mediation. we're going to come forward with a proposal on that. it would be great if we could see the city invest that support. thank you. >> thank you very much. next speaker, please. good morning, supervisors. i'm gail grumman, the executive director of the community housing partnership, the largest builder and operator of permanent supportive housing here in san francisco. so, i want to thank you for having this hearing today and we really wanted to sort of hit on an aspect that both bevan dufty the director of hope and trent rohr the director of human services agency touched on, something that we see sort of a lack in our continuum, which is a pathway and the housing ladder for individuals. we know at the community housing partnership, now having close to a thousand units of permanent supportive housing and close to 1800 people living in that housing, that we know there are individuals who couldn't transition to either affordable housing, public housing or housing with less

service intensive. but the bear ire to that is affordability. at the cusp of a city that is having an equity crisis and affordability crisis, we hope the board of supervisors and the mayor's office will look at housing ladder, all the stock of housing in san francisco from supportive to affordable housing to public housing. we know there are thousands of public housing units that are off line that will be brought back online over the next 3 to 5 years through the revision process of what the mayor is doing with public housing and transfer to nonprofit ownership. we hope there's a pathway for supportive housing tenets to move to that independent housing [speaker not understood] and keep the affordability of only paying 30% of their income. we hope you'll consider that and we really think that pathway could really move people out. chp predicts by 2020 if there was a housing ladder, that over

10% of our portfolio could move to market rate or housing. [speaker not understood]. thank you very much. >> thank you very much. any other member of the public wish to comment? okay, if there is anyone else, please step forward and line up here. howdy. well, let's start here. it disturbed me they talk a lot about the hot team but i wish you would have had somebody that actually works and is a part of the hot team actually come and say something. i think they'll say a lot of what they're saying, but they'll give you different ideas. i'll give you a better idea of what's happening. one of the things i have come to understand is you're having people who are undocumented, who are getting stuck -- i mean, one of my friends, i don't know why he got stuck, but i guess he just couldn't

get an id for whatever reason. i guess he went through the foster care system. i don't even think he knew where he was born. that's probably why he got stuck. the other part of it is some people -- all of these programs and all that stuff they're not going to be able to access them. one of the things that happened was is a lady -- an employee that was working with this lady got fired. she got put into like laguna honda. she just wasn't going to make it. so, though are some of the issues that it's being very cloaked in all of these stats and statistics that they're telling you. the other thing, too, what's being missed is families in s-r-os. to me that's a problem. so, you might have a 90-square foot room, you've got a family living in it. you change the definition. the other thing, too, is the housing authority. i think you need to be

aggressive, maybe you need to fire whoever is running that because it's not good enough. i wanted to talk about put a team together where they would talk about low-cost solutions to help thing. maybe $5,000 or less to bring solutions to the table. i've talked to several people. i can't get it off the ground. i feel part of the problem is we need -- all of these service providers are doing all of this stuff and our voice gets blocked. we get totally blocked out of the conversation and i want to talk about habitable housing. >> thank you very much, sir. thank you. are there any other members that wish to comment on item number 1? all right, seeing none, public comment is closed. [gavel] >> colleagues, i don't know if you have any comments here. i want to thank everyone for being here. i want to thank my colleagues for sitting with me through this hearing. i think all the speakers, thank you for your time, your preparation. certainly having worked

together with you the last few months, and also in advance for all the work we're going to be doing together moving forward. this is obviously a very complicated issue but one i think is critically important for our city and our population here in san francisco. and one that i think it is about time we started to focus on. so, if no other questions or comments, could i have a motion to table item number 1? we can take that without opposition. [gavel] >> okay. madam clerk, can you call item number 2, please? >> item number 2, resolution retroactively authorizing the san francisco department of public health to accept and expend a grant in the amount of $173,515 from centers for disease control and prevention to participate in a program entitled building resilience against climate effects: empowering san francisco communities to address climate change, for the period of september 1, 2013, through august 31, 2014. >> okay, thank you. i believe cynthia from dph is here to speak on item number 2.

