that they've gotten the vaccine and what the vaccine was and the lot and all that stuff in case there's a recall problem or something that the department is now responsible for in terms of administration or something? >> we partner with kaiser who provides those flu shots and i'm not sure what they give. >> i can tell you. >> ok, good. >> sorry. >> they give you a piece of paper but they don't give the details information. >> it's more like what the flu, i don't think they give you the lot and batch number and if it's a recall it says a basic vaccine and who type of adverse reactions you may have. >> the fact they partner with a provider actually solves that problem. i think no member would want this with the lot and wait for f.d.a. announcements so that answers the questions and i think it's perfect. >> great. >> all right. >> so any other questions?

if not please. >> shavon o'conner will go over our customer service metrics for open enrollment. >> how are you? >> i'm very good, thank you. how are you? >> just fine. health services system and we have slides. i can't see them but i wrote a script. first i want to say i'm honored to be in service employees and retirees in the city of county of san francisco. it's a privilege to ensure they have benefits, this service orientation is the north star by which member services does everything. to that point, open enrollment 2017 for a plan year 2018 was exceptional in every regard. most notably as you can see we took 14% more calls, and then in 2016, we provided 13% more third

floor in-person consultations and 22% more off site consultations and mostly at the largest benefit fares you will see in a later slide. we provided 19.5 more first- floor in-person consultations and we received and processed 24% more applications than last year which was the largest year in the history of h.s.s. we did 24% more this year. we also had roughly 10% fewer staff hours and this year instead of having 20 days of active open enrollment we had 21 days which is part of the underlying foundation for the bigger numbers.

>> so 2017 member services benefited from the longer open enrollment in october so we had 5% fewer calls and because we process open enrollment in the beginning of november we allocated the staff almost exclusively to processing with a few people answering phones and it worked out really well and we processed in a timely fashion and we were only officer vis level by one second which i consider -- i pulled together a slide that shows you plan year 2015 over 2016 over 2017 so if you take the long view from 2015

to 2017 call volume is up by 32% in-person consultation is up by 54% and applications received is up 35% so the demand is rising at health service system. you can see the increased call volume hit the service level and speed of answer was over a minute which is not the best and it's an expected impact with this kind of call volume. the next slide. slide 6. i also did a day by day comparison of 2016 over 2017 we took 1400 more calls in 2017 than we did in 2016 part of it was due to the extra day of open enrollment in 2017 we took 962

calls. also, there was a higher call generated by the new plans and answering those calls took a little bit longer because we wanted to make sure that people understood what the v.s.p. premiere was and what trio was. the next slide. to me the real game-changeer this year was technology and enabled for open enrollment and the the past few years the staff ing is flat but this year the member services team was really apt and fluent in the electric content management system deployed at health service last year and instead of handleing application on paper by hand we scanned them all in to the e.c. m. and process them out of the e.c.m. and counted them and it allowed us -- it probably saved us at least 333

hours and that's a conservative estimate it's probably more like 400 to 500 hours which helped us close the delta between the staff hours we had last year and what we had this year and still gave us a little bit more. next slide. our in-person contacts have increased and our in-person contracts have been on the first flor because brian rodriguez who mitchell mentioned earlier came up with a idea of having these little mini scanners at each station so instead of xeroxing applications and gives them back to members for the records we scan the application in on the spot and it linked in to the system and we gave the original back to the members so it was not only efficient it was green because we probably on the first floor alone scanned five or six thousand applications and that's five or six thousand pieces of paper we didn't have to

replication -- replicate. the largest off site fairs were busyer. city hall was dish sent three staff members to the city hall off site benefits fair and they didn't get a break they were talking all daylong and people had tons of questions and it was similar and some of the fairs were flat and one of the p.u.c. fairs but the bigger fairs we had that are more around the civic center are much bigger this year and unified school district had a benefits at john owe owe owe -- we didn't get an accurate count because it was so many people that just like helped them as fast as can you. the next slide. the impact of o.e., the demand

