removal of the repairs at a cost of 575, 529. amend the line 9, to reflect that. there is a reference to that of $600,000. it should be 5$559. >> another increase. from $7

million to 7.755. for work that has already been completed. shall i go to the next two items? >> yes. >> regarding item 4, on page 22 of our report, we report that it's shown in table on page 22, the contractor delta star has submitted invoices and all of the repairs were complete on february 12, 2013. such that no expenditures will be incurred. our recommendation on the bottom of page 22, that you recommend the proposed

resolution on february 12, 2013, instead of january 2013. the work includes all three phases and that you approve the proposed resolution as amended. regarding item 5, on page 29 of our report, we state that under the proposed lease amendment, the estimated royalty revenues to be paid by silva to sf puc from december 2010, through june 2032. that is estimated to total $153 million. on page 31

of our report, and again mr. up dike stated that this last extension is not before you, but we point out if that is an approved, the additional extension then as shown in attachment 2 on page 34 of our report, the revenues from the puc from 2010, to december 31, 2064. an average cost of $340 million and that includes the base rent payment of $500,000. we recommend that you do approve this resolution.

>> thank you very much, mr. rhodes. any questions on this? >> thank you. anyone from the public wish to comment on this item, please come forward. >> thank you, members of the board. my name is adam keats. i'm a resident. i'm here in my capacity an is the director of biological diversity. it's unusual for us to be speaking here on behalf of a gravel mining project. it's is not something that we are used to doing. when we were first approached by this company by oliver desilva, we were prepared to fight this project and we were prepared with our allies to the sun ol community to fight this project. oliver

silva came to us and said what would it take for to you support this project and we laughed and we gave a dream list to have this happen to benefit the environment and they said yes to everything. it took a year to get to this but it's been incredible. we think it's a great thing for the species out there and for the people of the sun ol community and good for the community of san francisco in terms of the revenue as well. this is the way gravel mining should happen. it's a necessary evil and i think that this type of project, the way it's been done with this company is the way it should be happening and i'm proud to support it and proud to be here with that message. >> great. thank you very much. >> quick question. it's unusual for an organization such as yours to support a project like this and necessary evils as you

call it as mining. understanding that it's one of the environmental impacts that it's going dig the quarry almost two 1/2 times deeper. i'm just wondering, i know you are concerned about wild life and endangered species, but from the environmental impact reports, doesid you see if it's going to have an additional environmental impact. >> we looked at this primarily from an air quality and from a species perspective. we were looking for red flags and with that within the relevance produced, we did not believe it raised any red flags on our end. >> it's impact, let me see some of the mitigation that we are restoring had trout in alameda

creek. in many ways they are separate from the quarry but additional work that the company will do to mitigate the impacts? >> correct. it opens up a blockage for a lot of steel head trout. the potential for that to be a really fully functioning ecosystem is there. it's over $3 million for this project that would go to that work. removing barriers mainly bart barriers. the environmental component is the ridge line and the environment that's above and higher elevation to this project. we looked at those as a coordinated effort and in an allowing this impact in this area took away a lot of impact that was already an approved on

the ridge line above and that allowed it above to be mitigated as well. >> thank you very much. any other members who wish to comment on items 3, 4 and 5. public comment is closed. >> we have a number of amendments for item no. 3 first that our budget analyst weighed out. it will have to sit for another week. can i have a motion to accept those amendments? can we do those without opposition. on item no. 4, we also have a number of amendments a little bit more technical in nature that would not have to sit. can i take a motion to amend item no. 4. we can do so without opposition.

item 5, had no recommendation. mr. avalos. >> thank you, when does the new amendment initiate? >> mr. up tooik and somebody from the puc. >> it's after the approval by the board of supervisors and approval by the mayor and the effective date is 30 days thereafter. >> okay, we have items 3, 4 and 5. >> i'm not quite prepared to support these items. item 3 will be seen next week. item 4 and 5, i would like to continue

to july 24th. that will give the committee time to pass out before july 24th. i will have more information to discuss it at that time. the motion to continue to july 24th. >> if we have these items continued to 24th. they only need one reading of the full board, correct? >> that's correct. >> supervisor avalos, i appreciate your comments. i have been speaking with the puc and i'm ready to support these items. i thank you for taking the time to do so. we can have a roll call on your motion. >> on motion to continue item 3, 4 and 5 --

