an overall for the purpose of determining rick in the audit and control process. we just do not perform to a separate extended level of audit of issue of report. >> i know it's another topic of the role of the treasurer and getting an understanding on how that operates and works. you make a brief reference to the role of the treasurer and you move on. is there anything that you think we ought to know as we try to understand this better, this process in relationship with the city treasurer's office? >> >> with the city treasurer's office in regards to our audit procedures we do confirm and evaluate the processes and the inter departmental processes.

overall i believe the process is in place and followed by the system, set by the city and county and we have looked at that, we also confirm the balances with them and evaluate the investment pools that the department, the system does rely and have on their financial statement captioned. does that answer your question in >> yes. so you have looked at the general process? >> >> yes. >> thank you. >> any other questions from commissioners in >> i know there were no adjustments for the materiality factor but were there any past adjustments or misstatements. >> no. >> any other questions? >> before we go to public

comment, i would like to thank you for submitting a clean audit. many years ago we did not have a clean audit. thank you very much. congratulations. any is there any additional public comment? seeing none, public comment is closed. pamela, you said you were going to present the financial statement? >> >> pamela levin cfo, as ms. calvin said that one of the parts they do as part of the audit is they look at the financial statement and they get incorporated at a very high level in the comprehensive financial report which i will call the khafre. the financial statement stands alone like many other departments pfc has separate

ones and sfo have separate ones. these are available in our office and on lean. i -- online. i would like to point out the difference of the balance, an increase of $15.5 million from last year of $77.7 million as of june 30, 2014. against that, $92.8 million we have identified and have worked with aon to identify $77 million in obligations with leaves $15.8 million that is not obligated within the reserves. however, i will be reporting in the next discussion about how things and as you know last year things go up and down

within the trust. so, the $15. million in fiscal years 12 #shgs 13, 14, are attributed to $11.9 million of premiums over claims increased incurred but not reported obligation claims lower utilization, savings from the employer group waiver program for the medicare pharmacy benefits and the $11.9 million will be used to stabilize the city in 15-17. $3.8 million decreased in the blue shield flex due to subsidizing premiums during fy 13-14 and the application is the early retirement

insurance program called the errp and the $4.6 million for dental plans for underwriting gains and $2.8 million associated with the flexible spending accounts, excess contribution in the 205 budget which is used for communications, wellness, analytics, it can be used for actuarial. that will be available for future use. there is interest income which is equal to a million dollars this fiscal year and performance guarantee penalties and forfeit yours. we have the $92.8 million in the net assets within the trust. i will identify the $77 million that are either

obligations or reverse -- reserves against that $92 million. there is vision plan and dental for the $92 million. and $30.7 million which we use the $2 million to subsidize the rate. 1.9 million. the aco contingency, this is per the policy discussed earlier this year the premiums accepting between these years is is from last year june and july they got a

credit then there is the available balance some of which will go to the all payers data base which marina will give a presentation on and then the flexible spending account. on a monthly basis we'll continue to monitor and report the projected year-end balance for the trust based on actuals reserves level will be evaluated by an in the report in 2015. any questions. >> the last item you mentioned about the last numbers and you mentioned would be used for the all claims data base.

that is not in your written report, correct? >> or could you point it out to me? >> >> the 205, i mentioned for the 205 that it could be used for in the report -- for the $2.8 million increase. >> on page 2 #shgs before we went to the 205 we went to 104 per member per month and it set aside for wellness, communication, actuary for reduced care cost. one of

the things when we went to you in january and talked about the budget for the 205, we call it the 205 rather than the 104, that was one of the items. we also are funding a lot of the wellness initiatives that stephanie talks about and we fund the out of that the communications which includes all the open enrollment and it also includes various kind of initiatives that we want to go forward with like updating or ub grading the website so it can handle more of the more period tinent kinds of information that we like to put out including wellness and some other types of activities. >> can you remind me the process for actually allocating those funds. does

that go 32 you the regular city budget at the beginning it -- of the fiscal year you have to say we plan to spend this amount out of this fund or is that done out of ad hoc approval? >> >> the trust is outside of the board of supervisors purview. they don't actually approve other than the rates and benefits, but they don't approve the budget that we have the 205 that we have for these allowable activities. what we do is we bring forward to you the board, to review what the use is, the proposed uses are. we did that in january, so we provided the information about what kind of wellness types of activities we plan to do during this