of o.e. impacted the abandonment rate and when the abandonment rate goes up because people don't want to wait anymore the call volume goes up because they're going to have to call back and they have questions that need answers so for we were stretched thin because we were out across the city and our calls lasted a little bit longer delinquency and termination volume for october and november had what i consider to be year over year the normal fluctuation it's higher this year but i won't go through the slides unless you request. >> we have the material in front of us. thank you. >> i feel open enrollment is like christmas to me and it's my favorite time of year. it's also a very challenging time of year and this year was more so and it takes h.s.s. village to pull this off it takes everybody on our team to

finance teresa's team, marina's team to pull it will off and member services is more front and center and i consider everybody at h.s.s. to be a hero when we're doing a really good job, no one knows we're there when someone needs us we step forward to help out and it took many hours of evenings and start as every year during open enrollment to process 14,000 applications and so i want to recognize out of the hero some particular people who were there literally every night until 7:00 every saturday veteran's day and they are florence lamb, yak chow , marine chan, ruby diaz and jesse. our newest member. each one of these people every hour of open enrollment whether on straight time or overtime so thank you to them but i wanted to list every person on the members services team and that

was edited so thank you member services team i much appreciate it and i also really want to thank anthony who is blazing fast at work and he has a very complicated demanding job and already, he processed over a thousand open enrollment applications to help support the members services team and i want to acknowledge our noble leader who is the calm force in the storm and it's very helpful to have someone just kind of say, slow your roll, focus on forward and keep going so thank you. all said this year's open enrollment was epic and spectacular and i appreciate the opportunity for getting this experience. more importantly i really appreciate the team that i get to work with. thank you. >> thank you, are there questions from members of the board? >> i just have one question, you point out it was a wonderful report and i think also want to

add congratulations to the team for all the work and it was spectacular and as you alluded to, call abandonment escalates particularly members anxiety, anger, hostility, and so do you have some idea about how long a member was on the phone before they were abandoned. >> interview: i think the average time before people abandon was about 65 seconds, i can look that up and provide it to the board. >> it looks to me like if i were called i would go back to the slide and maybe you had an average answering time and i think it was -- >> it was 73 seconds which is a minute and 13 seconds. >> abandonment time is 65 is actually longer than the answer ing time i mean, again if there are ways where they look forward. >> i can look it up. >> just look forward to how you can message when the calls come

in and are there better times to call? not better days. avoid monday and friday but better times to call so members who are thinking about abandon ing their call because they just can't wait might have -- it would be left with a message how to maybe not be so angry and call at a better time? >> we did message that call volume was increased and it would -- we expected a longer hold time and i don't think that we put up messaging if you call first thing in the morning or between 4:00 and 5:00 and you have a better chance of getting through right away and one of the things about i.v. r.s and they're frustrating as well and so when people finally get through pushing the buttons and listening to the message they're already like grrr so i think everybody on the team knows that during open enrollment people are going to be frustrated and you just kind of have this practical mentality of like bring this person down and let

them know there's no problem that we can't fix and that is the truth there's hardly any problems that we can't solve one way or the other. they may take time but part of this thing is delivering that message because if someone escalated but they know fundamentally we'll get them where they need to be and they calm down pretty fast. there are a few people that don't and that's just their nature so as customer service professionals and benefits professionals we have to deal with that. >> the comments were addressed to maybe not be fixed at the moment and fixed for future and look at some of these metrics and thank you for the wonderful report. >> you are welcome. >> are there questions or comments? >> commission commission lin. >> thank you to all the staff that helped during open enrollment and for your leadership during this hard times when we didn't have our director so thank you for all your hard work.

