to keep the city safe and healthy. but that is going to change things and it's going to change what our priorities are. and other aspects of this is that the ongoing -- although there are incredit mental changes to it -- incremental changes to it, and the ongoing restrictions on how we will live will affect the city now that we have a public health crisis. and then lastly prioritizing the vulnerable populations and equity in what we do. and that is, of course, perfectly aligned with our mission and our approach pre-covid and during the covid response. next slide. so the instructions from the mayor's office are to make

proposals that would reduce our general fund support by 10% for the first year of the two-year budget. and then that grows to 15% in the second year plus an additional 5% contingency. and effectively at 10% in the first year and another 10% for a total of 20% in the second year. so that is a big budget target. it is significant portion of our general fund support. and this is also an instruction that is relative to -- it's almost like we're going to start again fresh on the budget. so in our previous proposal that went to the commission in february, we had balanced our budget around some initiatives that we prioritized as a department. but we will have to again to re-evaluate and rebalance around those to the extent that we're

able to go firs forward with the initiatives in the new budget environment. next slide. so the timelines -- the reduction plans are due to the mayor's budget office by june 12, 2020. so it's a very fast turnaround and that is driven by what i described before, the fact that we've got a short turnaround time and we're very late in the budget process where we've had -- i don't think that we have -- or i have never been through a time where we had such a dramatic and unexpected change in the financial picture this late in the budget season. and so this is going to require us to do some fast planning and to turn around the ideas to the mayor's office by mid-june. and we've got to talk with -- internally and with you,

commissioners, about what this looks like in terms of how we interact with the commission on our budget proposals. but we do want to make sure that we figure out how we're going to keep you mostly involved and aligned with ideas and decisionmaking that goes into this process. next slide, please. so then just a little bit further out on timelines so, again, here we are may 19th, we've had a lot of news as i have described in the last week on the local and state budget. and then we will be submitting our balancing plans in june. the mayor's office will introduce an interim budget as i said to buy us two months of extra time to plan. and then submit on august 1st, the balanced budget to supervisors and budget and finance hearings in progress and then in september, just the

budget will go out for approval and the mayor's signature. and so everything is pushed out about two months. so i'll just say lastly that we -- as i had mentioned that literally less than 24 hours into -- into getting this news and starting to digest it and we've known that some of this is coming, so we have been doing some thinking on it. our budget targets, we're waiting for the exact amount, but the ballpark estimate -- each 5%, well, 10% is about $70 million to $75 million. so that would be our first year. and then growing beyond that into the second year. and we'll have exact figures on those once we've gotten the exact targets from the mayor's office. so we have been working on it, but this is going to be a

challenge for the department of public health. and for the city. and it is a large -- it is a large deficit. a large one compared to even some of the prior recessionary periods and there will be some challenging decisions that we have to make. we are committed to making sure that we do what we need to to keep the city safe in terms of the covid response as we go into this budget and there's more to come from us. so i'm happy to answer the question to the extent that i can. >> clerk: commissioners, before we go on, is it okay to see if we have public comment on this item? >> president bernal: okay. >> your conference is in question-and-answer mode. press 1, and then 0. >> clerk: do we have any callers on the line? are there callers?

any comments for this item? oh, no comments. great. so, commissioners, go on to questions. i'm sorry, greg, that you were on the screen the whole time. so could you raise your hand, commissioners. so commissioner barel in can see if you have any questions. >> i cannot see folks so they could just speak up. >> clerk: sure. does anyone have questions? >> oh, this is comigde commissir chow. could i ask commissioner wagner would have any idea -- it sounds like the interim budget is just sort of a budget for appropriation, but that the real budget that you're talking about us all trying to have input into would be the one that goes into the august period, is that right? >> that is correct. as a matter of law and process, the charter has a june 1st

deadline in it. and so june 1st there's a placeholder budget which is essentially continuing the current year's budget. and so that it meets that charter requirement for the timing, but then it will buy two months of additional time to submit a budget that has kind of the substantive response to this covid-induced economic situation. so you're right, dr. chow, it will be a place holder and the august 1 budget that we're shooting for to make new decisions and address the new economic situation. >> commissioner chow: so do we have an approximate $2 billion budget. and i don't remember the exact fund -- let me put it the other

way, nearly $2 billion shortfall we're really talking about 20% of that being part of our cut in general funds. woulwhat would that look like to give the commissioners an overview and how you would, as you said and i appreciate the offer there, to be part of the dialogue about this. but what does this actually mean in terms of dollars that we look like we're cutting? i mean, 20% of what? >> yeah, okay, so our base budget for -- if you look at last year's two-year budget, adopted budget for 2021, so next year, at about $750 million of general fund. so of our $2 billion plus, it's a 2.4 billion, so we're at about

