>> like to call the meeting to order. first of all, i like to ask for a roll call. >> president rivera, here. commissioner ajami, here. commissioner stacey, here. we have a quorum. >> before calling the first item, i like to announce the san francisco public utility commission it own-of the oholone tribe and other descendants of the recognized mission san jose. the sfpuc recognize every citizen residing within the greater bay area has and continues to benefit from the use and occupation of the

oholone tribes aboriginal lands sinsh before and after the san francisco public utility commission founding in 1932. it is important we not only recognize the history on the traibl lands which we reside, but also acknowledge the oholone people have established a working partnership with the sfp uc and are productive and flourishing members within the many greater san francisco bay area communities today. please call the first item. >> approval of the minutes of august 13, 2024. >> are there any corrections to the minutes of august 13? okay. seeing none, would you like to please call for any public comment on this item? >> remote callers, raise your

hand if you wish to comment on item 3. do we have any members of the public present who wish to provide comment on this item? moderator, are there any callers with their hand raised? there are no callers that wish to be recognized. >> thank you. >> seeing none, i like to request a motion and second for the approval of the minutes of august 13. >> so move. >> second. >> please have a roll call vote, please. >> vice president rivera, yea. commissioner ajami, yes. commissioner stacey, aye. >> alrighty. please read the next item.

>> director-members of the public may address the commission on matters within the commission's jurisdiction and not on today's agenda. remote callers, please raise your hand if you wish to provide general public comment. do we have any members of the public present who wish to provide general public comment? >> [unable to hear speaker]

[microphone not on] and i'm glad there is some talk about creating the inspector general's office, and i hope this inspector general office will work with

us, the community, because we tried to work with sfpuc and it's not going anywhere. we tried to work with the controller's office, and we are going somewhere, but we-[indiscernible] because he retired. you know, all your commissioners and many other commissions they have attorneys, you know, and i don't know what they do. they kind of rubber stamp. they have to take the initiative of the needs assessment and helping the community. thank you very much. >> thank you for your comments. is there anyone else? >> moderator, are there any callers with their hand raised? >> ms. lennear, there is one caller that wished to be recognized. >> thank you. >> caller, i unmuted your mic. you have two minutes.

>> [indiscernible] hard to hear for the first part of the discussion but it cleared up by the end. please consider sfpuc staff to improve transparency. it seems to me the staff presents just one view of a subject rather then providing discussion about alternatives. for now, i will use financial plans as a example. that might be a surprise [indiscernible] by the way, i'm not a solitary voice on the matter. with [indiscernible] both agencies provided choices to the boards along with discussing pros and cons. i haven't seen that for the sfpuc. a number of people raised concerns about the puc huge budget and 10 year capital plan put forth. do you know if they will modify the next financial plans, do you think they should? is there discussion about choices and alternatives? now is the time.

if the topic is left until january, as usually the case, there is no time to make changes without radical disruption of the approval process. now is time to have public discussion for goals and objectives. there shouldn't be a downside unless staff doesn't want transparency or buy in for the commissioners and public. my point is improving transparency and using the upcoming financial planning process. >> thank you caller for your comments. ms. lennear, there are no callers that wish to be recognized. >> thank you. >> please call the next item. >> report of the general manager. >> thank you madam secretary. p item 5 a is quarterly audit and performance review for fiscal year 2023-2024, 4th quarter. mrs. blackwood will be

presenting. >> [unable to hear speaker. microphone not on] there i go.

okay, great. good afternoon again commissioners. third time is a charm. my name is mrs. black wood, the audit director. thank you for having me today. i present the quarterly audit and performance review for 23, 24 fiscal year. >> may we have the presentation, please? >> may i have the slides, please? alright. so, of our audits, completed by the close of fiscal year, 15 were financial audits, 8 performance audits and one originated from the revenue bond oversight committee. as of june 30, 20 24, there were 12 additional audits in progerize or scheduled to come in soon along with 5 ongoing performance audits and one

revenue bond oversight audit and one focused on a revenue lease. here are details of the three audits completed in the 4th quaurth. in april, the california arrearage payment program was issued by the california community service division and we issued the performance assessment we talked about at the last update. the additional fourth quarter audit was city non profit supplier compliance with the state trust audit releashed in june 2024. i are wanted to delve into how we select and conduct our audit process. it is guided by several key criteria, including risk assessment, regulatory requirement, stakeholder input, historical data and strategic priorities. for risk assessment we begin

with comprehensive risk approach that vauchb evaluating programs and departments within the puc to identify those that may pose significant financial operational or reputational risk. we rank those risk as high, medium, and low and certain audits are mandated by the state or federal entities to insure compliance with those regulatory standards. we prioritize those audits to avoid penalities, legal permissions, or operations, and more. the audit bureau coordinates with the controller office, on their audit planning for the coming quarters. this involves discuz with audit bureau staff members and the audit staff at csa. also seeks inpt from stakeholders at the puc and this feedback helps identify areas of concern and insures that our audit priorities align with the needs of our constituents.

on ongoing basis we align-analyze historical audit findings and performance data. areas with prior issues may be targeted for follow up audits to insure corrective measures have been effective. finally, we align audit selection with the sfpuc strategic goals. this insures our efforts support the broader mission of providing reliable and sustainable utility services. once we have identified potential audits, we develop a audit plan and this plan outlines the scope objective, timeline for each audit. it undergoes review and approval process to insure resources are allocated effectively and address the most pressing issues. the audit selection process is not static. we continuously monitor emerging risk and change in regulation and stakeholder feedback. this allows us to respond proactively to new challenges and opportunities. so in summary, the selection of

audits at the puc is a structured process driven by risk assessment, regulatory requirement, stakeholder input, historical data and our strategic priorities. in addition to these processes, we coordinate with other oversight bodies such as the board of supervisors, budget legislative analyst and revenue bond oversight committee. the audit bureau actively monitors open audit recommendations throughout the agency to insure they are address and implemented according to deadlines. as of june 30, 2024, 14 recommendations remain open across three different audits, 8 from revenue lease audit, 3 from the two revenue bond oversight audits and 3 from public procurement integrity assessment. moving forward, we anticipate the completion of the following audits during the first quarter of

fiscal year. the chapter 6 delegated authority audit, the board of supervisors budget legislative analyst conflict of interest audit, the board of supervisors budget legislative analyst work orders audit, the annual physical inventory count for fy23-24. the calendar year for 23 post audit and the environmental protection agency cyber security guidance assessment and wholesale revenue, statement of changes and balancing account for fiscal year 22 through 23. we anticipate the kick-off of total of three audits this quarter. namely, the revenue lease of mission value rock, the post enrollment verification of the customer assistance program and environmental protection agency cyber security guidance assessment. they think for your time and i'm available for any questions. >> thank you mrs. blackwood for

a quarterly report and it is really nice to hear that this is not a static process as you stated. this is something ongoing and constantly analyzed. that makes me feel really good and probably the rate payers too. commissioners, any questions? commissioner ajami. >> thank you so much. great thing to have the conversation every quarter. even though it feels quickly coming by. the quarters go by so fast. i want to go back to slide 5 on the recommendations and where we are with those. can you actually-i dont know if you need to answer this or somebody else needs to answer this. i wonder what is the process to get these things under our wing and pay attention to this? >> the process is every audit we do in the sfpuc, my team will take

those individual recommendations and we have a little data base that put those recommendations in and we match it to individuals that are supposed to implement those recommendations and will continually remind them to make sure they are completing the recommendation and ask if they need any help, hold additional meetings if we need and once we get their final input on the final implementation of the policy, whether a update in the procedure, whether a change in the operations, whether it is adding new staff. a variety of recommendations that are in place. once that is finalized, we'll take it to the next-the appropriate body. most of the time it is the controller's office, city service auditor and we kbiv give it to them and they review and they respond back with a formal letter that says this recommendation is closed, or we consider it still open, so sometimes they can take some time and we are working with them on

their timing, but we have examples of those types of letters we get fl for them in a recommendation response form. >> for me to understand, the zero percentage is not related to us not doing the work, it is in controller's office hand- >> yes. >> we have done the work, now it is in the process and needs to be verified and finalized? >> yes. we have our own policies and procedures in the audit bureau. we want to make this report a quarterly report and it sets off june 30. the particular set of recommendations you see with the target date of july 10, we closed by then, but we want to give you information in the protocol that cut off at the quarter so those are completely finalized of now. >> perfect. it makes me feel much better. the zero percentage is not on us, it is on controller's office. okay. another question i have or maybe a comment is on the cyber

security guidance assessment. i do appreciate the effort. i think it super important as we become much more digitalized we have to pay attention to this element and for the focus on cyber security. i was just wondering and this is me thinking out loud, is there a way to think on broader sense, not just based on some of the ep a requirements, but we have every one of the enterprises have so many different activities that are digitalized, or digitized, so i wonder if you have to expand that? >> i think we are in a good situation now with our it group, our chief information officer is allowing us to partner with them on just that very thought of how to expand beyond what ep a requires for cyber security standards and how we can think bigger, so we are working with them side by side. the audit bureau and how to

expand these standards throughout the sfpuc. not just basic guidelines given by epa. >> excellent. basically try to have a more wholesome approach across different enterprises? >> yes. >> perfect. thank you so much. >> no problem. >> thank you. director, can you please open this up to public comment? >> remote callers, please raise your hand if you like to comment on item 5 a. >> commissioners, i have been monitoring this for over 40 years. the audit partners do what they have to do.

the sf-board of supervisors do not do due diligence. the sfpuc spending $50 million, $60 million, a hundred million and going to the board of supervisors and they rubber stamp it. what type of audit is that? and you commissioners must put a stop to that. put a stop to that, because you know anything over $10 million has to first go to the board of supervisors and not the other way around. this is a reason why a lot of the indictments with the sfpuc happened and y'all have no clue. i am telling you, it is worse now then it was when kelly was there.