>> thank you so much we appreciate it. >> any other comments from the board? well, on behalf of those who are silent and those who have spoken i want to say thank you directly and to the individual members of all the teams that you cited that what you have done here particularly this year with the new tools and new complexity that we the board and our decision-making delivered to you and you executed on it very well and an outstanding manner and we're profoundly in your debt and so are the members of the system so thank you. >> thank you so much. are there any click -- public comments? >> good afternoon, claire, i just wanted to add that retirees

were grateful for mitchell and the team that came out and we were also very greatful to the kaiser nurses who put up with a lot of chaos, we had people who received shots and they weren't prepared and we weren't prepared for the response we got and it increased a lot of these off site visits are very, very important and they're important for retirees because it's one of the few places where we gather as a group and i also spoke to some potential fire department retiree and i also speak to all the potential police department retirees and we talked to them about the fact that we do these clinics and that there's more special attention given to them during open enrollment and we can't thank the staff enough and we can't thank the leadership enough for all of what gets done for us during open enrollment and yes, it was that piece of

paper thank you supervisor, i was about to say that, so just a big thank you and we hope that there will be -- we're waiting for electronic complete electronic open enrollment everybody has been calling for that since before i retired but one of these days we'll get there. the scanning idea was brilliant, it saved a lot of trees and we want to reiterate that we as retirees are extremely grateful for the service we get, especially during open enrollment. >> thank you, any other public comment? >> we thank you the plans for being present as well. thank you. director griggs. >> i'm also just wanting to mention and i was going to do this at the beginning but, this

was a particular tough week for h.s.s. with the passing of mayor lee and a lot of us worked closely with him and his office so it impacted our office and our staff as well and i want i wanted to thank the employee assistance program, we were training messaging 5:30 that morning and her team had already prepared a communication to give to all the city on the employees and those department that's were more directly impacted like the mayor's office controller office and memorial and i was able to deliver that to our emergency department head meeting that morning and i delivered that message to the director of the d.h.r. and the mayor's office directly. >> thank you. >> do we provide e.a.p. to the

retirees and the message is this is available to them because the woman that trained me had been a city manager for a while and our department and she was quite upset. she knew mayor lee quite well and believed value over the decades. >> unfortunately we did not provide it as a retiree? >> >> i'd also have you take note of several articles that are contained in the director's report both for your education and he had they're not pinpoint ing any particular provider or health system but they are of interest of our working relationships with some of these entities so i would call that to your attention and also i believe buried in the report maybe it's coming up in the finance report and i'll be

corrected by you is a highlight we're working on r.f.p.s? >> working for something in particular? >> yes. >> well -- >> it was not in my report. >> it's not in your report, it must be elsewhere. >> so with that are there any other questions? any public comments on the director's report if not we'll move onto the next item. >> update on blue shield trio h. m.o. implication, janette moan blue shield of california. >> welcome. >> thank you. >> now that we have crossed the bridge together -- [laughter] we are now entering new territory and we expect to see you here frequently in the next month or two. >> i really appreciate you, i think we've crossed a bridge. >> ok.

>> um -- i'm janette and i'm with blue shield of california thank you for having me and i wanted to do a recap and some lessons learned from our open enrollment. we have a presentation that was submitted in advance and i want to let you know -- >> some of us here at our level, it's not public, but all of the screens are flickering now up here so we'll be an uninformed group for a while. >> there is goes. >> now it stopped now that i said something about it. now it's going again and don't worry as long as it's clear on the screen we'll proceed. so please. >> thank you. >> we have a presentation. >> thank you. >> thank you. >> i want to let you know in advance of going through this

presentation that the numbers here were losely based on ex pecked enrollment based on employee who enrolled so some of the numbers are soft and we indicated with special equal signs that they are i just wanted to review the objective of trio in the first place and number one, was to make an affordable high-quality health plan available to the h.s.s. members. the current access plus h.m.o. is very well run and it has a cost trajectory that could be perceived as non sustainable as a non kaiser alternative so the intent is to provide something to our members that is sustainably for our future. in addition to that the trio product leverages all the good work that h.s.s. and blue shield