-- about high 20s, and low 30s percent general fund. and the rest is made up with revenue. so the percentage reduction, the 10% in the first year and the 15% plus 5% contingency in the second year are a percent of that $750. and the 10% is about $75 million and then that grows in the second year. the other piece which probably sounds technical but is also very important is that that -- that target is after we have taken into account all of these things that were on these charts that drive the costs. so we have salary and benefits increases. and we have operating cost increases. those are going to grow. and then they're asking us to trim back against that, against

that increased budget amount. so it's not that we will have a 10% target against what we're spending now. it will be a reduction but it will be partially offsetting that growth that you're seeing in the budget that is driving some of the deficit. so that will be our approximate target in the first year. and then growing by 50% in the second year. >> commissioner chow: okay, thank you. >> clerk: i believe that commissioner green had a hand and then commissioner giraudo. in that order. >> vice-president green: given the presentations that you and your team have done in the past i have great confidence that this will be thought out and a well-done proposal. i have two questions, and one is probably quite naive. but is everything on the table? we have all of these long-term contracts with various c.b.o.s

and is there any flexibility there? i mean, some programs may not be able to proceed because of social distancing and it may continue and so forth. so i'm wondering how all of that fits into this. and then the second question is, given that a lot of the additional expenses do fall under the public health umbrella and yet all of these various departments are supposed to be cut by 10%. is there a recognition going forward of the additional cost burden on doing everything that we need to do from contact tracing to testing to so forth, and the manpower that would be required. has the salary increases that you've been looking at taken into account this very likely long-term group of individuals and teams that we need to work on on this pandemic and its long tale of aftermath? >> yeah, thank you. that's a good question. and i'll take that second part of that first.

it absolutely is the case that the city, both the department and the city, need to understand that because of the situation that we're in that there are necessary investments that are going to have to continue our progress on the covid response and also to be prepared in case we do have additional surge. so some of those activities are the things that we have been talking about at our previous presentations on that. but it is epidemiology and surveillance. it is contact tracing. testing. and then it's surge response preparedness. so we have been setting up excess hospital and post-acute capacity in the event that we do have a large medical surge. so we'll have all of those

initiatives and we'll be moving forward and i think that there is a recognition that we are going to do that and that is going to take investment from the city. so it will not be the case that the department is being asked to cut 10% and then do everything with that reduced budget. but we are going to have to make reductions in our general fund support in order to make that possible. so there's not an unlimited tolerance within the city budget for making all of those investments and i think that if everybody had the choice and they to some extent do, they understand that is a priority. but there's just the arithmetic of the city's balanced budget requirement. so i think that part of the way to view our budget reduction target is we're being asked to cut back on some of the areas where we use general fund and to

allow that savings to be invested in some of these covid response programs. so i would expect at the end of the day that our budget is not going to be 10% or 15% smaller. but there is going to be significant realignment in how we use the resources that we have that will shift a lot of the way that we do business. and to gear it so that we are better prepared for the ongoing response and the potential surge. and that goes with the first part of your question, i think, that, yes, everything is with a deficit of this size and i think that everything is on the table. and we do have options. some which are not going to be pleasant. but i do think that a big piece of this as i said is going to be thinking about the resources that we have and how can we kind

of get double mileage out of those resources by having them serve a function that is aligned with or associated with the covid response activities. so how can we use our -- our existing staff to beef up some of that epidemiology work? how can we use some of our existing staff to strengthen the services that we're providing in the hotels who are leasing, etc. so i think that is a lot of what the budget conversation is, re-evaluating our current responses and thinking how it can be aligned with the needs of the present day. >> clerk: commissioner green, does that take care of your question, can we move on to commissioner giraudo. great. commissioner giraudo, you're up. >> commissioner giraudo: thank you for this presentation. it's a little frightening to