it is worse now then when kelly was there. thank you very much. >> thank you for your comments. is there anybody else? >> moderator, are there any other callers with their hand raised? had >> ms. lennear, there are no callers that wish to be recognized. >> thank you; >> 5b is recent wastewater enterprise bond sale results. edwer kwon will be presenting. >> good afternoon commissioners. edward kwon, finance. normally the capital finance director would be making this presentation, but

he's out sick, so he had me. commissioners, we are here to report back to you the results from our sale of the wastewater enterprise, 2024 revenue bonds which the commission approved at the june 25 meeting and subsequently priced july 19 and closed july 31. on august 1 following on the bonds, an announcement summarizing the transaction was sent to internal staff, city partners and to the commission community box. the notice will be sent to you shortly after this meeting, sorry for the oversight. further information on the program can be found on the sf water home page. the commission reviewed the form of the preliminary official statement in june posted for investors to consider in

early july. here you see the offering of the bonds presented to potential investors on the muni os platform, used by selected underwriters. here investors are able to view the statement, [indiscernible] presentation about the wastewater enterprise and bonds offered. for the first time we included a short video of the construction progress at one of the funded projects. one offering document and two sales under single plan of finance. the official statement shown here with the pricing information posted within the mandated 10 days following the sale. this commission may recall, we intended to sell the bonds in two components. the table summarizes the first and details the series a and series b taxable bonds. these two series issued to fund

specific expenditures of biosolid project and refinance certain bonds that funded the southeast community center. these bonds concluding pricing on the 17, the sale was lead by b of a scrurts with morgan stanley comanager. the bonds were sold as 3 year note and received a a a 2 rating with stable outlook from moodies and carries no s&p [indiscernible] the series bonds received a a a 2 rating and stable outlook from moodings. noted the size and scope of the enterprise 10 year financial plan in the forecast of declining debt service coverage relative to [indiscernible] factors for the outlook. the change in outlook has no immediate impact to pricing and interest rates itself, but it means we need to be watchful and proactive if there are premature declines in liquidity

and metrics that may trigger future rating action. series c and d tax exempt bond sold to fund and retire outstanding commercial paper for various ssip for wastewater enterprise. pricing for the series c and d concluded july 18, the date after the a b bonds. the senior manager for these bonds were morgan stanley with b of a security as co. related a a 2, stable out look from moodies and a a with negative outlook from s&p. this grap shows the curve on july 18 to illustrate the interest rate condition during days of pricing in july. that is represented by the dark blue line near the center. commission has seen prior versions of this graph, but for everyone benefit,

this graph represents the rates hypothetical a a a issue with receive on day of pricing. the credit is a a, so we expect reasonably that yield on bonds price little higher and that's referred to the spread. during pricing and throughout the last two years of the curve, it has been [indiscernible] on short end, meaning very shortest rates are higher then long rates due to federal reserve overnight rate kept high. in a normal upward sloping yield curve would expect shorter maturities to the lower end. this table summarizes the result of the two sales in july. we received strong demands for bond with taxable series 1.2 times over

subcribed and 2.2 times over subcribed for the tax exempt series. we lowered yields 1 and a half to 4 and a half basing points for taxable series and 11 basis points for the tax exempt series in the course of pricing. overall, it was a very successful sale didn't [indiscernible] we were able to clear all our bonds offered. yield for the bond sold for 4.3. for illustration the last wastewater bond sale in april of 23, we got 3.1 percent yield,b but that was more then a year ago is and the most recent comparable water bond sales july of 23 was 3.72. higher, but still good rates. we were advised on the transaction action.

the lead advisor and coadvisor [indiscernible] after the sale they prepared a summary of the market activities and we would be happy to share the post pricing book with any commissioners interested. additionally, per for debt policy for negotiated bond sales we engage a independent pricing consultant to participate in pricing activities to insure we receive a reasonable fair price on our bonds. the firm, pfm conclude in the reports the puc received the fair price on the two bond sales, we can also share that report with the commission if they like. this is just snapshot of our enterprise debt before and after the latest issuance. total debt grows by approximately $730 million.

some was to retire outstanding commercial paper, but all in all we funded close to $1 billion of project proceeds with this bond sale. the illustrates the structure of the debt. we issued mostly level structure with maximum debt service in fiscal 28. reminder, this does not include additional future debt that we do expect to issue. and this finally, summarizes the puc issuance activities year by year. the commission may recall we are coming off the largest issue year by calendar year 23. this with the issuance of the 2024 wastewater bond we issued the largest green bonds to date with over $900 million in one issuance across series a and c.

and happy to take any questions. >> thank you very much mr. kwon for the report and wish speedy recovery to mr. [indiscernible] i did have one question that i was maybe more a explanation on slide 4 and i believe slide 5. there was a section that talks about the ratings being lowered on series b, c and d from stable to negative. can you explain that? is that connected to ongoing interest rates? what caused that to go down? >> just to clarify, the rating itself was affirmed and wasn't changed, but the agency outlook changed from stable to negative. the rational for that this time was because they took into

consideration our increased capital plan and finance plan and from their projections they foresee possible declines in debt service in the future. not to say they will lower the rating, but it puts on notice to keep watchful eye on revenues and coverage and liquidity. >> there was no impact then on the bonds, other then the professional opinion of- >> exactly. there is no pricing impact in this transaction. >> got it. thank you. commissioner stacey. >> thank you. i had a similar question and i think i heard you say in the presentation that lowered rating didn't have effect this time around, but we are not sure whether that will have effect on future? >> the rating was affirmed and no changed to the rating this time around and no impact to pricing with

respect to the lower outlook. >> okay. and on i think it was slide 2, the bond sale results, i couldn't find on the puc website. >> that is the internal letter and happy- >> okay. the post-pricing review mentioned on slide 9, i am also interested in seeing that too. i'm not a finance expert, but i'm learning and like to review all the reports, so i would appreciate that. >> will do. >> okay. and then i had on slide 6, i had a question. these graph lines, it is a a a rated bonds, generally. this is not puc bonds, this is just the general- >> right. >> outlook. >> the curve is called the mmd

curve, the interest rate curve for the marketplace and what they may expect to receive on any particular day of pricing. the wastewater enterprise being a a can expect our pricing is a little higher, but still following the general shape of the mmd curve. >> okay. >> i won't--this is the tax exempt muni, so we-it is a little nuanced but this represents the tax exempt a a a issuer. >> thank you. >> i want to add just to follow on comment with respect to the question you each asked. i think mr. kwon said no change in the rating at this point, and in terms of the outlook, that was s&p and there was mood ies who did not change outlook at

all, but we take it seriously and it is something we will continually address and watch, so we are aware of the importance of making sure we are being as stable as possible. >> thank you for those comments. commissioner ajami. >> okay, i'm going back, since i do this thing so i'll ask little more questions so make sure [indiscernible] yes, our rate didn't change, but the outlook has changed, right? that happened for various reasons and i do understand moodies did not change our credit score, versus s&p, but these conversations can actually--for next round moodies might look closer since there is a a a with negative projections on it, right? so, it is something that we do not want to be associated with, right? i think it is important to kind

of have a little of a more detailed conversation around why this happened, how can we make sure it is not going to continue happening and how can we make sure our revenue and assets are evaluated in a way that we don't end up on the negative trajectory. maybe a little more detail would be better. >> we certainly do take their comments seriously, and with our financial plan updates annually, we take a hard look what the ratings agencies use as criteria. we look at that all the time and i know financial planning team has taken a closer look how that criteria moved over the years, because we have always adjusted our plans to be above what the industry minimums are. if those goals are changing in the economy, we look at that

regularly and we do take their commentary seriously. >> thank you. laura bush, deputy cfo. it definitely preaching to the choir. we totally take this seriously. [indiscernible] isn't particularly surprising. we all know wastewater in particular has a very very large capital plan that has grown. a lot in recent years because of the major investment needs and this is what we talked about during the budget discussions as you recall. so, yes, we are taking it very seriously in fact, we have been regrouping as a team in the last few weeks since we got this news to figure what the next steps are and that will likely include review of the financial policies, the guardrails in place to protect the financial sustainable of the puc. in due course i will come back to you and keep your updated.

>> sounds goodism i say based on conversations, not on this specific topic, but s&p, climate risk is a lot more central so they are looking at every agency to show how well they are equip to handle climate process. >> i participated in the rating process and that something they talked about a lot. we are not the only wastewater utility facing the same headwinds and they mentioned during the discussion- >> i think one other thing, while we are going through the bond process and we are getting this money to invest, we do need to go back and look very seriously about the projects we have. are they really sort of reiterating what we had before or are we

addressing the issues in hand from affordability to climate to aging infrastructure and all that, so how can we bring them all together and i think the only way we can sort of pass this situation and end up above it unstead of below it, if we can demonstrate we have good strategies in place to address those three very important topics which is becoming more and more central to the rating. i would not be surprised if moodies does not do that, because they haven't yet starting-they are talking about climate but haven't started incorporating it, so they may come back next time with a different rate credit score and rating. thank you. and i look forward to a more detailed conversation on this. >> yes, definitely, and we will come back to you before long with approval for another bond sale for the

water enterprise in which the same issue will be discused. >> sounds good. thank you. >> thank you. director, please open up to public comment. >> remote callers, please raise your hand if you wish to comment on item 5b. any members of the publicprint present who wish to provide comment on this item? >> commissioners, i want to remind y'all the digesters. when we started the project, the sewer system improvement project, $6 billion, it is now heading towards $12 billion. soon it will hit $20 billion. and we are talking about climate change. what's our relationship with

pg&e? why didn't we have one single presentation on the digesters and how much energy those digesters will take? proprietary design from norway. you can talk about the bonds, you can talk about whatever you want to talk about, but the reality is, we are spending too much money. the reality is, when karen cubic was there, she did due diligence and gave us presentations. she left, and everything has gone down the drain and everybody's swimming in the cesspool of their own

creation. the lay man and the taxpayers are going to be paying for the extra amount spent. as commissioners, chronologically, you have to study the project, not from the bonds, not from some goobly goop-- >> thank you. >> thank you for your comments. >> moderator, any callers with their hand raised? >> ms. lennear, there is one caller that wished to be recognized. >> go ahead, please. >> caller, i unmuted your mic. you have two minutes. >> thank you. good afternoon. this is peter dreckmyer,

tuolumne river trust. there is alarming slides in the presentation. there are bond rating lower to negative on slides 4 and 5 ask i appreciated hearing that. [indiscernible] will soon more then double over a quarter billion dollars annually. slide 13 showed all the bonds issuance for water over the past 20 years and we know how that effected water sales, which you depend on for revenue. the next item, 5c you will see slides 3 outstanding anticipated debt showing $10.2 billion in debt and $11 billion in additional borrowing. what does this mean for the credit rating? i hope you will make answering these questions priority. your long-term vulnerability assessment which cost $743 thousand spent time on

the issue. report 3 focus on water demand, demand forecasting is a important exercise for water agencies for long-term planning process. how much will there be for water in the future? hoe much supply will be required to continue to deliver reliable service? how much will it cost to do so and what are the financial implications for the consumer? water agencies predict how the future will manifest in uncertain socio economic and climate conditions. getting it wrong can have consequences. [indiscernible] pose the risk of over investment stranded assets and high water rates. it is critical you take a close look at demand projections, which have been inflated and design drought. it is crazy not to discuss the mage r drivers of your budget.