have done with our deep partnerships bringing that to the next level. we want to create more competition in the work in the healthcare delivery system which will also lead to more affordable prices and also higher clinical outcomes for our patients. we intend to transform healthcare delivery and of course the bottom line is ensure high-quality care for everyone. part of the plan was to do a three-year rate guarantee for starters, trio is 10% lower than the access plus pricing and that trickles down to the members there's a trio 2019 rate cap of 5.9% and a 2020 rate cap of 8.5% the provider partners including dignity, ucff, are making investments in the product and financial investments as well as

operational investments. and in addition to that they're also investing in clinical innovations that are providing higher levels of care and hospice in patient counseling, et cetera. blue shield is invest north this trio offering as a broader bay area strategy to ensure high-quality cost effective healthcare plans in the bay area long run. and this pi chart i want to re illustrate of the 38,000 blue shield h.s.s. members, 62% were already using the trio product and when i say the product i mean the network, the same providers in the end we got 40% of those 62% to remain enrolled which actually would be great to be 62% but we learned a lot along the way there are provider nuances and it's a great start.

we wereen rolling auto members in to trio for january 1st and that again was based on their providers their primary care physicians being in the trio network as well. we had to reduce that number for auto enrollment by 3,000 members and those 3,000 members were because within brown and toll around who generously stepped up and creed to create a custom trio network just for s.s.f. it was discovered later that sutter objected to some of their primary care physicians being included in trio and those were the sutter foundation primary care physicians, if you think about it, healthcare delivery is

a business and sutter is not part of trio so our foundation p.c.p.s should not be part of trio either so we removed 2800 to 3,000 members who were originally thought to have been on the docket for auto enrollment and we took them off. because we did not want any disruptions to primary care physician relationships. in the end we auto enrolled 22,000 of which 14,500 remains. trio enrollment savings for 2018 alone is not 15 million it's actually 12.6 million based on 14,500 membersen rolling and my numbers are slightly different because again i updated it. since we found out the actual enrollment. is everyone following so far? and so it's 12.6 for 2018 and

2019 and 2020 should be more significant and the missed opportunity are those several thousand members who did not remain auto enrolled and who went back to access plus and they are constituted $2.7 million in savings. and that again. >> i wanted to just to talk about the imitation a little bit and the lessons learned. they had interesting nuances mentioned in the sutter primary case physicians which we responded to immediately and there was confusions about specialists who are also employed by sutter.

so that work is continuing and identifying those in determining whether they impact anyone and everyone enrolled as of january 1st or enrolled at any point in the plan is eligible for continuity of care so any treatments they have in progress they get to continue on with those providers for those treatments. so we're not concerned about patient disruption but it was a lesson that we learned along the way in creating this custom network for h.s.s. we got a lot of feedback from members being happy that now they had ak stows ucsf so that was something positive that we learned that we had not anticipated, even though we know ucsf is a world-renowned medical institution in the united states we didn't know our members knew that as well. we did have some sutter interference with the enrollment and there was a lot at stake for sutter and it was a lot of revenue to be lost should they

lose thousands of patients and not having them fill their hospitals and this is a normal reaction they did want to do a communication campaign and fortunately city and county of san francisco took a proactive approach and approached them directly through the city attorney office asked them if they were and then collaborateed in the communications and it above been ideal had they not done anything because they were confusing and created noise but they worked in h.s.s. as far as an outsideer could see. there was an additional robocall that did cause further confusion and the noise hit the target, there was definitely confusion and reaction to the letters as well as the robo calling and dis enrollment during this period

from the trio plan. at the same time, we need to recognize that sutter is a partner as well, just not in the trio product at this time and we appreciate what they provide on the access plus. we do have some lessons around communications and our letters really predominantly focused on primary care physicians and they could have focused for the hill and all the other trio providers , it was going to be the same. we really focused on p.c.p. because that was the logic to develop the letter list so that's a lesson learned for next year. as a result of that, not identifying that we did lose 800 members that there's no reason that they would be in access plus because there's no difference between what access plus and trio for them and as far as network the only difference is that they have a

