monitors? >> supervisor yee. >> so a couple of questions here. the 674 million represented here -- is that only city funding or does it include state and federal flow throughs? just like human services -- they get a lot of money from the state and the fed and it becomes city contracts? >> exactly. so to the extent that money flows into the state coffers from the state or the fed we contract with an organization that will include that state and federal money. to the extent though you have a number of examples where a non-profit organization might hold a direct contract with the state itself or the federal government itself. that wouldn't be here, so to the extent of the state and federal

money is flowing through the city it is here. to the extent it's flowing directly to the organization, it wouldn't be. >> so is it possible -- the increase that we're seeing year to year do you know whether the increase is coming from the flow through money from the state and fed, or is it actually real city money? >> i couldn't tell you. it's not one of the things we looked at up to this point but we certainly could. >> i think it's important to look at because otherwise we're finding out it's indeed the flow through money then we're kidding ourselves and saying we're supporting non-profits in a bigger way through the city money. >> i agree. it's something certainly we can look at follow up to this. in a number of cases the money flowing into the city the city has a choice how we want to spend it, so even with those funds we still do have discretion in many cases

whether we're using non-profit providers, city providers or making other choices but i dond your point. >> so you mentioned that you didn't look in details in terms of what this increase whether -- actually. >> >> cost of living or services and the other question is a subset of that is to -- if most -- let's say even -- that's probably not true. how are we looking at the different contracts? my guess -- maybe i am wrong, is that certain contracts -- in particular i would say like ucsf would get big chunks of cola and the small ones will get nothing. i don't

know if it's true but i think we need to challenge that. >> this is certainly aggregate level information. beneath this hood there is a hot going on i am sure. the review for today is summary level. i know during the time we have seen larger increases in the uc contract for example as the regular base as a whole. i think you will see different funding things by organizations by departments during this period. the only global thing applied to the base is are the three colas provided by the mayor and the board in the budget process over the last three cycles and those three together account for a five account cola for the entire base except for ucsf which has negotiated separate contracts with public health. >> are you finished? >> i can hit a couple of other points if it's helpful.

>> yes, please continue. >> i thought it would be helpful -- i know you realize this supervisors but some of the things that drive costs for non-profit organizations just to mention as examples and of course each organization feels thee pressures differently. you can many in the crowd that can speak to more experience and more compelling than i can and cost of living rises just like for the city itself and employment costs and benefits cost increase over time and wages to retain workers and health and retirement costs increase faster than the rate of inflation and in recent years the minimum wage that was passed on this last november's ballot has direct and indirect pressures on specific non-profits, so this indirectly the wage compaction it may

create within a given organization, and then of course you have changes in the regulatory environment in which we all operate so changes in state and federal law for example that might change and staffing ratio requirements in the health program but all things that affect employee and benefit costs as examples and the non salary side on the ledger, facility rental or ownership cost are a significant issue in the city at the moment. the city faces those pressures as do non-profit organizations and all other supplies of contract and non salary cost and in terms of the city's subsidy to the programs and the revenue streams going into a fit fit organization matter as well to your point supervisor yee so direct of allocation of state or federal revenue to the programs impact the amount of money required from the city to operate the program and we have seen in the early part of this

recent period reductions in state and federal money available to the programs as to the city itself and obviously fundraising and philanthropy and this results in request by the city itself. they're all felt differently in differences -- organizations. >> i have another question. >> supervisor yee. >> often we think of nonprofit will understand it they provide critical services in terms of safety net and other services, and in some places it could be just the government doing this, and a lesser role for the non-profit. have you looked at

in terp terms of the cost savings when non-profits do this work versus not contracting out this type of work? >> i haven't explicitly in a number -- i don't think our office has in a number of years but generally speaking a non-profit organization is going to operate at a lower cost than the city itself would provide such services. >> yeah, i wanted to point that out because as we move forward with our thinking we need to look at things from that lens that what do you mean we're spending more money? we're spending more money but we're saving money. >> to elaborate further on the point and the cost difference between a city program and a non-profit organization some of it is improved flexibility and being more arm's length from the city and a lot is going to be felt in terms of just different wage and benefit scales between