>> thank you caller, your time expired. ms. lennear, there are no callers that wish to be recognized. >> thank you. >> 5c is capital financing plan for fiscal year 2024-2025 and mr. kwon will be continuing. >> good afternoon again commissioners. edward, kwon finance standing in for -as the commission knows-may i please have the slides? -the puc has a large complex debt portfolio can significant future capital needs. therefore additional debt issuance and credit requirements. the annual plan is intended to freud visibility regarding capital finance activities guided by previously adopted commission policies listed

here. this is a brief illustration of the $10 billion outstanding debt portfolio, which excludes approximately $1 billion approved or yet to be drawn federal and state loan capacity. the commission approved last february the 10 year financial plan update of $11 billion in additional borrowing to fund the adopted 10 year capital plans. this includes $1.9 billion in new borrowing this fiscal year and wastewater bonds, which we just discussed. quick summary overview of existing debt across the enterprises. over $10 billion in debt consisting primarily of revenue bonds and federal and state loans. this is a summary of the ratings across

the enterprises and you see the new reflected for wastewater. the slide high level of the work our capital finance team does. this commission is regularly presented with new issuances, renew and replacement of credit agreements that support our capital projects. the commission may not see is analysis and monitoring of project spending conducted by the team to deliver the issuances just in time to help minimize cost to the rate payer. our team continuously monitor the market to identify refunding opportunities and to evaluate them as they present themselves to optimize cost of borrowing. as the commission is well aware, we remain in volatile elevated rate environment compared to recent

history, influenced primarily by federal reserve action, political uncertainty and geo political tension. the yield inversion, very short interest rates are slightly higher then longer rates remained inverted for better part of the last two years. we expect rates to come down, we can't predict when that will happen. the rates are elevated. they are still relatively flat, meaning, there isn't much difference between short rates and very long rates and this unique environment actually creates potential for refunding opportunities that we are continuously evaluating. for example, the 2023 water tender refunding that closed in july of 23. so, this is the fiscal 25 capital financing plan.

the first item this commission can expect to see will be request to expand interim programming for each enterprise with the growth of capital plan, we have increased need in these programs in order for continued funding flexibility with respect to debt issuance. the commissions know interim fund capital projects with commercial paper primarily until those expenditures are retired with long-term revenue bonds or federal and state loan as we receive them. with growth in the capital plan and resulting debt issuances, and coupled with the market opportunities for refundings, we are preparing to amend or reissue the municipal advisory contracts to accommodate the additional work. we expect to approach this commission with that some time the second quarter of this fiscal year. toward the end of the calendar we expect to bring the next water bond

sale. this was projected in theest la10 year financial plan and that is expected to be up to $762 million in new proceeds to fund projects and retire commercial paper. we also expect a funding component for savings. we expect to close the bonds early next year. later this fall, we expect the commission to consider srf loan and grant for wastewater enterprise totaling up to $170 million. toward the end of fiscal year, expect to bring renewal or replacement for the credit facilities for the water enterprise. as we approach 5 years since the last debt policy update, we expect to bring to the commission a update of those. work closely with advisors and partners in the city family to remain within industry standards and best practices for debt. finally, on depending on the

schedule of capital project we expect to issue a second loan with the agreement with the epa. we may also request adjustment to the first loan issued under that master to adjust interest rate if conditions are favorable. this slide as alluded to earlier, the commission action detail portion of ongoing work in finance. the team is actively pursuing other initiatives during the fiscal year to better fund capital projects or potentially save rate payer dollars. these include direct pay tax credits by inflation reduction act. over the summer we worked to register completed solar projects and electric vehicle purchases for credits we expect to file for in november. we are continuing to work with a gm and project team to identify

potential projects that may qualify. we work closely with financing opportunities for power purchase for pre-payment options and unique structures that may benefit project arrangement such as those considered for alternative water supply programs. we plan to continue to enhance green bonds programs to insure we are at the forefront of market and regulatory changes and make investment in systems and technology to insure staff have the new tools needed to manage the growing and already very large complex debt portfolio. that's it. happy to take any questions. >> thank you mr. kwon for your report and mentioning there is a potential for savings in terms of refinancing some of these projects as interest rates hopefully come down and would

be much more efficient. i did have a question, you talked about inflation reduction act and there were credits for electric ecvoos. vehicles. are you talking about puc fleet vehicles? >> yes. >> okay. are these like what portion is our fleet electric or hydrogen or alternative? >> i don't recall the portion, but it was somewhere in the neighborhood of 20 vehicles we took the liberty of in the period in question actually that may qualify for $7500 credit per vehicle. we submitted the additional registration for those credits and will file for those credits in november. >> alrighty. i'm sorry to ask if you don't know this question, it is fine. are these sedans or work trucks, because there is a new work trucks out there and puc would have the potential for using those also for our

work crews? >> i have the models, but off the top of head and don't recall. >> that is just something i wanted to know personally. thank you. commissioner ajami. >> thank you so much. i realize maybe this you don't do this often so didn't mean to scare you with the last item but you did very well. [laughter] >> thank you. >> just i have a few questions. one main question. one comment, one questionism on the green bond program, i think one thing i wanted to say is, going back to the conversation we had on the previous item, the more we think about what projects we incorporate in the process, the higher chances of being able to use green bonds, just because the international criteria around those are tightening a lot more and much

more specific, so it is really important to keep an eye on how that is changing and how we need to change to make sure that process. another thing i want to say, this has come up multiple times and i appreciate you touching on the updating data and technology system. you brought it up in the previous presentation too. i think this goes back to our real need for data transparency and having information technology that can enable us to do better and be able to see across different situations, different enterprises, different projects and see how things are changing. i just want to say, i think that is a important initiative. i appreciate you doing this and i think again, this is another over-arching effort that can go across different enterprises and i think it is important to think about it that way, because it is kind of like creates this

little more connectivity between the different enterprises and how they function. appreciate that. thank you. >> director, can you open this up to public comment, please? >> remote callers, raise your hand if you wish to provide comment on item 5c. do we have any members of the public present who wish to comment on this item? moderator, any callers with their hand raised? >> ms. lennear, there is one caller that wished to be recognized. >> thank you. please continue. >> caller, i unmuted your line. you have 2 minutes. caller, can you hear us?

i muted them on the line. ms. lennear, there are no callers that wish to be recognized. >> thank you. >> that concludes my report. >> director, please read the next item. >> item 6, consent calendar. >> i understand there is-- >> i said i conclude my report and moving to consent calendar. >> yes, thank you.

amendment number 2, to contract number pro.0165. >> on the consent calendar, 6b is going to be pulled from the calendar, because it was not listed accurately on the calendar. >> i like to call item 6 and we are pulling item b from consent calendar--okay. are there any comments or questions on the consent calendar? commissioner stacey, go ahead. >> thank you. i just had a question when i was looking at the calendar on both

6 a and 6c. 6 a is a fairly substantial, high percentage increase in both the amount and the time and so i had asked staff if there was something we didn't anticipate and it really just a ongoing compliance with regulatory requirements, but we otherwise have been satisfied with the contractor's performance so that is really just response to changing requirements. and then 6c, because i wasn't familiar with the union pacific railroad agreements i had asked about whether or not union pacific railroad contributed at all to the cost of those protective measures, but i understand union pacific has superior property rights to the puc and so it is the puc's obligation to accommodate the pacific union pacific railroad, so i appreciate

that explanation on those items. >> any other comments? okay. seeing none, director, can we open this up to public comment, please? >> remote callers, raise your hand if you wish to comment on item 6, consent calendar. any members of the public present who wish to comment on this item? moderator, any callers with hand raised? >> ms. lennear, there are no callers in the queue. >> thank you. >> alright. that thank you. i like to request motion and second to approve item 6, consent calendar. >> i'll move. >> second. >> may we have a roll call vote, please? >> vice president rivera, aye. commissioner ajami, aye. commissioner stacey, aye.

you have a quorum. >> director, please read the next item. >> delegating authority to the general manager to award and amend certain type of contract leases and other agreements. >> may i have the slides, please? are they going to be up?

good afternoon commissioners. ron flynn, deputy general manager here to ask and delegation metric. can i make sure you can see the slides? >> yes. >> great. i'm going to go over and highlight the major changes in this matrics compared to our prior material, but first, i want to give you a background for this resolution. in 2009, the commission approved delegation metric in which the agency

has been operating under for the last 15 years. in 2012, the commission approved real estate guidelines updated in 2013 and 15 and with small exception, we have been operating under the guidelines for the last 9 years. the new metrics identifies the relative authority. as the organization of the new metric, it has 4 leveloffs authority recollect the general manager, the commission consent calendar, the commission regular calendar and new section identifying the board of supervisors approval role. our 6 area delegation are included. i'm going through each of these with you now. the first section we'll talk about is notification and emergency declarations.

in 2009 matrix has all contract advertisement reports approved by the gm. that means the gm approves it and the commission receives notice. there is a change in this. previously, all design build advertisement went to the commission on consent calendar. when the matrix was passed commission approval of design build project was required. that section was amended by the board of supervisors in 2015 and gave department heads the express authority to approve advertisements of design build contracts, so this now changes to simply align with the updated code. emergency declarations, again, this aligns with the admin code under chapter 6, r21. previously, everything had gone to the consent calendar, now in alignment with the code, emergency work under

$250 thousand for construction and under hundred thousand for general service are under the general manager authority and larger ones which require board of supervisor approval, we moved from consent to regular under the theory if we are taking something to the board of supervisors, we should present it to this commission on the regular calendar. next slide. so, the first group of contracts we will talk about are ones that were on the existing matrix and i'll go over contracts for construction, professional service construction related and professional service construction not related and highlight the proposed changes from the existing matrix. construction contracts, this section contains some substantive changes i want to highlight.

in awarding construction contracts the gm authority does not chaichck. it remains at the san francisco admin code threshold level which is currently 1 million dollars. the change occurs in what appears for approval on the consent calendar, versus on the regular calendar. in the 2009 matrix, everything above $10 million went to the regular calendar, here we propose contraction constructs of 1 to $25 million go on consent and every above 25 go to regular. all those contracts will come to the commission for approval, it is just in the last 15 years, the size of construction contracts in particular have escalated and we feel the additional time to focus on the larger contracts is warranted. for modifying or amending there are small changes. as i said, the thresholds change. this makes clear that whatever authority exists for awarding

that same authority-you can do amendments within that authority, so the gm could do amendments, even if it is for 20percent above, as long as it is under a million dollars. if it reaches that threshold, it goes and comes to whatever calendar it has to go. we added a sole source designation to be consistent with state law. that is how it exists now because it isn't on the matrix and what is in the quarterly report about what the gm is doing with contracts so this becomes part that report. finally, there is a change in how we do close-outs. under the admin code, the authority is granted to department head, so we moved from the gm from consent, accept where there is a modification required for the contract to close-out, then it follows the above rules. in other words, if a $1 million contract was going to have make

it 11 million $11 million to close it out, that bumps into the next level of authority. next page. this section deals with the professional service contracts that are construction related. architecture engineers, inspections, those kinds of things. there are no significant changes. there is one change that removes a little of the gm authority. there wasn't express dollar limit on the gm authority to amend and this caps at the same level award. this is just for consistency. another change is that, the tiers are based on dollars, so if you add time to a contract, but not money,b it stays within the authority that is existing and happy to go over examples when we get to the questions. next page. this section deals with professional service contracts.

professional service contracts not construction related, that is some of the ones we were-all the contracts we do related to finance, related to auditing, related to any service not construction related comes under this section. there are no significant changes in the thresholds that are here, there are changes about the amendments to sort of line up what is required by the board of supervisors on sizes, so instead of just having it be 25 percent or more, it more aligns with the charter, which has a dollar threshold and sort of those amounts, so we backed that through. but, the threshold amounts are not changing. now i want to get to new sections that are brand new to this matrix. the first one is the power

purchases. going to the-yeah. for power purchases and sales, we included the new authority granted to the department by the board of supervisors following this commission approval of proposal to grant delegate authority to the agency to enter into large scale contracts, so that is a cumulative amount of $200 million annually authority for purchases and amendments to purchase agreements, and a cumulative up to $10 million annual authority for sales and amendments to sales. that is consistent with the resolution passed by this commission and then the board. everything else goes to the regular calendar, again, because that goes to the board of supervisors, so we are aligning with the code. the next section grants is also intearly new. it is not just simply lining up with code however.