look contribution out of the paycheck but they elected access plus still so that's an opportunity for the future and it would have been nice to have better control over sutter it was amazing control over sutter but the city was able to perform and perhaps we should talk to them earlier next year. we need to better understand in the future the complex relationships our provider partners have with other partners and that could -- there could be more that we haven't thought of so i just wanted to be honest about that and we don't think there is but we didn't think these were coming up. i just want to be honest and transparent and where we would like to continue this to be very flexible and collaborative and working with the provider partners and h.s.s. in the event something ups and another observation is do we do auto

enrollment again for those people for which the only difference would be a lower contribution so it's just a thought. >> it's a question that they wait and explore all kinds of autoen roll and not discovered and whether we want to engage in that process again it's really i think something that prolonged discussion and i would expect there would be some necessitys to bring forward if we decide to mh370 of this that direction and some engagement of this board before we make the final decision and. >> i wasn't look forgeron a decision. >> thank you. >> does anyone have any questions? >> commission commission -- sheehy. >> i did find it confusion and i know a lot and i think identifying a specialist problem i still haven't figured that out

and the web sites are not very good on a -- i wasn't clear whether my primary care physician was in the network or not and i was one of those who was delighted because i've had trouble, i was at ucsf before here and she's been my doctor for 20 plus years and so at one point i was paying her out of pocket because when you create those relationships you want to keep them but so i think really a lot more clarity and a lot more ability to identify whether the various providers if you are like me and you have complex heath needs that would be helpful. if you are thinking about -- the ucsf fees was under sold and a lot of people, i know myself i was excited to be able to really

be able to have my doctor and uc sf access so you might start earlier and work with ucsf talking about that relationship and again i have a buy as because i worked at ucsf but i think a lot of people in town recognize the excellence of that institution and so that is the main thing. i just -- these things, i mean i know a lot, i've been doing this for years and i really found it -- a couple of times i was completely confused and almost slipped back because i thought i lost my primary care physician because the information wasn't able to be accessed and like even when you go to -- soy went to get my flu shot as people have identified and also to do the enrollment and talk about trio and it wasn't really easy to get the information like one person looked on the screen and said my doctor was not in trio

and another person looked on their screen and said that my doctor was in trio and so that level of confusion -- >> i didn't talk -- you are reminding me. we had another -- there were lots of nuances i didn't mention but i recall there was a lot of provider confusion at the open enrollment meetings and so brown and toll around again, they customize this network and protocols just for h.s.s. and they had representatives at the open enrollment meetings who didn't fully understand it and we did hear about that because fortunately they are right next door to each other so we mitigate it but it did impact some people so that was a huge lesson to learn as well. thank you. >> other comments from commissioners? >> yeah, from members i very much exactly what is said. and especially there was a

meeting over here at the hotel, there were two meetings there i believe and people i know and the members said they were more confused after they left than when they got there because they did get a different story from brown and tollhappened than they did with blue shield and i don't like the auto enrollment at all and i wonder who is going to take the burden of putting these people back in when they go to their doctors and find they can't access them. will blue shield be doing that work or will it all be on you? >> so, after we end open enrollment and we send out a confirmation letters changes permitted are administrative changes and administrative errors? people can appeal anything and we do handle those appeals in open enrollment and we always get a lot of appeals after open enrollment so there's an appeal process if someone wants to move

back in to access. the reasons that we would do it outside of appeal for some reason we demonstrated an address issue, a mailing address issue because that was one of our key communication is the mailing, a second one would be an issue about continuity of care if someone is in the middle of treatment. other than that they would need to send an appeal and it would be reviewed by h.s.s. first and according to our member rules after that if we up hold the denial they can appeal to the board. >> what was the last thing you said director griggs? >> the first level appeal is handled by h.s.s. and if we up hold the denial, our own denial then the member can request to appeal to the board at the second level appeal? >> all right. >> there shouldn't be a lot of