thank you for coming. >> good afternoon, supervisors. i'm the manager of planning and fiscal policy in the environmental health branch in the san francisco department of public health. and i'm here today seeking a retroactive authorization for an acceptance in the amount of $173,515 from the center of disease control climate ready states and city initiative to prepare for climate change challenges and build resilience against climate effects. this is the second round of funding we have received from the cdc which has been awarded to 16 states and two cities, san francisco being one of them. the past three years has allowed the health department to engage in several initiatives to under the potential health impacts of climate change at a local level and we have worked to improve climate change preparedness in san francisco. the department of public health

priority activity focused on vulnerability assessments, outreach in education, building partnerships and community resilience, developing tools and indicators and emergency preparedness planning. one example we completed was an assessment of san francisco's vulnerability to he can stream heat events. climate models predict extreme heat will produce severe heat in san francisco with 39 extreme heat days by the year 20 50. our city will face more deadly hot days and poorer health outcomes, especially our vulnerable population. i know we just pep the last couple hours talking about the homelessness, the homeless population is specifically vulnerable to climate specs, specifically extreme heat and cold snaps. this assessment was used to develop a heat wave disaster which is now part of the annex of san francisco's new emergency operation plan. additionally we created

interactive heat run vatctionv map to under which areas of san francisco are most at risk [speaker not understood]. satellite and temperature data based on cultural, behavioral, and other demographic characteristics and san francisco's neighborhoods have been made publicly available on data s.f. with the funding from the cdc we will continue to assess climate trends, define disease, develop specific interventions, methods, and aloe virginiavctiontion effect of change of at-risk population in san francisco. in partnership with the city administrator's office, the department of emergency services, department of environment and our many stakeholders, we will promote community resilience through education, empowerment and engagement to reduce impacts of climate change i'm happy to answer questions about our

climate and health program or -- >> supervisor mar? actually, i'm very supportive, but i did have a question. i know what the elimination of [speaker not understood], his role. i'm worried that we're not going to be really focused on equity and the strategic initiative like this was funding within dph. but i'm just wondering what's going on with the role that dr. bakia had been playing and how is dph responding to that? >> sure. i just want to ensure you that the department of public health is committed to ensuring equity. i have been the principal investigator on this project and the main contact with the city for the last three years. and, so, we have a very strong staff that works very hard and i don't think his absence will be an issue moving forward. >> so, who's been dealing with the roles that dr. batia within your department? >> right now i'm filling in helping lead the program with

[speaker not understood]. we have an acting director [speaker not understood], the director of population health is working on these issues until we find a new districter. >> that's on top of what they already do. you don't have a replacement then? >> for the past several years i have been a key leader in health equity and sustain ability and we have a pretty collaborative decentralized staff. so, i definitely want to ensure you that we're all working very hard and that we're all really committed to equity. >> okay. any further comments? okay, thank you very much. we do not have a budget analyst report so we'll open up to public comment. anybody wish to comment on item number 2? seeing none, public comment is closed. [gavel] >> colleagues, can i have a motion to move this item forward with recommendation? we can take that without opposition. [gavel] >> mr. clerk, can you please call item number 3? >> item number 3, hearing on the mayor's fiscal year 2014-2015 and fiscal year 2015-2016 budget instructions to department heads and general fund deficit projections and other related fiscal year 2014-2015 and 2015-2016 budget updates.

~ >> okay. next we've kate howard our budget director here. thanks for waiting. >> kate howard, mayor's budget director. i have talked to several of you about the mayor's instructions previously, but let me walk you through an overview of those instructions and i'm happy to answer any questions that you may have. i'll plan on being as brief as possible. an overview of the general fund deficit for the next two years, i'll talk to you a little about what the specific instructions were and we can review a timeline that we'll all be experiencing over the next several months.

you will remember that we balanced the city's budget just last june together for the coming two fiscal years. that was largely driven by revenue growth, smoothing our fund balance over two years to start from an even place, a variety of departmental and city-wide solutionses including differing funding for our i-t capital and equipment investment. looking ahead, you'll remember that all of our two-year -- all of our budgetses this year are open. so, we have fixed two-year departments, the puc, the port, the mta, and the airport, and all of our other departments will also be open for the next two years. we'll also be negotiating new labor contracts with all of our bargaining units except for the police and firefighters, and we

know that the economy as well as the state and federal government will likely continue to have an impact on how we balance our budget overall this year. this slide gives you a summary of what's changing since we balanced the budget last year, and what's on the revenue and expenditure side. you'll see tax revenue improvement in both years, changes in our fund balance, and relatively significant changes on the outlook for the health department's revenues. on the expenditure side, the major change is full funding of the prop h set aside which is not pulling the prop h trigger which we did do in the second year of the adopted budget last year. so, the numbers here in front of you is the projection that our office has developed over the last several months working

with departments. you can see first it's growing by about 63 million in the first year and 133 million in the second year. while uses grow at a faster pace than that than the sources are growing. those gaps create a shortfall leaving us a projected $100.7 million in the first year and $118 million in the second year. >> was this when you sent out the budget instructions in december? i know next week we're going to have a sick month update. >> that's right. the numbers you're seeing today are ~ working projection at the time we issued the instructionses. those were issued on december 18th. as you correctly point out, the controller i believe will publishing their six-month report early next week and it will be reporting to you on the results of our current year performance.