the board of supervisors adopted admin code 21g related to grants since the matrix passed so we added it and the admin code has rules accepting grants so we included those here and that is what the accepting and expending grants. those are just from the code. as to awarding grants, there are not specific roles laid out in the code, so we have what we think is reasonable policy. any new grant program would come to the commission on the regular calendar for approval. once the commission approves a grant program, grants under a million under this would be authorized for award by the gm. 1 to $10 million on consent calendar and above $10 million on regular calendar and going to the board. there is also amendment authority up to 25 percent within each one. again, this is one section where we

crafted these because there was not a specific-particular codes that we were aligning with. next section. this is a similar section. this is the mou. these were not on the matrix. we divided into various types of mou, which are essentially agreements with other city departments, agencies and other government entities. so, as to the mou with city departments, these could be done through work orders or mou. that is how it happens now, there isn't consistent role. the administrative and operation agreements are the type of things a agency department head usually takes care of. here, we are proposing to give the gm the authority to enter into agreements with other city agencies unless it involves a permanent transfer of land. if someone is going to use our

land or we use their land, that type of thing that would be to the gm. it would come to you on a report. non city government agencies, we propose anything less then the 10 millions or 10 year approval by the gm and more then that on the regular calendar. exception to the rule, if the mou involves the puc requiring new assets or taking on delivery of service that impose long-term operation, maintenance or construction cost, those go to the commission on regular calendar, unless that new action has already been approved by the commission on a separate action. if we take on a new service and the mou was implementing that, the taking oen the new service would be a commission approval, the mou would be just direct gm action. next page. now the final section has a

number of items that were not on the matrex. they are now all here. next page. the first three rows of the section involve third party use of sfpuc property. for use at the fair market value, this does change. this changes thresholds for the gm. it had been up to 9 years and proposing up to 9 years and million dollars. the old guidelines had 5 years and $300 thousand. this means leases between 300 thousand and a million are between 5 and 9 years that would have been on consent calendar are now at the gm level. there are no other changes for that. for less then fair market

value, there are no changes accept in some a million has been on consent and those have been moved to regular calendar. that whole-there are small items on consent use of things on the poles, but everything else goes to regular. as the community hub at the southeast community center, january 23 of 23, the commission approved a small revision to the 2015 guidelines to authorize the gm to sign work station license under specified circumstances. what this matrix does is the commission sets those rates and then the gm can enter into those contracts with those groups to use the work stations. and the next row is how the sfpuc uses third party property. here, again it gives authority of the gm for up to 9 years and expenditures up to $5 million. that is again, increase in

authority to the gm. it had been up to $300 thousand and up to 5 years when we did this 9 years ago. there are no other changes. so, the next group of-nearing the end, but the next group are very specific. the cottage leases, it provides the commission sets the rates and the gm rolls out those lease agreement with employees, with park service. for use of city and county of san francisco property, without a jurisdictional transfer, it sort of aligns with our proposal on the mou. that is it would move to the gm. previously that had been on consent under the guidelines, so that aligns with our proposal on the mou's. other then that, for the change

for the lines jurisdictional transfer acquisition of property and conveyance, there is no change. that moves from the guidelines in here which is all coming on regular calendar and goes to the board. the final row is new in entirety. this is agency vote on ballot measure effecting sfpuc operations. occasionally as a land owner, we receive ballots regarding creation of special use district or special assessment. on a piece of property outside san francisco. happens very rarely, these are small in nature but wanted to include this. as the ballot comes in we usually don't have time to come to commission, having it on this insure it gets on

the delegation authority about the delegated authority, so it provides that transparency. next slide. you get a quarterly report on actions taken. items can be moved between consent and regular. there will be linked up the updated matrix to the threshold amounts and to the power and purchase so that which is available. those are the major changes. i know you will have questions about details so i want to spend my timer answer questions about particular changes or particular rational. >> thank you deputy flynn for the robust nrfshz. information. i think we have questions. commissioner ajami. >> mr. flynn, thank you for the presentation.

i have handful of questions. much of them are related to changes in thresholds, time or money. >> okay. so, maybe we go through them one by one. i was wondering what was the logic to go from 2 million to $25 million and with extended timeline. >> on the awarding construction contracts? >> yes. >> okay. >> go down the list. >> okay. thank you. the primary reason here was it was $10 million. that was 15 years ago we entered the matrix and looked what was happening:our large contracts these days are as you know, they are hundred million, 200 million, we don't have a lot of contracts that are under a million.

that is just the threshold under a million, but the 1-25 there are some, but vast majority of stuff and we want to focus on are the larger ones so propose to increase, but it wasn't to get at a particular-it was able to spend more time on larger contracts and so that was the rational. as to the time, 10 years is a magic number. it doesn't apply to construction contracts because construction contracts don't go to the board, but that level of something that is 10 years is the type of thing the board usually sees so that is something we want coming to the commission so that is where we got 10 years from. >> let's hypothetically talk about a case that doesn't end up going to the board. gets approved by the gm.

but never sees the commission. basically the gm approves the contract or ends up in a consent calendar. this is the case here. goes into consent calendar between $1 million and $25 million and longer then 9 years and the items don't end up at the board, correct? >> correct. no construction contract ends up at the board. >> exactly. the hope is commissioners read the consent calendar, which i'm hoping everybody does and make sure that every item that is in there is correctly lined up. i'm wondering if instead of and we should make this a or, so that way if something is between $1 million and $25 million, or it is longer then 9 years, needs to end up in front of the

commission. >> when you say end up, i want to make sure i understand. you mean on the regular calendar? both consent and regular come to the commission. when you said that-okay. >> it becomes conversation, has a presentation, has a individual attached to it, versus something that ends up being item that is in the consent, everybody reviewed and basically as a batch we approve them and let them move forward. the reason i'm asking the question is right now we have a lot of construction project that come and go because we are going through a phase of change, building a lot of new things. say in 10 years we don't have that many construction projects, doubtful, but let's say, i want to make sure like who ever inherits whatever matrix we put in front of them has all the right tools to make sure we as a agency are doing

the right thing, everything has enough oversight and done in the right way. does that make sense? >> yes. is there a question? >> the question is, does this-do you think 10 years from now, if you are done with all the wastewater projects and water projects and all that, do you think changing $25 million and number of years in a way that would make sure that more projects end up in fruchbt front of the commission is necessary or you think it isn't necessary? >> i don't think it is necessary, but that is why we are here and saying why we made the change. let me tell you why i don't think it is necessary. i do think 10 years from now, $25 million construction is a lot of money. we do a lot of work under $25 million. a lot of repair and replacements, but a lot are larger then that now. even when we are doing projects

replacement of pipe, we gather together large portions and those will come and those are going to be there. i do think it provides the discussion on the larger ones, and i also think since i've been at this agency, i don't think just having on consent means it doesn't get considered in and the commission don't read and pay attention and ask questions. that does happen, it just allows we believe greater discussion of the larger ones, but that is just a policy call. it is still a number that i think 10 years from now when we are talking about there will be new people, what does it mean to go $25 million construction contract, it is on consent. someone wants to dig into it, they can pull it to the regular calendar. that was our thinking. there were various proposals all over the place and that is what we came up with. >> let me ask you another

hypothetical question, you're a lawyer, you know how to make sure everything is done correctly and under law, let's say. hopefully you do since you are keeping an eye on this organization. if this proposal was put in front of you as an option of should we keep it in consent or should we have it in the regular calendar, what do you think? is it tighter policy approach to this issue versus make the agenda and make it shorter and go faster? >> right. i don't think our-thank you for the question and for that. i didn't approach this as a lawyer. i can tell you there were lawyers involved. contract admin group was involved. the real estate group was obviously involved, the city attorney was involved, i was involved thinking through the issues for a long time. i don't think the goal is to

make us get through a commission meeting just like that. i think the goal is to have staff make presentations on significant matters that should be having discussions that we know are the public want to know about and there are going to be public discussion about and not sure that today or in 10 years a $15 million pipe construction project is that thing. if this commission thinks it is, that's what we are doing here, but i did i think the it was reason to think about what we want to do. it isn't shorten the meeting, but spend the time saying when you present to the commission, you should be prepared to answer questions and presenting on that and that's-there something significant about that public presentation. i'm comfortable talking-a lot of employees, this is a hard thing and so we want to make sure we are

using your time wisely and our staff time wisely and why we pulled the threshold. people come to this meeting and you see it every time at the end of consent calendar, a lot of people get up and leave. that's because people come here prepared to answer questions on the consent caldener. it doesn't mean we are not expecting questions and they won't happen. >> i don't doubt that and i do pay attention people come and go and we ask questions, but for me, it is more thinking about not the commission you have now or the staff you have now, but what kind of organizational process need to be set up to make sure this specific organization is successful, regardless if i sit here or you are standing here dennis is here or any of us here, because that is the point of the commission, to make sure regardless what we have in place, there are enough checks and balances for all of us to be successful then our kids or families will have aue utility that is

successful. that is the lens i look through everything and why i ask that question, because i want to make sure every one of the changes we see would enable us to keep this organization healthy and move forward. $25 million, you are absolutely right, we do spend a lot of money, because we have aging infrastructure that needs attention, we have a huge system that needs a lot of attention, but also at the same time, it is a lot of money for a lot of people and for less then that people have got into trouble for different reasons. i'm just trying to make sure every decision we make here, ends up making all of us to be more successful rather then just making sure-i want to make sure what the criteria of change is. is it like time? is it process? is it long-term, short-term?

that is the just of all the questions i want to ask, which is all focused on that. as a individual, if i am given the role to be sitting here, while i have very limited time, i am dovoted to make sure the time is spent to make sure we have a healthy organization. that is my personal goal. >> i appreciate that and so how this particular line is set up, everything up to a million is gm approved, where you draw the line what goes on consent versus the regular calendar is what we are talking about and that is something that is movable. we suggested $25 million based on looking at the 15 year old matrix, looking what contracts are putting out now, how many-we were looking at this material. it is bit arbitrary. all the numbers are a bit

arbitrary, but that is how we came to it. but that is really everything above a million will be on this calendar. everything will be on the calendar whether a report or we are approving it, where you want it on the scale of regular or consent. >> which bucket it falls in. the same kind of question--actually, i will jump because we are talking about thresholds and i will go back to power later. for example, we have a few other one of these, like for example, as a puc third party property, we now have expenditure, less then 10 million dollars. those numbers-i can tell you

which page-- >> i think you are talking about -this is under real estate. there are two items, one is the third party of puc property at fair value market. at this point we will be first go to gm if revenue is less then $1 million is lease time shorter then 9 years, right? >> that's right. >> i don't have a problem with that specific item, but i like to know how all these numbers have come about. for example, the million. if you go down that line, the next item you have sfpuc use third party

property license and easement and the threshold is $5 million. >> on the real estate, real estate in some ways could be contracts we have above, but they are different just in the realization we have a real estate group, real estate operates different in the city. you notice there isn't the same admin code, blah blah blah on these, because even in our code in the city we deal with real estate differently. it is really left--they go with the market and the roles are slightly different, so there is very prescribed things that have to be in contracts and construction contracts, indemty, insurance, there is much less that in the code for real estate contracts because of the nature of the work. the real estate group worked on this a long time to come up with a

structure of the ones they think are the ones that are sort of the smaller ones that they negotiate with the landlord and are going to move quickly and they want to work out and are those numbers are widely different then before. we had $300 thousand and that isn't a number in these multi-year contracts anymore that we are entering into. so, as for use of our property, there is a threshold that is in the charter, so we work from there. for use of other, the threshold we are spending is much higher, so it ends up being higher, but the idea, it is the smaller leases. we don't lease typically and may in some cases but don't necessarily lease the small places we lease to other people. we lease a warehouse for 9 years. those types of things were the changes. this was really work over by

the various people on the real estate team to see what's the practical thing and what do we want to be done. what are big, what is the discussion points and what are more routine, so those are i highlighted threshold changes in the real estate. they moved from 300 thousand to a million. 300 thousand to 5 million in the other instance. you are correct. but that was sort of through the real estate broker-the people out there negotiating the contracts. what makes sense for them. >> can you give me a logic why some of these that did not used to be approved by the general manager, now have a threshold they end up going-being approved by the general manager? >> happy. can you give a example?