communication putting people back to the access plus because a lot of members did not opt for this and they find this out and otherwise the board here is going to be inundated with appeals -- there was an appeal letter already here from a member who said it appears compulsory as i did not effect to make the change nor was it clear i would need to check the blue shield access so that the enrollment wasn't clear and i can't imagine how time-consuming it's going to be for staff and everyone if you would have to take these back to the board and i mean, if these are honest mistakes, and they're not gaming the system, i just don't think it should put a lot of extra work on anybody and it should just happen because, i had two other people that were automatically enrolled and each

one of them, their husbands and children had ten different providers and i don't know how you can -- plus infusions and they were automatically put in to this trio also so i mean, it seems to me like it's going to be a lot of this issue. >> right. as far as the provider -- 5,000 have no change and this is more than 5,000 so half of them have no change at all and the other half would be the brown and toll en and they have a change in hospitals so for that reason there was a robust marketing and education campaign around that including multiple phone calls

to every member and of course we had a lot of members call us and custom mailedings whether they're enrollment resulted in a network hospital change or not and then informational sessions as well as open enrollment meetings so there were significant attempts to and that doesn't again to talk about the electronic communications so there were significant attempts to educate all members on what the changes meant. as far as infusions, transfusion s, now they're going to go for an infusion and they won't accept you, now you have this date set up and that's a

big deal. >> yeah, that is if people are in the midst of treatment they would continue on with those same providers for that treatment. >> commissioner. >> i mean i was just having been trained at ucsf and attempted to practice there early in my career and then having my career in fee for service practice with myriad contracts my medical group had multiple contracts with every provider in the city and then half of the time at kaiser i think i have some experience with this and i'm saying the complexity overwhelming, i mean i know my own former colleagues what kind of contracts they have with sub specialists and it's just amazing to me that this could be navigateed easily or quickly and i'm surprised that any sutter foundation primary care provider had any contracts because they

have because they have control if they're not foundation documents, that said, the percentage of what you call missed opportunities switched backout and speaks the fact that members were alerted to what was happening and had the had sometimes people see the glass as 10% full and they sent out letters further pulled members what was happening and should have raised some red flags for those individuals so it seems to me that i had a major concern about auto enrollment and i think that actually the result was encouraging despite some individual experiences and really i do think the sub specialist issue was predictable and we talked about it here and hopefully you can navigate through some of that.

it's always difficult. >> i like your perspective. >> if i could add anything, i'm glad you brought up sutter's robocalls and that letter, i spoke about it in the report. the one issue that we definitely made sutter agree on is the only people that would get this communication are patients of the sutter medical foundation so weren't auto enrolled to begin with. the 10% that we didn't agree with was one word in there that they were giving members direction to select access plus and so when that -- i think what went wrong is people had that letter and came to the office and talked to their co-workers and that word the mouth and the word spread, e-mails spread but the commercial communication

between sutter, as far as my knowledge, because i agreed on with sutter to the sutter medical foundation patients and we didn't autoen roll those. >> i was consulted as part of that process and pushed it in the letter as well. so, whether we do this like process like this next year or not, to me it's a subject that needs to engage us early and so that we can get some sensing about the results of this year because we're right now just doing it and we've made the journey across the bridge and we have not traveled further so the consequence is ahead of us so thank you for your report and are there any other comments or observations from the board? we'll expect follow on reports as we go forward. is there public comment on this

item? no public comment we'll go to the action item 6. >> clerk: item 6, action item. presentation of audited financial statements for fiscal year 2016-2017 and 2016 and kpmg >> director levin good afternoon >> good afternoon, pamela levin financial officer, we had to make sure everything was set right. >> who do you have in your company? >> we have a presentation. >> i want to first turn the