look at going forward, and what you're facing. i know that you have a very short timeline to look at the -- to do this realignment. will you be able to give us an idea prior to your submission -- our next meeting is june 3r june 3rd -- of what your realignment is going to look like so that we're aware of this upfront before it goes out into the mayor's office or the public? >> yeah, that's the goal. and this is as you say the timeline here that is really tough. because 3 1/2 weeks to do this is extremely, extremely challenging. this would be extremely challenge figure we had the usual three-month timeframe. so i think that what we're going to have to do is to have a few

conversations between dr. colfax, mark, and commissioners about what does this look like in terms of kind of timing and process, because we, you know, we obviously want to make sure that the commission is understanding where we're headed and weighing in on it. i think that the question there is just procedureally how and when do we do that and what was the process for that. and we will have that june -- i forget exactly -- june 13th or whatever that deadline is, that will have to submit to the mayor's office. and then after that point there will also be continued back and forth over the subsequent month also before the mayor's budget submission is finalized. and so part of this is the role of issuing these general fund targets to the departments is to cause the departments to put

ideas on the table which can then be evaluated and weighed and prioritized against other considerations or other options that have been put on the table by other departments. so in addition to what -- kind of whatever the process -- i don't know what it is today about how we'll communicate with the commission, there will be ongoing conversations beyond june 13th before the budget is finalized. so between the two of those, we will work out what the best way is to make sure that you're informed and giving us oversight and direction. >> commissioner giraudo: great. thank you very much, and good luck. >> thank you. >> clerk: commissioner bernal? >> president bernal: yes. first of all, thank you so much for your presentation and for sharing this with us so quickly after receiving instructions

from the mayor. it is a frightening scenario. given the cuts that we'd see from general fund revenue as well as the outpatient and a lot of outpatient with visits and procedures and ambulatory care, are there any areas in which you might anticipate increased revenue from any existing sources or even some new sources of revenue that could emerge? >> yeah, good question. so a couple of things that come to mind. of the negative impacts of this epidemic, there are probably some -- i guess you could say silver linings. one for our health system is that we are likely to see increased medi-cal revenues as more people are pushed down to medi-cal because of the economic

environment. and we would rather not see that. but if it is going to happen, that revenue will help us to offset reductions and to be able to better care for that population when they come into our system. i think that the other big pieces out there are going to -- we do have some continued work to do on evaluating what we think that revenue impact is going to be from covid and we're revising it and making sure that we're not too conservative or aggressive. but i think that the other big category is going to be on the state and the federal level and what interaction between those levels and the counties looks like. so big pieces of that is our -- the state is obviously in a very difficult situation. they've got a projected $54 billion deficit. and so some of the areas where they have been able to help i think are probably constrained. and that includes previous to all of this happening, we were

in the process of negotiating a new replacement section 1115 waiver. and the successor programs which are a big chunk of our state and federal funding. one of the key pieces is going to be to figure out what is -- since those plans have been thrown off track by the change in the circumstances, what is the interim program going to be and at what funding level. that is potentially the opportunity for some short-term relief at least. and the other is the larger federal contact. so talked about the fact that there are questions around fema reimbursement, the duration of that, and the level. and then, of course, there are the potential actions by the congress to offer additional

relief and there is discussion active right now as you all know about democratic proposal to do another funding package which would include the support for state and county governments. that is not a slam-dunk by any means. it's a controversy around that. we read it in the papers every day. but to the extent that there are the opportunities for further federal support for some of this response, that could be a big issue. and to the extent that offsets either the losses that we have or it offsets the general fund cost of all of those investments that we talked about that we need to be able to sustain the gains that we've made on our response, that would help the picture. so i think that those are a couple areas and there are some

opportunities out there, but a short timeline and a lot of hope associated with some of them. >> clerk: welcome commissioner guillermo. i wonder if you have any questions since you just joined? >> commissioner guillermo: no. a number of the questions that i had were asked by the other commissioners. so i just -- that's my concern is, as others, that, you know, this is a pretty dire situation for us. especially since the end is not near and so i just feel like we need to be able to follow with you and to get as much information as things develop as is possible to share.