any under spending or better than expected revenue would generate year-end fund balance that that would -- which could be applied to the circle ~. so, like any projection, this projection assumes a number of thing. i want to make those explicit to you so you know kind of what's included and what's not. the fiscal '15 budget is -- we have used as our base case the budget that was adopted and signed about -- adopted by this board and signed by the mayor back in august. that means staffing levels remain consistent. funding for capital equipment and i-t are what was adopted by the board and signed by the mayor. we have updated both salary and benefit costs to the best of our knowledge. however, we have not updated -- we haven't made any new projectionses about the results of the city's labor

negotiations. because we're just beginning those conversations and those negotiations with our labor unions now. if seems premature to make an assumption about what the results of those will be. since revenues are growing, we won't be eligible for either a rainy day, budget stabilization withdrawal. and as i mentioned, the major changes that have occurred since we balanced the budget are the health revenue changes which i'll show to you momentarily, funding of the coverage baseline, and smoothing our fund balance over the two years. so, a couple of charts that give you a little more detail on the specific numbers. so, this is our revenue outlook for the next two years. you can see the first line is showing you our revenue -- projection of general fund revenue growth. that's largely our local tax revenue.

so, property tax, sales tax, business tax, hotel room tax, real property transfer tax among others. and you can see that that is a healthy revenue growth. as a rule of thumb, i think $100 million is -- that's good revenue growth and we're exceeding that based on our current projection in both of the next two years. you can see we're smoothing our fund balance again over the next two years. we have slightly less than we previously budgeted available in the first year, but we have that as a starting source in the next year which makes it easier to balance the second year. [speaker not understood] one-time sources, one-time payments or litigation settlements where we might be paid a certain amount of money, those sorts of things. and then finally, the other significant change noted here are changes in our public health revenues. and the largest piece of that

is bait r based on a [speaker not understood]. the current year the state is taking back about $17 million from the health department and we're projecting ~ next year we'll double that which will be offset by positive news at the health department in other areas. so, those are the big pieces on the revenue side. this next slide just highlights for you at a high level what's happening with baseline set asides and our reserves. you can see as our revenues grow, we continue to feed our base lines. things like the children's fund, the library baseline, the open space fund, and certainly the largest line. you can also see at the bottom what we're projecting at this time as the balances that we will budget into our general re

serve, our budget stabilization reserve, and our rainy day reserve in the next two years. >> sorry, those are additional funds going in? >> these are total balances that will be appropriated in those areas. so, i don't have the number off the top of my head, but there's over $100 million, significantly over 100 million dollars in the stabilization reserve today. there will likely be an additional deposit into the budget stabilization reserve in the coming year. >> okay. >> ms. howard, can i ask through the chair, what's the percentage of our general re serve of our total budget? >> so, we have adopted financial policies. this board has adopted those policies which are aiming to grow the reserve to 2%. i believe not by this year but

by the subsequent year going to a 1-1/2%, but i can confirm it and circle back with you. the next one is highlighting for you major changes on the city-wide cost side. clearly the largest impact from a financial perspective is the cost of our salaries and fringe benefits growing about $100 million -- $100 million this year and next year the same staff that we have today. our capital budget growing by 26 million and then 36 million, city-wide order include things like the cost of power that the puc provide, cost of water, those sorts of things. i do want to delve a bit more into the specifics of our labor costs. this slide gives you some greater detail about what's

happening both on the salary side as well as benefits. the first two lines are showing you the impact of additional positions that were added in the budget last year. the second line is showing you the impact prior year colas. so, you will remember that this year in the current year the mass majority of employees are receive the equivalent of a 1.75% raise spread into three payments of 1%, 1%, and 1%. that annualizes to 3%. so, the gaff you're seeing 2% the second year. the impact is retirement and health and dental increases. these are fringe benefits. you can see more than $50