presentation over to the kpmg auditor, this is gi walee and we worked with them for several years and she'll talk about the audit process and i will quickly give a overview of the financial statement. >> you might find it for someone to sit in the chair and assist you so you can maintain eye contact with us here. >> ok, yeah. >> thank you. >> ok. >> good afternoon, everyone. my name is key wa lee and i'm an auto manager for kpmg so i'm here to present the financial statement auto results for the fiscal year-ending june 30th, 2017. so i have in front of us the presentation so let's go down the first slide. the most important slide is the

auto results and you can see that there is a result of our audit and there are no uncorrected or corrected misstatements and we've issued a unqualified opinion with a clean opinion and there are no issues and control noted during our ought i had. >> i'm going to add emphasis to this. >> it's always an audit speak and i just wanted to be on the record that you found nothing outside of the audit expanders that would cause a question about how the funds been disbursed, managed or controlled during the course of this year is that not correct? >> that is correct. there's nothing that we found. that is deemed to be report able to the board. >> thank you. >> ok. >> ok and going through the next couple of slides these are required communications that

presenting to the board so the first one called the management over of controls so this is a re but the able and this is the fact that across all entities there's some risks associated with the management override of controls so it's part of our audit procedures and we are required to have procedures in place to evaluate from the control of substantive area if there's anything that deems to be a warrant that there is control and as a result you can see on the presentation that there's nothing that came about that everything resulted from a procedures that warrant any type of communications to the board. ok, moving onto the next slide, this is also a, what we call a significant risk and this is basically just that we as auditors have to do more diligence to make sure that the

significant risk has been mitigate. this is related to the blue claims reserve. it is a significant risk because it's an estimate with judgment involved coming up with a liability for the june 30th and from our procedures, we have from a control and substantive area we have looked at their liability with involved our own kpmg action so look at the methodology and what goes in to the liability and nothing -- there were no exceptions noted at the end of the day. all right, moving on next slide, the significant account practice s so it's been very consistent year over year and these are actually presented in the financial statements under note 2 where management has actually reported like all of their significant counter

policies and as a result of our task work, they are in accordance with general accepted counter principles and consistent with our practices. ok. onto the next slide, these are the required communications and other matters that we as auditor s are required to report so no concerns from management and i know there was a change in some management but nothing that can warrant any problems. management has been helpful and co-operative so you can see on this wonder wonderful slide there's nothing that needed to be worrisome or any concerns at this point. all right, the next couple of slides very worry but it's basically to kind of communicate what management is responsible for and so management's responsibility for the presentation and preparing the financial statements and making sure that there are controls in

place when they're preparing these financials. and then the next slide is just kind of more responsibilities making sure that the health service board your responsible really for the oversight of the controls over financial reports and that is the proper tone at the top and because we do the audit financials it doesn't release the management or the board of the responsibilities when prepared these financial statements. last couple slides are our kpmg responsibilities so better responsible for doing, planning and performing the audit, conducting our audits in accordance with professional standards as well as forming and expressing opinions over the financials. and a communicating to management and the board of any significance issues and concerns

very last page this is also just responsibilities over over the m dna and it's something that we don't issue opinion on but we do perform limited procedures and it is a required supplement in addition to the financial statements. >> and mdna is -- >> the management discussion and analysis. >> thank you. >> yes. and that is all for my presentation. >> were you the partner that led the process a year ago. >> i was the manager. >> did you find the same high degree of professionalism and cooperation you found the year before present this year? >> yes, yes, management consistently performed really well and very co-operative. >> all right. thank you. i just wanted that to be on the record as well. >> thank you. >> just one quick question. >> yes.