>> from this matrix how it goes into the matrix. it has been expanded,er as it should have been. fwr example, here we have real estate property sales. >> okay. >> which was always supposed to come to the commission, and also real estate property acquisition. >> yes. >> they both had to come to commission, i'm not hundred percent sure where that ended up-- >> those ended up on the last page of your matrix, that acquisition of the puc and fee interest and conveyance of permanent property so buying and selling of property are long-term interest and that goes to, in this no gm authority, it is listed as all under regular and reaches certain dollar thresholds it goes to the board. all those go on regular calendar. >> map into three items.

>> there were not changes, it is just pulling out in the guideline that wasn't in this and putting it right there. >> okay. now i want to go back to the power. so, let's talk about power first and then- >> there are 4 different categories on power. >> yes. >> purchase, sales, entering into and amending of each. >> i want to talk about power purchase and the power sales. i do recognize that-- >> power purchase and amending power sales. >> those two i wanted to talk to you about. on the power purchase, i noticed that we have had the less then 25 years and i found that to be a little of a long sort of timeline for that to be

approved by the general manager. for example, if you are the general manager, you have 25 years ahead of you, some of the decisions are very long-term, so some oversight is important. >> absolutely. >> can you tell me how that 25 years have come about? >> yeah. so, as you know, and barbara is here if you want to get into specific s, as you know a major expenditure we have in power is the buying and selling of power. that really is--and as we get in and negotiate those contracts, there are lots of times we needed both to be able to act quickly and act with exceptions to city contracting rules. so, what we did is came to this commission and identified what those the thresholds would be, what that would look like, and those have

changed over the years. this is the current section and we went to the board and they delegated authority to the general manager that which is what those ordinances were to enter into a number of those contracts up to an annual threshold and so the 25 years comes from that delegated authority for an ordinance, so the board of supervisors gave this authority to the general manager of the puc. this is taking that authority, which is ordinance that isn't there and putting oen the matrix so it is laid out who is doing what. if it doesn't fit in the box or exceeds the annual threshold if we bought wind power and we no longer have $200 million, it comes on the regular calendar and board. these four boxes, there is a lot of information and the numbers are big, but those numbers, this is an

area where that was delegated--it was recommended to be delegated by the commission but delegated by the board of supervisor in a ordinance to the department head up to certain amounts. these four boxes, there is a lot, but this is translating what is in the code just on to the matrix. >> i think this was approved by the commission before it went to the board about a year and a half ago. >> because we had so much volatility in the market. we were-i remember that. >> i [indiscernible] >> [indiscernible] >> so, i was speaking to assistant general manager barbara hale and she reminded, there are times we have brought contracts, which are under this

amount, which and brought for approval and that just is a matter if we have the time, we don't want to use up our--if we have the time we don't want to use delegated authority on a contract because it is within the thing, if this is acting fast. >> that was my next thing and this came up in the power purchase and also in the item you had on agency vote and ballot measures effecting sfpuc. >> okay. >> the same issue, which is, time matters, yes. if thereis something that needs to move forward today two weeks from now or imagine it is june and we have summer off and things need to move forward, we cant wait a month, but there are cases we might be able to put these things on the calendar right away, and i wonder if there needs to be some form of a amendment or statement in there that says, if there is no

opportunity to attend to this right away, then general manager can make that decision. otherwise, for example, today is deal starts and tomorrow we have a meeting, maybe should just--i understand- >> on the pow r one, it is what it is under the code. on the agency vote, we put it on there just because we are scouring everything that had gone on. think what this is. this is a special assessment. land owner, do you-are you going to approve a new 5 cent per tax on your property? what will end up being on the puc whether we vote yes or no isn't determined. whether we vote, we want to be able to. but, it also is not-they are not asking for a $10 million special assessment, this is a land owner assessment type question that comes and they

usually do come pretty quick by the time they get to us they never come to the right address and always go somewhere else and forwarded here and there is a long lead time to get things on the calerder here. for action item or approval item, so this is a way of highlighting it and putting it on so it is there. i don't know it would-i think there is two of these in the last 10 years. i don't know it would kill us if we have time. there is a transparency thing is not the big-it is the opposite of the big dollar thing, it is the special assessment, our special use district votes that come to property owners and as you know, we own property in many counties. >> to be honest, a lot of the questions are going back to transparency. we really want to make sure all that is

in place. i also had a question on the amend power sales. >> okay. >> actually, on both of these items, i wonder why is the board deciding the threshold versus us deciding the threshold? both on the amend power sales and on the power sales? >> the charter gives the board authority over all contracts above $10 million where we are buying something, and above 1 or $2 million where we are getting money. sales, below a threshold. for us to get this, we had to ask the board for specific delegation of their authority to us, and that in those ordinances that was written the

amounts who went to, how long it would last, what kind of reporting we have to do to them. all those things are in there, which is one reason if you notice on the reporting, the quarterly reporting it pulls it out because there are specific board requirements for that reporting so we are-we do that reporting. everything we send to the board we do to you. it is just--we ask for that authority. the short answer, we ask for those amounts in that time, and the board- >> we give them a number then they approve that number. >> yes. it goes through the legislative process with a specific amount and specific time and we have over the years gone and asked for increases to that when things happened and when we first did this, it was before the market went crazy and powers went, so it wasn't useful for us. there is two important parts of this. the part we are talking about, which is

the amount and the time and there is the ability to enter into these contracts without specific city rules which is really the piece preventing us participating in a lot of green markets and all kinds of things so we had to get delegated authority to enter into contracts so that is where that came from. >> okay. i still say, i appreciate you walking me through these. i would just say, you know, based on the criteria i said earlier, from me personally, right? accountability, transparency and making sure we have a healthy organization that survives and thrives under different administrations, different commissions, different leadership. some of these do like those thresholds do make me a little bit worried to be honest with you, because i feel like in

some cases sort of takes them away from valuable discussion, puts them in a place that might not necessarily get the attention they need, and we do have some projects that are in important. regardless of the amounts, they are important to be part of a discussion. they might be a million dollar projects, but it is a important one that needs to be discussed, because context matter. to your point, if it is a major pipeline or building wastewater treatment plant, the amount is significant, but a small project might you know cost a lot more then it should as it should not have cost them. the whole discussion around the $28 million toilet that we went through last year or something. it wasn't ours the board of supervisors. just saying, context very much matters.

the size of the project, what project we are investing in very much matters and the size of those contracts are very much related to that project, right? some of these projects do need attention under the $25 million threshold. we may not have enough oversight or discussion to make things are spent properly and in the right way. >> i appreciate that. i would say in response to that, i'm not pushing back on that. this threshold we are talking about is the threshold between consent and regular, so-- >> yes. >> i hear you saying that there is a question whether it gets the attention, my experience is commissioners do read things and get questions whether at this meeting or beforehand. we heard on consent calendar there was

questions asked beforehand and answered and telling the public, here is the answer to these questions, so it doesn't mean there isn't ability to answer questions. >> yeah, and that's fine. people have different ways of approaching things. personally for me, i like to ask the questions and like to hear those questions answered and if if there is follow up i like to ask them. different commissioners have different strategies approaching things. i do ask tons of questions about the consent calendar, but this isn't about me or this specific commission, this is about long-term as people come and go how things are going to work and you would-i have been in a lot of boards. not every commission and board is formatted the same. they are not the same people are on these things, so we need to make sure things don't go unattentioned. >> right. >> that's my-not thinking about are we doing the right thing, it is more like, if we change this, is it going to impact the organization

financial health or accountability if for the generations to come for the next commission, for the next gm, for all that. for now, i will let other commissioners speak and then we can-- >> commissioner stacey. >> thank you and i want to say first of all that, i really appreciate the organization and the readability of this matrix. it makes so much more sense to me then the other matrix and breaking it out into more detail with the citations to codes and charter sections is incredibly helpful. >> it will pass the thanks to those who did it. >> it is so much easier to understand and read. i wanted to follow up and make sure i understood and some information that you gave in response to commissioner ajami's question on the construction contracts.

>> yes. >> it is your power point page 6. is the threshold amount set by admin code section 6.3 current ly $1 million, is is that what you said? >> yeah, the threshold amount is $1 million. >> okay. good. alright. and then, when i was reviewing the matrix, i was concerned about mou. sometimes there is an exchange of money between-this is just within the city, intracity mou, i was concerned about exchanges of money and i was thinking about the ocean beach project. do i remember correctly that was a mou within the city? maybe it doesn't matter. >> we do have mou's related to construction projects, related to operations of our facilities,

related to -we have mou we are paid on mou for our utilities by other departments. like, it all--we have all kinds of mou with other city agencies are not contracts, they are agreements between departments that can happen through a mou or work order. >> and i think that sort of alleviated some of my concern that the mou are often a good faith attempt at setting out a procedure or a way of working together. what i was concerned bet is when there is a exchange of money, but i think we do see the work orders in the budget process. i remember seeing work orders department to department, so we the commission would see that in the budget process for the most part. >> yes.

so, there is money that is exchanged between departments. those end up coming through the budget process and they are line items. i want to be clear that the mou's can include that money that has been appropriated, but a mou does not appropriate money, so that still has to sort of happen. the other side is, because there were no set roles and they are not set roles in the city about mou's, they happen in various ways. some come to this commission, like we enter this thing or talk about and take to the commission. others are entered in. this is the first formalized prauz. process. we have been working hard to gather mou's so we can say this is part that process.

every mou that will be entered in by anyone has to end up on these lists and being able to sort of be there digging for mou or mou's that last fl year and find them listed so we are working hard at making that in a central place and central public way, so, this both does grant to the general manager authority that was not on the matrix before. not appropriating money, but enter into agreements, but it also then sort of requires that the general manager come to this commission and list out what those things are. both those sides were missing before. it was silent and done in a very -it was just done in different ways. >> okay. and then, i was looking at some of the real estate provisions that

were not on the matrix before, but when i reviewed the record, i think there was a 2015 policy adopted by the commission that dealt with these real estate matters. >> you are absolutely correct. that is much more difficult. as hard to go to the matrix to matrix, the cottage leases were rule 6.1 and they were scattered all over so going through what is-what is the approval of those things and putting pulling out and put in here. i want to say, i tried to highlight, i did highlight for you when pulling that out of the guidelines the amounts would change and those are pieces we talked about. i highlighted those for the thresholds would change, but where i was pulling it over like the jurisdictional transfer stuff, that is when i said there is no change. it is a change adding to our

matrix, but not a change in the threshold or where it sits on the calendar or something like that. >> yep. got that. and then, i think that it is a really important function of the commission not only to have oversight of a lot of these issues, but also public accountability. allowing the public to see how the business is conducted, having a public hearing is really important and i think that can happen both on consent and regular calendar so finally, in connection to that, i also think it is really important that we pay attention to these quarterly reports that will be submitted to the commission and i think that will help both the

commission continue to be aware of what's happening at the general manager level that might not be coming to the commission, but i think we need to look at those reports carefully and if we think something should come to the commission or the policy needs to be changed, we can certainly revisit this matrix if something isn't working. >> not gathering pieces of paper, but saying that box i want different. >> yeah. the report gives me a lot of comfort and the something being on the consent calendar to me doesn't mean we don't have the same public accountability and the same public review. i think it is really just a matter of paying attention to everything that comes before us. so, i am comfortable that the report and the public accountability and the oversight role of the commission will continue.