million next year just for those health and dental benefits and the retirement contributions. we are claiming to that final peak year on our retirement contributions and, so, you can see in 15-16 that number begins to decline. and, so, we will be seeing, though the rates will continue to be high, we'll see gradually decreasing rates as we couped our losses from 2008 and 2009. other mentions of outcomes of our labor negotiations aren't reflected here. for rule of thumb, a 1% increase in salary costs -- a 1% raise would cost the employer about $20 million on the general fund side both wage and benefit. >> and to be clear, none of these projections are baked in? >> that's not included here. to the degree the city comes to

agreement with our unions that do include raises, that would make the shortfall worse. this next slide is really just highlighting some major departmental changes these are, i think, items that you've seen before and i won't spend a lot of time detailing them. but i will note that -- ~ a some of our major capital investments are coming to the conclusion in the construction phase, we're starting to see some of the costs associated with staffing as providing services at them. this is a summary again of what we talked about. i mentioned at the beginning some of the uncertainties that i think remain. certainly economic uncertainty. none of us know when the economy is going to change or

if it will change benefit costs continue to create some uncertainty. we had last year a number of conversations at this committee about the impact of health rates and those conversations will continue i think this year. the results of our labor contract negotiations and then any additional state or federal policy changes or financial changes that could affect us including the implementation is most significant obviously what happens at the implementation of obamacare, the affordable care act. finally, any current year over spending by supplemental appropriations will have an affect on the bottom line because they're our variable fund balance. this one is really just a slide that highlights for all of us the relationship between our economic cycles and the way that the city has chosen to

staff services. you can see we hit our peak employment by the city ask county back in 2001 at a little over 20,000 employees. that was the height of the .com cycle of our economy. you can see the decline of employees as we entered into the recession. then the increase in employees leading up to 2008, 2009, [speaker not understood], and some significant deficits many of us experience together over the last several years, reducing our number of funded employees to about 26,000. and, you know, when i look at it, i think well, we're back, we're essentially to our prior peak. we're nearly at 20,000 employees again. so, i think for the mayor, we both feel cautious about adding

significant numbers of new employees, given we are at that peak level employment that we've seen, and we see our ability to fund employees is tied with the economic cycle. this is just a history of kind of deficit projections and the targets that were associated with them. i won't spend time on that. the mayor did issue instructions in november to departments asking that all general fund departments reduce their fund 2% the next two years, 1-1/2 the first year and an additional 1% the second year. he also asked that departments propose a contingency reduction in the second year 1%. for context, that first 1-1/2% that he directed them to reduce

would generate around $21-1/2 on an annual basis. the mayor doesn't believe in across the board cuts. this is a way of developing ideas that could move forward as they are needed. on the policy side, we're encouraging departments to focus on their core functions and minimize direct service impacts to the public. the mayor is also particularly interested in asking them to review all their fees, to determine if the fees are relevant i necessary and to determine if they are tell at those this year and then this year, government efficiency, the affordability of our sever says to the public, as well as government innovation. and certainly to -- encouraging all departments to conduct outreach with their stakeholders through their

commissions or through other community -- community meetings that they may conduct. finally, just a reminder about kind of key dates in the budget process. the dotted line kind of gives you a sense of where we are. so, the mayor has issued his budget instructionses, the mayor has released his budget proposal. they submitted their i-t plans and budget requests. next you'll hear about the current year performance at the six mark. february 21st, all departments are required to submit their budgets to the controller's office and the mayor. we also will see the joint report being published, the shared work of the budget analyst, our office, and the controller's office. in may you will begin to see

departments coming forward with their budget proposals here to this committee. the controller's office will issue their 9-month report which gives us our sort of last look at our current year performance before we put the budget to bed. and the governor will issue his may revise. the first working day of june, the mayor proposes a proposal may of this year. [speaker not understood] and your review. that is my presentation. i'm happy to answer any questions either now or one on one later if that's preferable. >> colleagues, any questions at this time? okay, thank you very much, ms. howard. we'll open this item up to public comment now if there is anybody in the public who wishes to comment on item number 3. please step forward.

good afternoon, supervisors. debby lerman from the san francisco human services network. i wasn't intending to speak, but i just feel compelled to note that the mayor's budget instructions at this point do not include any cost of doing business increase for nonprofit service providers. we spent this morning in a very educational set of presentation about the homeless services in this city and the city's nonprofit partners are on the front line of every aspect of those services, yet we have a 15 -- 6 or 7 years we had no ip crease, although we do appreciate the increases we've received, lower than the annual cti. so, our service providers are facing a myriad of pressures.