city employees and non-profit employees. that's just true. so a couple of questions to consider as we move forward on this. one, how do you and the mayor balance the tension between funding organizational infrastructure and inflationary costs and demands for new services? the analogy here like physical infrastructure. we talk about neglecting to maintain roads and fit pot holes while focusing building new and the same thing is city departments and non-profit organizations and there is the tendency wanting to expand services but not looking at the underlying costs and pressures and it's something we all feel during the budget cycle. when do we consider inflationary impacts and during the process and should it happen

during the rfp process or the contracting process between the organization and the department or should it be born during the budget process and discussed during that process? and i think there tr pros and cons to both of those approaches. what are the drawbacks to seeking a global answer and the cost-of-doing business for this broad diverse base versus acknowledging more variance in the group in terms of services and pressures they face? is there means of addressing this that can minimize city costs? and then lastly which i know supervisor mar is really a key part of your focus here is are there means to increase predictability and certainty for providers and the workers and the city itself? and i know some of the ideas on the list for discussion here might include contract mechanisms and

terms. since i was at last involved in this discussion we now as a city we now adopt a five year financial plan for a city and a two year budget. do those longer range financial tools increase ability to increase the predictability for the city and the provider network? and are there others? by no means an exhaustive presentation today but some background and some questions we're considering and i am happy to answer any questions. >> thank you and through chair farrell we have a number of speaker cards but i know may 1 our minimum wage goes way up in san francisco. oakland has the highest in the nation right now and i think we jump may 1 to join oakland or as close to the highest in the nation but i know that creates some challenges for non-profits and others in the city. could you talk about how

non-profit contracts are adjusted for -- going to be adjusted for the minimum wage and how -- i know some of the executive directors are here to talk about the wage compression you talked about as well as a result of the increase in the minimum wage, and then once the minimum wage hit hitss $15 an hour and 2018? >> as i recall. >> and increase by cpi yearly after that. how can the city adjust to that with the non-profit sector? >> those are choices not made yet by the city so the mayor and the board will grapple with. i think kate howard is the best to speak to your question supervisor. >> thank you supervisor mar. through the chair i am the mayor's budget director. as you recall we set aside money in the budget last year to address the impactings of the non-profits

of the minimum wage increase that we hoped would be passed by the voters. through the five year financial planing we made estimates of the cost of that impact going forward. our current estimates are the direct costs to the city as we rise to $15 an hour or about $10 million a year and we set that money aside and we will certainly submit a budget that includes that. on the issue of wage compression or the ripple effect as some are calling for you know i think this is a topic that i don't think we fully gotten our arms around and i think there is more work to do and discussed it with folks in the non-profit community and will continue to do that. >> thank you and then one other question is on the parity between non-profit or the lack

of parity between non-profit contractors and for profit contractors according to our -- let me try to remember, our minimum compensation ordinance. could you talk about how for profit contractors are able to get annual multi-year increases in the contracts with the city? >> there's nothing in the charter that prohibits either -- or in practice that prohibits a non-profit or for profit from entering into a multi-year contract with the city that specifies anticipated funding in a given fiscal year. the charter of course creates a limitation though on the effect of that, that multi-year contract, so the contracts can only be appropriated one year at a time and each contract has a non appropriation clause should the funds not be appropriated for the multi-year contract. what we will see on a typical for profit or private sector bid construction project for

example would be a number of bidders would submit bids that would include the expected costs over the duration of the construction project and a low bid would win. the one that submits the lowest cost wins. the practice on the non-profit side has been somewhat different. generally speaking mayors and boards -- rcht simply this -- not simply this mayor and board but recent mayors and boards preferred to make a global decision what cola you're going to provide to this base. that's not a global rule so there is nuisance how departments manage this and we have departments here today that can speak to it but generally speaking in recent years the desire is make a single decision and apply it to the full base and you're reserving that right annually and doing that annually. ways of entering into the multi-year contracts could

be part of the work we're talking about. >> in the future maybe we can talk about that subject and the parity between non-profits and for profit contractors. maybe i will leave it at that if we have no other comment dprs from -- and colleagues and i will open it up for peculiar. >> that sound. >> >> public comment. >> that sounds good. >> i will limit it two minute and i will begin to call the speakers. [calling speaker names] >> mr. fields. >> supervisor farrell, supervisors, i am steve fields. am here representing the human service network as one of the