i have one more clarifying question and that is, i'm not sure i understood the very last item in the matrix. an agency vote on ballot measure effecting sfpuc operations. when you were discussing it today mr. flynn, you talked about ballot measures that may arise in other jurisdictions where the puc has property or functions. >> land owner and there is is a special assessment or special use district or anything that talks about the assessed value, we will get a ballot. we don't get them very often. we don't get to vote on city ordinances or city rules or those things, but as a land owner, if santa clara is going to create a historic district and we are go-our property is in that, we

get a yes/no vote if tied to assessment to the property. so, those ballots come in, they go to the department of real estate and city administration and come over here and then people wonder who gets the vote on this. when we were trying to gather up the things, that's why we decided that happens and doesn't get reported anywhere, it is just one thing that is out there and so, [indiscernible] that's why it is on there. it has happened. >> okay. i think that's it for me. thank you. >> alrighty. >> i have questions i can go after you. >> okay, i just wanted to thank you and your team for putting this together. this is obvious ly a very very heavy lift in terms of all the work that went into this, and also, thank you for updating a lot of this that

needed to be addressed. it hasn't been done since 2009 and real estate, 2015. trying to-my feeling about this is that, it is making the puc more efficient and kind of updating and addressing a lot of changes the board of supervisors made and making sure that is incorporated, especially the area about the mou's. just having that level of communication is critical and having it written down i think that's what you know, in the future like commissioner ajami said, this is a blueprint for the future and i think there are some safety measures in here if i can use that term in terms of the quarterly report and then also the ability to consult with the

general manager or the commission president to address anything that we would like to either add to the consent calendar or regular calendar, so i want to thank everyone on your team for a lot of work on this. i really appreciate it. go ahead commissioner ajami. >> two things. by the way, when we worked on those items, who ends up voting the general manager? >> the general manager. >> is the one that signs the ballot? >> yeah. >> so, i'm still very hung on the $25 million and 10 years thing. i'm not sure where the number is and where the year should be, but i would like to see if there is a way we can

change that without necessary-continuing the item, but figuring out that number and voting on it. is that a possibility or no? >> yes, this line right here, we are talking one line on the matrix. it is 25 and 10 years. it used to be $10 million is what it was on the old one, and we moved that to 25. that is the change. the 10 years is-was a implied on the old one, so it is what was there, but there was no things. we pulled in because there- >> i like the year, that is a good idea because it gives the and thing. >> we added that in, but it was up to 1, 15 years ago up to 1, 1 to

10, 10 and above. what we proposed is moving it up to 1, 1 to 25, 25 and above. that's the real move. the years are kind of new, because--but, that's the number you are talking about. >> if i might, mr. flynn, for my perspective i don't have a problem if this were approved today to revisit what our experience is on the number and come back in a year to see if that number works or doesn't work for you and we see how that works. this is put together based on our best thoughts and experience of where we have been, but from our perspective, the number isn't in stone and we are happy to see what our experience is and come back and see if needs

adjustment. >> could i be clear what we are talking about. are we talking construction award? whether on consent calendar versus regular? >> yes. >> thank you. >> if we change the number of years could we pass it today or no? that is my question. $25 million, but 5 years? >> if you like to adjust the numbers as between consent and regular, that is something we can do and it isn't a significant change to bring

something down, just because between those two items, because it isn't dictated by law, it is a policy decision. >> okay. and i know i appreciate you saying this, because i think you and i had conversation last year or year before how things end up in consent versus regular calendar. maybe we can just actually change the year. i don't mind keeping the money on $25 million, but needs to be less then $25 million and less then 5 years. >> [indiscernible] >> i think--i will leave it to chair. i think that's a--i don't know how they go about doing that. >> so, you have to make a motion to approve it, approve the matrix

or policy with that proposed change. >> okay. okay. is that okay with you? >> that's fine. is that something if we have consensus with that or-i know president paulson isn't present. i dont know if that has any impact on our vote. >> it doesn't. you have quorum. >> alright. we would have to open up to public comment before we did that. are there any comments or questions regarding item 7? >> i am sorry, i thought that you commissioner ajami were going in the opposite direction that you didn't want to change the years but did want to change the money. now you are saying, leave the money amounts as they are on the matrix, but you want to shorten the time period?

>> basically, in my engineer mind, i'm dividing 25 to 10 by 10 and like, that means 2 and $2 and a half million a year. so, if i change the number of years i we can do either. we keep the years, change the money threshold. or change the-keep the money and change the time threshold. either way you end up with more -you get to see a lot more of these items that are sort of big chunk of money, but needs to be spent over shorter period of time. that's what i'm trying to achieve. therefore, $25 million need to spend within 5 years, if it needs to be spnt within 6 years then they have to come to to be on regular calendar.

>> if i understand the math you just gave us, if we shortened it to 5 years, then we are talking about $5 million a year. rough calculation, i get that. >> right. >> you are trying to increase the amount that the general manager could approve to be spent on for each year. >> not necessarily-this is a and. either the money needs to be certain number, or the number of years needs to go beyond certain number of years. >> yeah. >> i hear you. maybe i'm going backwards so maybe we need to increase the number of years. >> if you are trying to get to the department being able to spend less

each year-- >> that's not the case. i'm trying to figure out-this is what i'm trying to figure out--if you are putting a pipeline today, which is like a mile long and is going to cost $25 million and 10 years, and then another project comes around that will put a quarter mile pipe and cost $25 million and 10 years, then somehow we need to see how these things line up or $25 million--just try ing to figure how we can tighten in a way if a project is being over-charged, we will have a chance seeing somebody presenting it to us and having discussion around it. >> okay. i don't have a strong feeling either way, because i think both the

consent calendar and regular calendar come to us and we can comment on it or pull it off the calendar if we don't feel it is appropriate. pull it off consent if we don't feel-- >> one gets discussion, one doesn't as much get discussion. one gets a presentation, one dozent get a presentation. so it is a little bit more-there is more transparency in the process if there is something that is presented to you and you have discussion and you hear more about the project. >> deputy flynn, would you like to-- >> maybe i can make a proposal here that would sort of get what i think is going on here. if we moved it to the less then $20 million, so anything more then $20 million or 10 years, that tightens those two numbers together there. it still gives us the room above 10 which we have 15 years ago, so we are not in 2009, there is no

construction contract like that now, but it is somewhere in between there. if you wanted to amend it to be the award construction contract line, 4th box and consent and regular moving it to 25 to 20 in both those boxes. i don't know whether that is a change that could be made. councilor. >> that can be done as a proposed amendment during the meeting. >> alright. anymore discussion or quadratic equations regarding the pipelines? >> from my understanding that is a proposal that commissioner ajami is making is to on the road it says award construction under chapter 6.

under consent it is greater then threshold amount and less then $20 million dollar and less then 10 years. anything on consent has to meet both of those criteria under 20- >> yes. i'm still thinking about the number, but we can have public comment and maybe then land on a number. >> okay. director, can you open this up to public comment, please? >> remote callers, please raise your hand if you like to comment on item 7? any members present who wish to comment on this item? moderator, if there are callers with their hand up. >> ms. lennear, there are two callers who wish to be recognized. >> go ahead, please. >> caller, i unmuted your line. you have two minutes. >> hello, this is steve. can someone explain what

happens if a design build item that was part of this at a earlier time i believe? >> caller--go ahead. mr. lawrence, this is your opportunity to provide comment. no response will be given during public comment. >> okay. well, the other aspect of this is, i wish to remind you that 25 years ago the people brought-the commission had so much difficulty, the puc had no financial difficulty, that there was a

freeze on rates. since that time, things have certainly changed dramatically, but i hope that the commission will not advocate its responsibility to keep on top of the finances of this organization, which is [indiscernible] not only that freeze, but also corruption since then. >> thank you caller for your comments. caller, i unmuted your line. you have two minutes. >> thank you. this is peter dreckmyer, tuolumne river trust. this makes me nervous. commission which is supposed to provide oversight [indiscernible] if the puc is [indiscernible] commission is differential.

this proposal makes the problem worse. it comes across as a staff power grab. staff ignores comments and suggestions and the problems identified keep getting worse. commissioner requests also get ignored. i remind you of commissioner ajami's request last november for a sensitivity analysis looking how water sales projected impact the budget. we heard nothing. [indiscernible] convinced him to lift commissioner request on advanced calendar, then had to get him to list due dates. once he left the commission, all that quitely disappeared. couple years ago the commission changed the rules of order moving general public comment to the end of the meeting. commissioner ajami's name was [indiscernible] but couldn't believe it was her idea. she is very transparent to the public. [indiscernible] request for communication leading up to that item. i was denied based on attorney

client communication. illegal use that. earlier this year, 3 commissioners returned general public comment beginning of the agenda. it was wonderful. the first time i heard someone on the commission make a motion other then the staff recommendation. staff has gotten away with that so long it is now part of the culture. if i were in your shoes i would reject the proposal outright, but at least give the public a opportunity to understand it and weigh in. don't allow yourself to be pressured into rushing something you will likely reject. like general public comment. thank you. >> thank you caller for your comments. ms. lennear, there are no callers that wish to be recognized. >> thank you. >> i like to make a motion or request a motion and second to approve item 7 with the changes discussed by deputy flynn in regards to our previous

discussion. specifically--i don't know what those changes are, i just want to make sure we get those correct. >> i like to suggest we do $20 million, 5 years. sounds good? >> it is up to you. i think the staff have a harder time on the shorter years. we really did look and say how many contracts. we haven't looked ed at 5 years. we looked at various thresholds so i don't have a reaction as to what that does. >> this is-we can easily bring this back as suggested. we can do 20 million, 5 years, revisit it within a year. if this ends up populating our items in

a way that is over [indiscernible] we have such long meetings or things are used less in general sort of regular calendar, we can go back and revisit, right? even now, we don't have like-we have meetings that are quite timely and sometimes shorter, sometimes a little longer, so obviously this is not going to significant change if we go down to number of years and the amount, right? >> manager herrera, do you have any comments? >> i think deputy general manager, we looked at a certain amount and did certain evaluation. we tried to make a proposal we thought would accommodate your request, but if that's not-we have to look at that. so, i would say we pull the item and continue it. >> that's fine.

maybe then if you want to continue it you can come back with data and how that impacts the consent and regular calendar. >> i just have a comment to add if i may. i like the idea of lowering the amount of money that the differentiation between consent and regular calendar on construction award line item. i really am not as concerned about the length of time, so i would be-if we want to continue it and get more information that's okay too. i just am more concerned about the threshold amount of money between the consent calendar and regular calendar more so then the length of time. >> i understand for policy perspective that is something for you to decide. if you can come to agreement

oen the years,thalities polk fine. if it is going to reduce the number of years, i have to continue the item. i leave that to you all. >> can somebody explain to me why number of years matter so much? >> it isn't i'm necessarily sure. when we were doing this, we were looking at numbers, where we started and went and how many contracts given out in the last 5 years and frankly, i think we were looking at dollars. there was no limit on time, so we were adding a limit to add clarity here. it was silent on that before. because 10 years is--the 10 years is a new limitation that didn't exist so we were adding in this, if it is bigger then that could be a really big thing and go over here. it didn't, it was just numbers

before. it was 1 to 10, 10 and above. 1 to 25 we could have stopped there, but this was a attempt to bring some more in but we didn't look at this how many we are giving that are 5 years. we didn't do that, so it isn't i have a philosophical problem, i look at it and so i don't want-- >> so we don't know what would that-- >> yeah, so my proposal is that we go to the 20 and we go to the-keep it at 10, and we come back and we look what those numbers are and we tell you how many number of contracts. if you want to change at that point and look at it it will have make a matter do t but i would like to move this forward. it is continued a number of times. part that i was on vacation and part a number of things. >> part is because i asked you because i wasn't here--