>> some adjustments that were passed from kpmg? >> no pass auto adjustments. >> thank you. >> and now i will give a high- level overview of the financial statements there's a lot of detail there's provided and both in the notes at the beginning and the management discussions so i will just give a real quick high level because i know we have a tight time line so the trust began 2016-2017 with a balance of $68.6 million in net assets and end of the year with a balance of $72.5 million. so that's a $3.9 million increase and the primary reasons for that is a $9.2 million decrease in city health plan net position as you know, we continue to subsidize the rates

in order to bring them down and make them affordable. and then there's $13.1 million increase in the net position that $6.9 million for the blue shield and $3.7 million for the dental plans and $.8 million for the healthcare sustain ability fund as we know as the $3 and .5 for flexible spending and 1.2 as the interest income performance penalty and forfeitures. there is a outline in the presentations towards the back that item eyess -- for the performance guarantees and penalties and forfeitures and there are obligations as we've discussed and reserves against

the net assets and they are $45.3 million against the $72.5 million and there's a explanation in the report but essentially it's $22 million in contingency reserve, $19 million in stabilization reserves, $3 million for the healthcare sustain ability fund and as i mentioned, there's $1.2 million for adoption benefits basically it's -- i'm looking at the timeframe from 2008 to 2021 and as you know we've been funding the adoption benefit through the performance guarantees. and i provided some other information in the report for -- and i the first thing is at the

end of calender year 2016 there was a combined total of $14.1 million in the stabilization reserves for the city plan and delta dental. we have used $7.7 million of that for 2018 rates and what is available for the future years is $6.4 million and that is in delta dental so essentially we have a decision by the board to buy down rates using the complete amount in the stabilization reserve. there's also a comparison of the investment earnings performance guarantees and forfeitures between the two years and so there was a total decrease there

the total decreased from 1.18 million in 15-16 to 1.16 in 16 and 17 and that was a lot of increases and a few decrease so the increase 113,000 and forfeitures 263,000 and while the performance guarantees decreased 396,000 and that reason of that decrease is not because we're not collecting performance guarantees and it's not due to inadequate controls that we have in our contracts, we got, in 15-16 we received two years of performance guarantees and 16-17 we received one year so it's very strange comparison so i wouldn't be concerned about

that. the next steps are financial statements were issued in october and we have hard copies at the office, soft copies are available online and then the comprehensive annual financial report that contains us as a portion for the city-wide report is due out some time in december and as we expected as i expected the going between the financial systems has resulted in some additional work that needs to be done by the controllers' office. that ends my -- >> are there questions regarding the audit from cfo or the financial statements? any questions?

>> i would like to recognize my staff who worked very hard on this. we have -- uri, he is our guru in the finance areas working with the audits and elizabeth salazar who is back in the office continuing to work providing a lot of work in terms of pulling up the financial information, it's a team effort between my whole team and we're to get this done and maintain the proper controls. >> again to you and to your team on behalf of the board i want to express my great appreciation for the consistency, thoroughness and professionalism you brought to your work this year and it's continuation of what you've been doing in the past. we thank you for that.

>> thank you. is there any public comment on the audit or financial reporting ? if not we'll now move to our next item. >> clerk: item 7, discussion item, hss financial reporting as of september 30th, 2017. pamela levin. >> chief financial officer health service system. the report that is presented to you today goes through the trust fund and the general fund through september 30th, and then does a projection through june 30th, 2018. again, any projection that is done in for throw months and annualizeing it has the opportunity of having large swings during the year we do our

best for little data, the trust balance at the end of june 30th, 2017, going in to this year, it was 72.5 million based on the activity through september 2017, the fund balance is projected to be at 67.3 million as of june 30th, 2018. this 5.2 projected decrease in the trust is primarily caused by subsidizeing the rates for city plan and unfavorable experience for most city plan and blue shield flex, the use of the healthcare sustain ability fund to fund the budget of expenditures and the use of performance guarantees to fund the adoption sur gough see assistance plan and pharmacy rebates for blue shield and