co-chairs. i want to thank supervisor avalos and supervisor mar sponsoring this hearing and thank the unanimous support from the board in this past budget cycle for the fact that we have to finally address the dysfunctionality in the way that we as a city and county deal with the funding stability for what is becoming the most important vulnerable population providing sector for the city which is the non-profit service systems so i am very optimistic and the think the membership of the human services network is as well that we're moving toward a really monumental shift in deciding how we go forward recognizing that we can no longer expect to resolve these issues of non-profit service funding, the salaries our workers deserve through the insanity of the june add back

process and if no other reason is going to hold us all together not going through the june 18, 24 hour days on this should hold us as we look for solutions. i would like to present a proposal to the board and i think the questions that supervisor yee and mar have asked under scored this and even clearly the points that ben made about this which is we would like to see a study, a group convened that will look at resolving all these complex questions with a guarantee two year cost-of-doing business increase agreed upon with the mayor and the board of supervisors for this current two year budget cycle for each year, 15, 16 and 16-17 and we can study and come back and appropriate period of time with recommendations to resolve and explore all these really important questions that have not yet been resolved, so thank

you for your support. we look forward to finally resolving this. thank you. >> thank you mr. fields. next speaker. >> i'm going to move over here so i can monitor the time better. i am peter mace iac and a representative with seiu 10 to one and i agree with everything that steve fields says. there is nothing more frustrating to be here in june sort of at the 11th hour not having no idea what's going to happen as far as funding goes. workers not knowing if they're getting a raise. non-profits not knowing if they have funding to deal with increases in health care and rent and other things. it's a very chaotic situation and it's one i think we can all agree that we shouldn't repeat and at the supplemental hearing that we had a couple of months ago i think i heard unanimous support for seriously addressing this permanent fix and it's to

see we're having a hearing now and moving towards that. one thing there are a lot of nuisances and complications with this, but one thing that we can't do is neglect non-profit workers while we address this long-term fix. i do think that we may need to study and put together a working group to look into this in a more detailed way how we do something permanently but we need to establish a cost of living increase bridge that we can walk across while we get to this permanent fix that we will be discussing. non-profit workers -- if we're going to hear acknowledge this situation is real and going on we can acknowledge it in the future but not address it in this budget year and the next budget year and i will say that the non-profit workers every year are doing amazing work with less and less money in their pockets

and less money in the agency. i talked to non-profit workers. i never heard them say the requirements who we serve is going down because we didn't get an increase. the requirements stay the same and go down for the requirements and we need to provide those services. >> thank you. i will call some more names. [calling speaker names] mr. o saki. >> good afternoon supervisors. i'm here as co-chair of the api council as well as a member of the human service network. i am very pleased to be having this conversation not just about a conone time fixz but a solution to the cost that non-profits have beening. supervisor mar summarized this issue succinctly and if the city values and

wants these services we have to be willing to pay for what they cost. now the api council submitted to the mayor a cost of doing business proposal for 5% for the coming year and addressed prior years of getting zero or funding decreases as well as to address the impacts that have been mentioned today, the rising minimum wage, not just in terms of the direct costs but the indirect costs on employees in the organizations and i want to stress this point and that as pointed out earlier many of the non-profits look very differently and our structured differently and funded differently. my organization is funded through a blend of city funding but federal and state funding so i think it's very important to take that into account that a one size fits all solution doesn't necessarily work for everybody that we have to be careful about strings that we

attach to this. i know there has been mentions of performance measures and direct pathways to employees and it's important to keep in mind this issue has many levels. it's very complex and i urge us to take the time to review it carefully and come up with the best solutions so we can provide the best services to those that need it in san francisco. >> thank you. >> hi. i am rebecca and intensive case manager at hyde street community services and the out patient clinic in the central city. i know that one of the focuses is creating safety and we're talking today about hiring police. we're talking about a new jail, right, and i believe that we don't need those things to be a safe city. i think what we need is make sure we're taking care of our workers and one way to do that is make sure that our non-profits are really taken care of. my agency is having a