>> it's actually 4 and 5 because item 3 will be heard next week. >> on the motion of 4 and 5, avalos, farrell, no. the motion passes. >> we can continue that item until next week, next wednesday, can we do so without opposition? >> mr. clerk, please call item 6 and 7 together. >> the clerk: item 6. administrative code health service system plans and contradiction rates calendar

year 2014. >> item 27. establishing monthly contradiction contribution amount health service trust fund. >> these are the approval of the health systems 2014, health and dental plans. we have a number of speakers here, acting director of the health service system and greg who is out of retirement or still in retirement, but with this thank goodness with the city and also specifically want to thank kathleen for putting this together. with that i'm sure there will be good discussion. why don't you start off with your presentation and we can take it from there. >> good afternoon, supervise,

lisa, acting director, i'm joined by our cfo and joined by the vice-president for actuarial services for an hoout. we have asked jerry rap port to speak on this so he will follow my presentation. i would like to start first with what we believe is the most important story of 2014 raise some benefits process and that's precedent 4th year. this has never happened. it's unprecedented for the city of san francisco and something we should be proud of. first reminder that the health

services system trust is a trust that provides health benefits for employers and the city and county of san francisco, the school district and community college district. the package represents the employee and retiree benefits for all four participating employers. my presentation today is going to review the aggregate premium increases and there is a peak into san francisco city of san francisco premium rate increases and the federal health care reform act and the impact on our rates we'll be looking specifically at some of the medical plans, blue shield and kaiser and what drove the increase in their rates this year. kaiser was going to be an area of concern we had with kaiser and we are

those concerns that we would like to share with you. we also heard from the city union to not approve the rate of the package and want to address the implications for not approval for you along with the suggested action plan. turning to page 4, the aggregate premium for all employers is a 2.43 percent increase. this is remarkable and is made up of all of our health plans, our dental plans and our long-term disability and life. so if we look at those we have a 5.22 increase in our kaiser rate, increase in blue shield rate, our dental plans are running at 2.48. we believe it's due to

more increase. we think it's going to moderate in 2014. our lifetime disabilities in 2014. our pay rate is $659 million. the members cost on this is $84 million. that is an 11.3 percent of the premiums. on the next page is the summary of the impacts. >> can i ask a question. from previous documents that i thought it showed that the blue shield premium decreased in previous documents along with the city plan as well, but the aggregate premium increase shows that blue shield went up.

can you explain that discrepancy. i can't remember where that was where the document that i was reviewing. my understanding that the city's plan and blue shield was going down and kaiser was going up by 5 percent. >> this is an aggregate of the active and early retiree rate. this aggregate view is a combination of all plans we have under a health plan and that's true for both kaiser and blue shield. the blue shield medicare increase was 5.9 percent emerged with the active and early retiree rate which was zero, i believe. and so for an over all, a point 55. >> supervisor mar, i believe you were referring total table

on page 39. that does reflect the aggregate rate for all the employers and the employees as opposed to what is reflected in our report that shows the significant reduction for the city health plan as well as for the blue shield represents the city of san francisco's cost and that is the blended rate for the employees, but it's only the city's contribution. >> thank you. >> that's an important distinction. the city of san francisco's membership for employers has a lower percentage of kaiser members than the other employers. so the impact of the 5.25 percent increase for kaiser has less an impact on the premiums than it does on the rest of the employers. >> supervisor avalos? >> looking at the difference

between we are seeing blue shield about even and the city plan going down, we are seeing an increase in the kaiser rates. how can you explain that difference? >> yeah, i do intend to address that in a few slides. would you like me the do it now? >> we'll get to that. that's a concern i have. >> turning to the care act. this is a significant part of the 2.4 increase percent. this is due to the new taxes and new fees by the affordable care act. it's a significant part of our care. the increases come from three major fees that are going into effect as of january

2014. the patient center and the reassurance program and the health industry tax which is the largest of those. and the $16 million breaks down by health plan by $10 million coming from blue shield and the city plan and that's how these fees are applied. because they are 501 c 3 of the taxes. they are significant and the health insurance industry taxes expected to continue into future. we will see this each year. >> the next slide on slide 6 is a break down. an aggravate view for blue shield and kaiser.