>> understood, thank you. thank you, commissioner. >> clerk: dr. colfax, any comments on this before we go to the other item? >> well, just to thank greg for his amazing turnaround time and his team. there's a great deal of work ahead, commissioners. i appreciate the concerns that you have expressed and that, again -- and greg may have said this, i'm sorry, i had difficulties getting online here. but i think that one of the key things as we face this pandemic, at least through the medium term is how to ensure that our programs adjust, not only to the new normal for what they would have otherwise provided before the pandemic, but if we're able to deliver the services that were delivered before the pandemic as well as address the pandemic concerns. that is certainly an intersection that we're going to

be looking at as we think through our priorities. for instance, some on the behavioral health side, we're already seeing the challenges of behavioral health overlaid on top of the challenges around both preventing covid-19 and preventing covid-19 from spreading among populations with serious behav behavioral health issues. so that would be a place, for instance, to look not only at the ongoing need that we've always had, but foreseeing that the pandemic has only made those needs more apparent. and very specific in a way that wasn't happening before, obviously, with regard to pandemic control. so where there is that intersection of the needs that we had before that only continue, and then in some cases are made more apparent by the pandemic, i think that is where we'll prioritize our resources

going forward. >> mark, could i just have two more comments after dr. colfax here. >> clerk: sure. >> i'm done. >> clerk: yes, commissioner? >> yes, thank you. and i'm just reflecting on the processes and the fact that as we move forward that we know that in the past when we've had to make significant cuts, there have been a need to really reach out to the communities and obviously to our own employees about what needs to be done. i think that requires really a very strong message from our director and a need -- you know, to have the commission to define what are those priorities. so i'm not sure how within this very tight timeframe that we could do all of that and try to also to get the public to

understand why these are being, you know, done at this point. obviously, the state tried that already with having put out that state employees would have potential cuts if it actually gets through the entire legislature. but i think that it's important that everybody try to be on board to try to work the best we can out of this very large budget cut. those of us who have been through budget cuts before know that there are very, very passionate and vocal advocates, rightly so, for their populations. and we're going to just have to work together on seeing that there's understanding as to what is the priorities needed because of this significant hit to the finances of the city. >> clerk: thank you, commissioner chow.

any response from mr. wagner or dr. colfax? >> well, i think that, dr. chow, that's exactly right. and in this compressed timeline and in this time of social distancing, and the many challenges that we have, your comments are even more salient. and certainly you're committed to achieving the goals within the timeline but also getting as much input as we're able to during this period. >> clerk: all right, thank you. commissioner bernal, is it okay to go back to item 3 to the director's report? oh, you're muted, commissioner bernal. >> president bernal: yes, that's okay. >> clerk: dr. colfax, and the director's report? >> yes, and, again, i apologize for my delayed participation in the meeting.

we were having challenge with microsoft teams. and so good afternoon, commissioners, grant colfax, director of health. you have the director's report in front of you. and much of what i'm going to talk about in the covid-19 response is going to be covered in that discussion. so there are some details here that i would -- i would leave in the interest of time for you to ask any questions about. and then the covid-19 presentation to provide a high level perspective of where we stand and wh where we're headedn regards to the pandemic. i did want to highlight one piece of welcome news. in terms of a new key staff person on the team, a new member of our executive leadership is dr. clara horton. some of you know dr. horton already from her role at zuckerberg hospital. but she has been at zuckerberg,

san francisco hospital, since 2008 as a faculty member. at the department of medicine. and over the past 12 years she's served as associate medical director and then the medical director of the people's clinic. and then since 2018, she's served as the then elected position of chief of staff for zzfg. and she's a dedicated educator and she focuses a lot on the health care system and change management. she has a tremendous amount of skills. i can say personally they worked with clare over a decade ago now, maybe -- at any rate when she was an intern and i i attended the people's clinic, she has political acumen that helps her to be a better administrator. and i always learned as much frer