hard time staying open, right, and our salaries radio so much less than people. >> >> doing similar work in other arenas and we have to address that if we're going to make our city safer. we have outcome measures that show the longer the clients work with us the more likely they will be housed and connected to vocational programs and primary care and the outcome measures are there. we're doing good work but it's harder to do that work. we can't even afford to live here even more. even 3% doesn't account for the cost of living increases happening so if we can actually start to build some measures that make this work sustainable then i think we will see a safer city. i think we will city -- like san francisco be this thing that we want it to be, and so i think that's something to really think about. i think always we should talk about like mobile crisis is

having -- they should be the ones that are responding. we should have non-profit workers and case managers. like we should have enough people out there to respond to mental health emergencies and not rely on the hospitals and the police and jails and things like that so i hope you guys can create like a really beautiful and sustainable plan for non-profits. thank you. >> thank you. next speaker. >> good afternoon supervisors. my name is jane and i represent the non-profit sector for opeiu local three and i wanted to address directly something that i feel like we talk around a lot when we have these conversations about non-profit funding, and i want to ask you to see the services provided by these community based agencies and these non-profit workers as services on par with the services provided by the

workers who do wonderful work and are employees of the city of san francisco. the non-profit community based agencies are funded by the city and rightly so because they are community based. every survey ever done will tell you that services are accessed more frequently and more effectively and have better long-term outcomes when they're located and in and culturally competent within the community and all of you know you represent different populations, very different areas of the city and the folks in your district want services that speak to their needs and that's what our non-profit workers do, so the city needs to see those folks as important as the city employees, their work as effective and as professional, so we're asking you to provide some leadership

here and help us get to a long-term plan. i'm in agreement with folks who spoke about how complicated that plan might be. the need for that, the need for something going forward, so we're asking you to provide that leadership today, and to support and recognize the work of our non-profit folks. thank you very much. >> thank you. [applause] a couple more speakers. [calling speaker names] ms. adams. >> thank you. cheryl adams with larkin street and co-chair of the human services network. i want to echo the comments that steve and john made and we greatly appreciate the hearing today and the opportunity to really talk about the complicated issues that face all of us in tries to address

having a good cost of doing business increase or methodology for determining out of the budget process what that should be to sustain a healthy non-profit community that is providing critical services to vulnerable populations in san francisco. we are a diverse group of non-profit providers that provide an array of services and i think having both some mechanism for looking at how best to do that over time while addressing the immediate need for this budget upcoming year and the year following it to have some stability for the non-profit sector, so to have a cost-of-doing business increase -- i will go with john and 5% and api and have a process that actually addressing all of the issues that come up when we try to have this dialogue and i support and appreciate this opportunity and look forward to continued dialogue. thank you. >> thank you. next speaker.

>> good afternoon supervisors. i am jonathan vernic and the executive director of baker places. i want to thank you again for having this hearing this afternoon and better than june 20 something and at that point normally this room is filled with people and there is a human cry and decisions are made, not really in the light of day but in the rush of too many need and too little time. i have worked for baker for over 30 years and baker places has been around for 50 years and we like many other organizations represented here have tried as best we can to respond to the changing needs of san francisco and to the many social and cultural crises that have occurred over time whether that was the aids epidemic or the substance abuse crisis over

time, the changing face of mental illness and a variety of other things and we come up with unique and creative and innovative programs that we take great pride in. for 10 years myself and my colleagues came every year simply to try to survive the year literally, to try to save programs, and what ben's graph doesn't really capture by drawing a straight line is the sense of uncertainty during all of those years as to whether or not specific programs would even survive, and now that we've gotten back to having a conversation about these things we encounter times when people look at us and say -- supervisors will look and say "you know we gave you something last year." there needs a permanent fix, solution to the ongoing problem. that process doesn't work. these are serious long-term issues and the

workers who provide the service to san francisco need to have a permanent solution to these problems. thank you for your time. >> thank you. next speaker. >> good afternoon. i am with hamilton family center. i wanted to start out by sharing the waiting list for family homeless shelter hit a high mark of 287 families a few years ago and now down to 137 families and that is not due to a reduction in demand but due to hard work at our family center, catholic charities and other non-profits in the city and ts embarrassing frankly that we're not able to pay these workers a fair wage that allows them to stay in the city that they have given so much to. a couple of facts i. ed to point out. >> >> yee you asked about the cost savings