>> totally fine, but there is a lot in here and lot of staff work in here and so i'm reluctant to say yes to something i haven't looked at. i feel comfortable on the money stuff. that is completely your criteria so if you want to lower that and think that will be--that is still operationally good for us. i just-we came up with a new limitation and didn't think about is this new limitation we are adding that didn't exist before to be big. it was-could have been a 20 year contract. it didn't matter. we thought that 10 years just adding a new thing way of talking about a big contract, but didn't analyze the other way at all. >> if i may, maybe the 10 year makes sense to me just because we are used to that charter section, 9.118

where the cut-off is 10 years for certain kinds of contracts that have to go to the board of supervisors, so 10 seems like a reasonable number to me, but it may be i have gotten used to the charter requirements. >> i think you put your hand on why that number came from. it is number we are all used to and exists throughout the thing. there was no number on it, so we pulled that sort of in, but it wasn't-- this again, you are really discussing what is on consent and are what is on regular. this is-i would like to leave here today with something passed. if we [indiscernible] where that fits and of course because [indiscernible] just saying you are asking me how do i feel about that and i can't- >> because i have to ask you. look, there is you know

operational efficiency versus transparency and they should not go against one another. we are not necessarily involving a day to day operation of this place, but i also want to make sure again, i'm emphasizing the fact that you will have to different combination of management, commission, board, and you want to make sure this organization survives under any of those. any political or manage or any kind of storm that can come and go. that's why i have to ask that question, because it is important and remember, it hasn't been long since we have come out of all the drama this organization has gone through. i was brought in during that process. i can't forget that. for me, every question is, is

this going to be good for the organization, or is it not going to be good for the organization. i'm happy to go with 20/10, but i do not want to sit here for a year and wait for results. if you want something to pass today, maybe by the next few meetings we will have a item maybe can be general manager report that shows data on how we came up with these numbers, because the way you are presenting to me, there was a lot of conversation, we decided these numbers. some data was hopefully involved in this process and i would like to see that data, then i can make that decision a little more-in a more educated way. now, if we go 20/10 and you bring me the data and i look at all these different contracts that have

gone through and we figure out oh, this is totally fine, that is fine and we don't need to revisit, but if it is not, we can think about how we can change this to make it work. i'm not necessarily--look, i'm not a lawyer, i'm not detailed-dont have a super detailed understanding of the code, beyond the water code, so for me it is like all these things is more does it work, does it not work, is it going to be right or not going to be right and majority of the public is going to look that way. >> i'm happy to come back with information about construction contracts in terms of dollars and time, so we can put that together and we will bring it back and i will leave to the general manager to decide whether that is a communication- >> it won't be communication,

we'll make a presentation. >> i agree. i like to move this forward today. there is a lot of discussion and lot of staff work on the matrix. i am comfortable with it 10 year period of time and happy to change the $25 million $10 year period of time and happy to change the $25 million number to $20 million and i think we'll have a report on that continuum of where the contracts land where the construction contracts land, but i also think the quarterly reports and i think this commission's attention to both the consent calendar and regular calendar gives me comfort that we will continue to be transparent and responsible on these issues, whether or not on consent or regular calendar. i like to move this forward today too and see more information from

staff. >> i like to reyest motion and second to approve item 7 as written with more discussion to follow on certain aspects of contract-- >> [indiscernible] we change the number, threshold to 20million. >> 20 and 10. >> $20 million and-we went from $25 million to $20 million. can we amend the number? >> i like to request a motion and vecd to approve items 7 with the $7 with the change of 20million and a 10 year maximum-is that acceptable language? >> i will make the motion and just to be clear what we are amend ing is line item for awarding contraction and the column is the consent calendar

column and regular calendar column that reflect the change from the $25 million to $20 million number in both of those columns. >> thank you. >> so moved. >> second that. >> director, may we have roll call, please? >> rivera, aye. ajami, aye. stacey, aye. we have a quorum. >> >> item 8 has been removed so will you read item 9, please? >> yes. approve the appropriation of earthquake safety and emergency response tent twen and 2014 general obligation bonds.

>> good afternoon again. laura bush, the deputy cfo hoping the item should be quick and easy. this should be relatively unconsverseulum. we are asking your permission to ask the board of supervisor to appropriate $6 million of interest earnings sitting in a bank account at the treasury, sf treasury, and this is earned on go bond proceeds and this money is intended for the emergency fire fighting project. it is budget supplemental because this money isn't legally appropriated in the current budget. we are asking for additional supplemental to use the $6 million, it is just sitting there in a bank account for this project. i will hand it over to josh anderson from infrastructure to walk you through what the project is about. thank you.

>> good afternoon commissioners. can i have the slides, please? i'm josh from the project management bureau. we are looking to reinvest the 2010, 14 bonds, interest earnings from the bonds. part of the reason we are asking to use this is we are looking at a funding gap coming up temporary. this helps bridge the gap and we use for planning and design.

we use for the west side potable emergency fire fighting water system as well as the fire boat [indiscernible] this slide shows the financing-funding on the program. i want to draw your tension to the green portion. the $9 million on 2020. this is where we are working mostly, 2020. we have about $9 million available, but that funding is accounted for. $5 million is about to be appropriated for the 20 motorized street valve project. that is construction and construction management. we also have a new pro-163 contract coming up and the other one is

[indiscernible] we have a claim issue, so that takes us all the way through that $9 million and on the next slide, i'll talk about the other funds we have coming up for the program. this is used for planning and design. we have a future funding for two more user bond sales. one in january 2025 for $41 million, and one in 2026 for $75 million. those funds will be used for the remainder for design and into construction. and after that, we are looking to go to ballot measure for 2028. this gives a idea where the funding is and how to appropriate the interest earnings. the summary of the proposed action is to approve the appropriation of 2010 and 2014 general obligation

bonds interest earnings in amount of 6 million, 180, [indiscernible] for earthquake firefighter water system project and authorize the general manager to submit capital project supplemental appropriation ordinance and associate bond authorization to the mayor and board of supervisors. that's all we have and can take any questions. >> thank you for that report. any questions regarding this? i did have one question. you mentioned pump station 2. i'm trying to see what work needs to be done there. i thought it was just rehabilitated. >> there was a claim issue that came up that is about $1.2 million. >> can you specify, what do you mean a claim? >> with the construction. not familiar with it details

because i'm relatively new but i can get more information and bring it back if you like. >> yeah, i just like to--i'll talk to-that's fine. can we open up to public comment? >> maybe this goes to mrs. bush. what's the long-term strategy on this? $6 million here, then what? >> the project is funded through go bond, not through sfpuc. >> i was wondering that. >> this is a rare beast, so this is go bond funding. >> okay. >> these go bond have been sold by the controller office and dpw and puc and the money is transferred to the projects. as josh mentioned, the small $6 million we like to appropriate will bridge the gap until the next planned

issuances go bonds under the program. >> got it. okay. thank you. >> director, can you open up to public comment? >> yes. remote callers, please raise your hand if qulou you wish to provide comment on item 9? do we have any members present who wish to provide comment on this item? moderator, any callers with their hand raised? >> ms. lennear, there are no callers in the queue. >> thank you. >> i like to request a motion and second to approve item number 9. >> i'll move. >> second. >> may we have roll call, please? >> vice president rivera, aye. commissioner ajami, aye. commissioner stacey, aye. you have a quorum. >> please read the next item.

>> approve amendment number 1 to contract number pro.0138c engineering for dams and reservoirs with aecom technical service inc. >> may i have the slides, please? good afternoon commissioners. my name is ted lee with the sfpuc here this afternoon to request approval of amendment 1 to contract number pro138c engineering service for dams and reservoirs. after the orville dam failure in 2017, the california division of safety of dams sent letters to all the dam owners in the state of california requesting condition assessments of their still ways that are under dsod

jurisdiction. so, we advertised pro138 a, b and c in late 2019 for all dams and reservoirs from hetch hetchy, all the way down to the city. pro138c covers facilities shown here in the east bay, the peninsula and in the city. at the time of advertisement, the capital plan for the pro138c projects had a budget of 81.5 million based on what we assumed at the time. meanwhile dsod they were learning and analyzing repairing orville so imposed additional requirements as they learned, so these requirements and analysis were put on dam owners in the years that fallowed. so, we since completed some of

the needs assessments on several of these facilities and these assessments helped define project scopes. we significantly increased our budget to $208.9 million to reflect these updated needs. so, this slide shows the projects in 138c on the left, the current phase of each project, the current contract budget, and our proposed amendment 1 modifications. the original contract is $1 modifications. the original contract is an leave million 11 year pool contract where we list the selection of pre-determined projects that this contract will support. this type of contract provides flexibility to us in professional service support throughout project planning, design and

construction. so, we funded these task orders under the contract based on project criticality and priority. we did not assign a set aside amount of the $11 million for each of the projects there on the left. as the work was really not known prior the condition assessment of work. now we know more, in amendment one on the right side, we are asking for additional $9 million with no additional time to continue planning and engineering design for several of these projects. san andres dam, turner dam, [indiscernible] sunset reservoir and university mound reservoir, so it is a significant increase on the contract but a intentional evolution of the work based on project criticality and priority, so i'll do a quick review of each of these dams.

san andres dam, [indiscernible] the second bullet shows the budget for when the contract was advertised, in this case $25.7 million, versus the budget in the capital plan, increase to 32.2. for turning dam, east bay, we are addressing recommendations in the turner dam still way condition assessment report. this project is pretty much stayed the same in terms of dollar value. for [indiscernible] also on the peninsula, we are looking to address seismic stability through upgrades to the dam, spill way and outlet works. sunset south basin in the city, we analyze embankment, reservoir, roof and structural components.

for university mound south basin, also in the city, seismic strengthening of the roof structure and other structural elements such as divider walls, liners, gate towers and inlet/outlet conduit. so, this slide is the same slide as the earlier slide and adds additional column on the right for rough order of magnitude request of future capacity as planning and design work continue on these projects. so, we anticipate that we will need to find other means for contracting capacity to do the work, which may utilize existing as needed contracts for smaller efforts, or most likely a new rfp. or we can come back to the commission for future amendment to pro138c. from a funding perspective however, as the projects move through condition assessment and planning and we keep learning more and update our

scopes and our budget-that is taken into consideration in the 10 year capital planning and budget process. happy to take any questions. >> thank you mr. lee. commissioners, any questions or comments? commission stacey. >> thank you for the presentation and clarifying other means. i was thinking there other sources of money we would be tapping into. this is big increase and you mentioned we are looking at criticality of certain dams and reservoirs. it also seemed from the staff report as though you were not only anticipating regulatory changes, different standards implemented following the orville dam analysis and that you were watching to

see what dsod was doing and so you are not only responding to changes that are already taking place, but trying to anticipate what might be coming in the future based on what you see happening else where in the state. did i understand correctly? >> yes, dsod is doing their analysis and they learn then they think maybe we should get these state dam owners to do this too and so then they continue to pass down requirements onto us. >> it looks particularly on the [indiscernible] dam there is a wade range from 0 to $64 million. i assume you are evaluating and that is why there is the wide range on your slide.