blue shield a 6.55 increase and due to increase of affordable care act taxes and fees and 5 percent reduction in the requirement. the negative 2.9 reduction in 2.4 increases in taxes. the health insurance tax does not apply to self insurance plan. so that's lower. the affordable care act taxes and fees and premium increase. >> the difference between aca taxes and fees and blue shield and kaiser. what is the difference? it's usage? >> that's the difference in how the taxes apply to different

insurance companies. because kaiser is a 501c not-for-profit, they have applied that for the insurance company. the rolement with kaiser is greater than blue shield? >> it's close. it's about 50-48 percent. >> is blue shield older? >> the age risk of the population, the risk of the population that was an assessment done in 2012 and presented to the health service board, the ratio population is higher than the blue shield population. >> can i make a comment here. i just wanted to point out when you look at blue shield and city plan compared to kaiser, both blue shield and city plan

are self insured plans, the rate you see for blue shield and the negative race increase you see for city plan, has nothing to do with blue shield's offering. what it really is, is we are projecting actuary what we will have to pay in self insured claims next year compared to what we thought we would have to pay this year. because we are realizing some favorable utilizations this year which generated some cash, we can project that savings in claims for next year and that is what is generating these savings. this is not one company offering a rate over another. these are both self insured plans. so when we are, i think it's important when we look at these side by side, kaiser is a

fully insured indemnity plan. while we can make actuarial presentations, we can view disaster or emergency or terrible flu season that can affect this rate. these are not present in the calculation. >> thank you. i'm sorry if it's taking me a while understand this. it looks like the kaiser former care act taxes and fees is 1.77 percent. you can factoring that to a $9.3 million increase. i don't understand how blue shield is

going up 3.2 percent and we have a $20 million saving. is blue shield covering that itself and kaiser is charging us and potentially gouging us in other jurisdictions? >> no. blue shield doesn't really involve blue shield at all. the $20 million savings is what we realized in the first year of the blue shield self insured plan. what happens when you move to self insurance. a year ago we were in a fully insured plan with blue shield. blue shield continues to be responsible for all claims for dates of service prior to january of this year. so to start this year like we did with the flex plan. it takes time to submit it by the patient and be paid by the third party administrator. you wind up with a cash savings in

the first plan that lag from the time of services occur until we pay in march, april or may. that is in the first year of self insurance. the $3-4 million savings below that that represents utilization savings. when we set our rate for the flex plan for the employer and employees, we benefit a lower payment amount than is anticipated. all the utilization savings and cash flow savings, come back to the city in a self insured plan. in a full indemnity plan you don't have that because they are

insuring based on the plan. regardless of when it's paid or processed. in kaiser's case they are still paying claims from last year and they are responsible for those and we have no responsibility at all for the cost of those claims. does that make sense? i know it's a lot. >> it doesn't make sense and it's going to take me a period of time hopefully with more transparentcy from kaiser to explain the rates. >> the difference in indemnity insurance versus self insurance is they take the risk of claims or loses like your auto insurance. they don't give you a rebate when you don't have an accident. just like in auto insurance over the years you

get good drivers discount. you get the immediate upside or down side of claims, loses. if this was a car insurance plan for blue shield and you had an accident this year, you would be spending more. right? so that's basically we are going -- if more or less uninsured on those two plans, largely self insured for the vast majority of the claims we incur. >> thank you. one that i want to take a few minutes on because it is really a remarkable slide. since catherine dodd has assumed responsibilities for the department we have significantly evaluated and adjusted every aspect of our benefits. the co-pay and

deductibles and long-term disability, we have aco's working and working with the health service system. funding with blue shield. we completely retoo old the plans new networks. the shop is now in california. we have really looked over the last 4 years of every aspect of the administration of benefits with the health service system. i think towards our goal of stainable affordable benefits, we have to look for every aspect of financial waste. in 2011 we did a lot to get our co-pays in line. with 3.1 percent in 2011, this race is unprecedented and not only help us pay for our employee

benefits and our retiree benefits but also mitigated our long-term liability which is a significant concern do this city. with 50 percent of our members in kaiser, we know we could not obtain our goal of sustainable and affordable benefits without dealing with the financial waste in kaiser. we do have a plan and we are going to talk about that because it is an issue with 50 percent of our members in there. we have to draes that and we plan to. i wanted to spend just one more slide on good news. greg, did you have a question? so slide 8 again is reviewing the compressive cost containment strategies and really unprecedented single digit trends for the last 4 years. i know ro