calendar year. we talk about the communications. we came forward and presented that and i believe it was, it's on the agendas an approval process of the board. so we don't do it ad hoc. we had a plan for each -- we had a high level plan to the extent that we are going forth and having a project that we are doing against that money, we do go forward and ask for your approval of that contract and that's what the items are that are before you in terms of the all payer claims data base. >> if for example we thought completely making this up as

a hypothetical, if you thought that adding two wellness staff would make a significant difference, yes, the 205 can be used to fund wellness, can that be done out of the trustor would you run the fund out of the city process? >> >> we only pay for the wellness coordinator and the communications out of the trust and that goes through the budget process. it's considered they call it off budget which means that it's charged to something other than what the general fund whatever the board is approving. we can add staff unless it's approved by the board of supervisors. so we don't intend to at this point in time intend to add more staff that would be charged against the 205. >> i understand that. that

was a hypothetical. i'm just trying to understand the interaction between the budget and the process. >> it's something that i think we need to look at between now and january because i believe personally that we need this that we need to present more information to you so then you, the board, can say yes, we approve these things whether it's a high or lower level and we come back and say this is the category you approved and this is what we are doing as we go along in order to be a little more accountable to the board in terms of spending of that money. we do have some problems and one of the issues i will bring up now to the

extent that we have to cut our operating budget because of the changes , the initiatives that were passed this current election and if we could theoretically use some of the 205 for actuarial work. we don't intend to do that but it's basically the options if we are put against the wall, yes. but we would let you know that. >> maybe i could answer some of your questions. in terms of the dollar amount administrative budget is is done through the board of supervisors, but in terms of fde, even if it's funded through the class fund is

through the board. >> it's for funding this. i understand that, but it's an interesting thing to think about. i'm glad that you are thinking through these issues and we are lucky that it does not go through the board of supervisors because it gives some flexibility but it's important that it be transparent how it is we are planning to spend the money. >> it does have to be approved through our board. >> that's what i'm in inquiring in exactly what the process is. i'm glad you are thinking about it and i'm glad in january those of you who remain will be working on this. >> the board last january, the recommendations for the 205 was routine expenses $800,000 data analytics $500,000

communication $175 so we had a $1.8 million so that's what the board approved. and the board was presented with what the expenditures had been in 2013. >> i'm not being critical in anyway. it's just understanding so everybody understand this. for those of us in government we understand why these issues matter. can you just remind me, pamela the authority limits at the various levels? >> >> decision ? >> that is in the authority level of approving a contract? >> >> when do you need to bring an action to which level.

you don't bring every single contract to us. there must be standards. >> there is a standard practice, we are looking at this because one of the things is that and we were proposing some changes to the governance policy that we are working with tom cortex what we would like to do is say that you approve projects, you approve doing things and then we come back to you and the dollar value that's in there now is very low. >> what is it? >> maybe a little over

$100,000. >> okay. that answers my question. i appreciate it. >> there is a lot of authority on the part of the board to contract for health benefit related issues without going through the purchasing, the city's purchasing, but it has to meet all the other structures that govern us and something the city attorney approves. my thinking is that the things that are large issues, i mean, i don't believe you should have to approve us getting a consultant to look at the

files to see how we could do it electronically, but you would need to approve if we were going for a full on project of doing replacing all of our membership files with electronically. so, but there is the threshold, but we are looking at this with the govps governance committee. >> as you are looking on it that indeed to help this board do it's if fiduciary duties could be part of this budget i assume. >> it could be something that i would like to look into with the city attorney. it needs

to be within the realm of those benefitting actually expenses to reduce health care cost category, so i guess what i would like to do and i understand that you want more training is that we first ask for general fund money for it and if not we can look into or simultaneously we will look into possibility of using -- >> i hadn't particularly focused on any category of activity. i was trying to get at a general principal in terms of understanding this particular budget area and what it's authorization is, and so i was asking a higher levelcious not any specific

activity in terms of this board being identifying a need to meet it's if fiduciary responsibilities would these types of activities qualify to be covered by this type of budget support. >> i think the answer is we don't know at this time, right? >> >> to answer the high level question what's allowed from the trust fund set out in a 423 and pamela is right, what's allowed is expenses incurred to reduce health care cost and there is no general administrative cost sections allowed in that charter section. that's the general standard that's set out there and that's the review we have when each specific case comes up. >> all right. more to follow on this question. >> any other questions or

comments by commissioners? >> any public comment on this item? >> no. seeing none, next item, please. cl eric clerk item 7, discussion item. hss financial reporting as of september 30, 2014. pamela levin. >> today i will provide a summary of receive into you and expenses of the trust fund and the general fund administrative budget based on actual through september 30th. for the trust fund right now we are projecting $11.7 million decrease in the net assets in the trust fund. that would take the 92.8 down to $81.1 million by fiscal

year end. again, this is 3 months. july, august and september and these for those of you who have heard me for over the last year that i have been here we've gone up and down. our projections go up and down. the 11.7 decreased in the assets is due to 4.4 decrease in the projected city plan net assets. it's in the report, but 3.7 was used to stabilize the 2015 rates, $700,000 was used for premium credits used for 2014 rates for unions accepting the 9383 contribution model and the blue shield flex net assets. from the $4.9 million used to

stabilize the 2015 rate $1.1 million of the eerp and $1 million for premium credits for 2014 rates for unions accepting the 9893 contribution model and also an $800,000 decrease in estimated medical hmo insurance premium, revenues due to the eerp credit and the $900,000 increase in interest income including the interest on the erp and the $4 million due to the transfer to the general fund pursuant to the 14-15 general fund budget. so, the net assets is surveyable to the general fund statements

we just presented from $92.8 million as of june 30, 2014 , we are projecting to have it increased to $81.1 million. the general fund administrative budget, this is three 3 months is very difficult doing projections because a lot of the expenses are not things that are allocated across 112 every month. right now we are projecting a balance of $50,000 for the year-end. we have staffed up and we continue to staff up. we have obligations for contracts that we need to meet and then the big unknown is with the

passage of prop b that wasn't considered in the mayor's budget because it was placed on the ballot after the mayor and the board finished the 14-15 budget. so that is a whole. it was estimated a couple months ago as $20 million shortfall to the general fund. initially that was allocated to department based on a formula of 1.5 percent of the general fund budget. however, that is totally being reconsidered and relooked at as you imagine by the mayor's office they have not put out instructions yet about any actual cuts that we need to make. this fiscal year or how it would roll into next fiscal year. we expect that to happen sometime around christmas and i hope i can

come to you in january to give you information on what our instructions are. if the reduction exceeds the savings we are going to have to do a major reallocation of our expenses. that is a concern and it's as i mentioned to senior staff and others it's a tight budget this year. we knew that going in after we went through the budget analyst process and we have to be really cognizant of that. but that doesn't mean we can't in next year's budget propose things that are really necessary in order for the department to continue operating in a way that is it

needs to be for our employers. >> any questions? >> >> what is the amount? >> >> approximately $50,000. it's about 46 or something like that. >> so your 50,000 is $50,000 is you are plus in your personal services? >> >> i need to make a is surplus in order to be able to fund the contingency. i figured out a plan to do that and the only place we can possibly cut in order to do that is in our professional services. so yes, we are going to have to figure out a way to have savings in professional services. this $50,000 is gone as far as i'm concerned

to meet the mayor's needs. hopefully it won't be, it won't increase. >> if it doesn't happen you can use that $50,000 to pay for lost equipment, stolen? >> to pay for what in ? >> >> the equipment stolen. >> that would require an allocation. so essentially we are looking at every single so so sooner litary expense because we have had equipment, the alarm system in order to be able to protect our assets if we were to be broken in again. so all of that i have to find a way to fund. it's got to come out of materials

and supply unless i go and request a is surplus transfer. >> all right. any other questions from commissioners? >> any public comment on this item? >> >> seeing none, we are going to take a 10 -minute recess until by that clock at least because i think there are different clocks. 2:40. next item. item 8. action item review results of 2014 health service board performance evaluation and approve recommendations to the board. >> the meeting was on november 9th. how much you would like me to repeat here. there