the status here--see the slides. the conceptual engineering, so end of planning is march 2025, so by then we will have a pretty good idea which alternative is the best. >> great. >> and which we move into design. >> good. it just seemed there had to be a fairly wide range of possibilities given the raisk raisk of cost. >> imposed reservoir restriction so we are at water level lower, so there were different alternatives we were looking at whether to operate with reduced reservoir restriction forever more and the most extreme is build a brand new pil a rcitos. >> thank you. >> commissioner jaumy. ajumy. ajami. >> glad to see sthis and we have a very old and functioning and wonderful system that needs attention and

i think it is important to pay attention to these dams, especially the older they are, the more maintenance they need and it cost more to operate them. so, i was glad to see this and hopefully--depends on a lot of storage, so that storage, all the dams are quite important to our system. so, i look forward seeing how this progresss. >> thank you. >> alright. thank you. director, can you open up to public comment, please? >> remote callers raise your hand if you wish to comment on item 10. do we have any members of the public present who wish to comment on this item? moderator, any callers with their hand raised? >> ms. lennear, there are no callers in the queue. >> thank you. >> alright. i like to request a motion and

second to approve item 10. >> move to approve the amendment. >> second? okay. may we please have a roll call? >> vice president rivera, aye. >> commissioner ajami, aye. commissioner stacey, aye. we have a quorum. >> please read the next item. >> we have a public hearing to approve the irrigation controller rebate program. >> good afternoon commissioners. my name is julie ortiz and manage the water conversation section and want to introduce team member sergio ramirez here today and we are seeking your approval today to establish a new irrigation controller rebate program to encourage customers with irrigated landscapes to water efficiently. to give context, we estimate

landscape irrigation use represents about 12 percent of total retail customer sector use. many water utilities in california offer rebates for instillation of smart irrigation controllers. the pacific institute of water sufficiency program supports our plan to establish this program and market to customers who may be over-irrigating. this program ised a ministered in-house by puc staff like our other conservation rebates and we plan to launch january 2025 where your approval. the program will provide rebates off the purchase cost for qualifying ep a water certified weather based or soil moisture based irrigation controllers that are installed in existing irrigated landscape in the retail service area. we are proposing two pricing levels for the rebates based on the size

and complexity of irrigated landscape. for small landscape typically find at a single family home or small multi-family or small commercial site, we would provide a maximum rebate of up to $250 for qualifying controller up to 2 controllers per customer and large landscape over 10 thousand square feet with irrigation systems that serve many zones, we will provide up to $35 per active station. these large sites would generally be more like parks, ball fields, large apartment and ho a complexes or campus like settings. again, for perspective, large irrigation systems in our service area, may have 25 to hundred active stations with some up to 200 active stations. we base proposed rebate amounts looking what or water utilities are doing and setting so it is a substantive

rebate, which could represent between 50 up to hundred percent of the controller purchase cost depending on the size of the landscape. participation requires applicants to get a free landscape assessment from the puc conservation team that enable to give site specific guidance. water [indiscernible] two type of controllers, weather based irrigation controllers that use local weather and landscape conditions to taylor watering schedules and soil moisture based irrigation controllers that monitor moisture levels in the soil to prevent irrigation when water isn't needed. both types of controller are considered smart technology. poorly scheduled irrigation is a key cause of over-watering at some properties and for the sites replacing

or upgrading conventional irrigation timer with water sense labeled smart controllers could reduce water waste. the new rebate will expand the suite of outdoor assistance with free evaluation [indiscernible] community garden irrigation meter grant program, rebates for rain barrels and sis turns training and measures. we plan to promote the new program with landscape for focus on sites we identified through the landscape assessments as being top users, having leaks or other potential water waste. we also plan to do direct outreach to customers to garden and home supply stores and contractors. we will have articles in current and have social media posts and ads. that concludes my remarks and happy to answer any questions. >> thank you mrs. ortiz.

commissioner ajami. >> thank you. obviously i'm very excited about this. that is wonderful. i is a neighbor that constantly her irrigation is running and water going through the streets and it drives me crazy. as you can imagine and i hope maybe i can gift one of these to them. but, on that topic, i'm very glad to see this, but since we have you here, you know, i often when i go to the golden gate park i see every grass area or irrigation is over-watering where they are being used and i wonder if we can sort of work with park and rec on that as well and try to help them to do some of these smart irrigation systems. it is just again, makes me crazy to see-i know they are using

recycled water, but using a lot of resources and energy to turn the wastewater to recycled water, so i'm just asking you to see if you can look into that and let us know what we can do. >> absolutely. we certainly will be letting rec and park and our big muni department agencies that have irrigated landscape know about our program and i imagine they will be interested in participating. >> i hope so. please keep us posted. >> thank you very much. >> thank you. >> director, can you open up to public comment? >> remote callers, raise your hand if you wish to comment on item 11. do we have members present who wish to comment on this item? moderator, any callers with their hand raised? >> ms. lennear, there are no callers in the queue. >> thank you. >> alright. i like to request a motion and second

to approve item 11. >> i move to approve. >> second. >> may we please have a roll call? >> vice president rivera, aye. commissioner ajami, aye. commissioner stacey, aye. you have a quorum. >> please read the next item. >> next item 12, communications. >> i don't think there is comments on this. alright. so, let's move to the next item, item 13. items initiated by commissioners? discussion? okay. item 14, please. >> item 14 is public comment on the matter to be addressed before

closed session. remote callers, please raise your hand if you wish to comment on item 14. do we have members of the public present who wish to provide comment? moderator, are there any callers with their hand raised? >> ms. lennear, there are no callers in the queue. >> please read item 15. >> item 15, motion on whether to assert the attorney-client privilege regarding the matter listed. >> may i have a motion on whether to assert the attorney/client privilege regarding closed session matters agendized as conference with legal counsel? >> move to assert the attorney client privilege. >> i second that. >> may i have a roll call, please? vote. >> vice president rivera, aye.

commissioner ajami, aye. commissioner stacey, aye. you have a quorum. >> alright. we'll go into closed session. [meeting reconvened] >> alrighty. item number 17, the commission is recommending that the board approve the settlement referenced in item 16. director, please read the next item. >> we need a vote not to disclose. >> move-- >> i was asking-i could read it. item 18, a motion regarding

whether to disclose the discussion during closed session pursuant to san francisco administrative code, 67.12 a. i would like someone-request a motion not to disclose discussions during closed session. >> move to not disclose the conversation in closed session. >> can we have roll call vote, please? >> vice president rivera, aye. commissioner ajami, aye. commissioner stacey, aye. you have a quorum. >> adjourned. [meeting adjourned] .

>> my name is jan an wong a regional paralyzing in the bureau i did not see might have as at management in the beginning which my career i have a master in civil engineering i thought i'll follow a technical career path i scombrie being able to create a comprehensive plan implement and shape it into realty love the champs of working through cost quality schedule political and environmental structuring and

finding the satisfaction of seeing the project come into fruition i've also take advantage of the sfpuc training program yunt my certification i see the flow from the pipeline into the tunnel one by one and i also had several opportunities to attend and make presentations at conferences also as a tape recording san francisco resident authenticity rewarding to know the work i do contribute to the quality of life my life and those around me [music] hi. i'm san francisco mayor london breed i want to congratulate

sfgovtv on 30 years of dedicated service as a broadcast channel for our vibrant city. you played a critical role during the pan dem and i can worked keep residents informed. adapted to changing situations that allowed our residents to engage and participate in government. thank you for 3 decades of informing and inspiring and connect the people of san francisco as the voice that. >> hi my name is jason jones a xaefrp and communication capture at the san francisco water department i hnlt a high volume of calls and radio communications i enjoy coming to work i still find it challenging i still learn everyday and i'm going to have the level of activity if zero to 60 in a

matter of minutes i take bride pride in handling the emergencies. >> have are you available the work order is 2817827 that's one of the great things of sfpuc they offer work shops to help you get ahead you have to care about the job and go above and beyond to find out as much as you can the three puc i so no glass ceiling the opportunities are end

each speaker is allowed three minutes to comment unless the board president deems new time limits. all public comments are concerning the

item presented. a caller may ask questions of the policy body. the health service board welcomes up to 30 minutes of remote public comment for each item. remote public comment for those with accommodation due to disability will not count towards the 30 minutes. you can dial in by calling 415-655-0001, 2660084961. press pound. you are prompted to enter the password, 1145 and pound again. press star 3 to be added to the queue. you will hear the prompt, you have raised your hand to ask a question. when the system message says your line is unmuted this is your time to speak. you will be muted when your time is expired. for those on webex click on the raise hand icon. a raise hand will appear next to your name. when you are unmuted request to unmute will appear on your screen.

please select unmute to speak. once your hear, welcome caller you can begin speaking. click on the icon to lower your hand. members of the public are encouraged to state their name clearly, but you may remain anonymous. i will give a audible warning when you have 30 seconds remaining. we want to thank sfgovtv and media service for sharing the meeting with the public. as reminder, this is general public comment. any comments to pertain to future agenda items or general public comment. >> good afternoon commissioners. director yant. dennis krueger, active and retired firefighters and spouses. i'm here today as a 50 year member of the health service system and a 35 year attendee of health service commission meet shz. as i look around this room, i

only see commissioner zvanski and myself that have the institutional knowledge of this commission history. so, to have watched one of the most respected boards lose all its integrity and credibility was a very sad day for me. to see the optuse treatment of the membership by the appointed members of this board was extremely disappointing. when the attendees became emotional because of the restricted comment time they were allowed, you called the sheriffs. the history of blue shield is one of bate and switch. how is it possible to offer the same coverage as united healthcare, but for $20 million less? i will tell you-- deny treatment, deny medication or both.

it is history is any indication which we observed, blue shield will be back here to ask for adjustments on their rfp. they have done it before, they will do it again. their proposal was placed in the city budget before it was even voted on by this board and then to watch the appointed commissioners twist themselves into pretzels to get the results the mayor wanted, including the removal by the mayor of one of the most compassionate, knowledgeable, and respected commissioners who did the right thing. this was very disinheartening. you too face removal if you do not meet demands of this mayor. this board has shown it lf is to be nothing more then a political arm of the city. rather then the independent

commission it was created to be. when blue shield returns here asking for more, i hope you will remember what was said today and that the membership deserves better from you. thank you. [applause] >> any other members can approach the podium. as reminder this is general public comment. we have a item specifically for the blue shield plan. >> fred sanchez, president of protect our benefits. i'll just say, ditto to what he had to say. i where don't want to stay up here and just say the same thing, but the feelings are echoed by not only protect our benefits, our coalition with recc, cara, all the different senior advocacy groups, they all feel the same. the disruptions are already happening. a member will call intoday on

he got a letter that as of august 15, it is called landmark will no longer be available to him. i'll complement the staff and the chief operating officer. he immediately called that individual and he didn't have a answer for him, but said he would look into it, so the staff is still doing their jobs and i'm still very complementary of the staff here. thank you. >> thanks fred. >> i'm not sure if we are talking in- >> talk in the microphone. >> if we are talking about united healthcare and the switch to blue shield. >> this is general public comment, so we do have a specific agenda item- >> number 12? >> yes. >> so, the earlier comments were just-

>> the earlier comments were a general public comment that had those in them. if you had a question about uhc or blue shield the opportunity is on item 12. >> okay, i'll be back. thank you. >> hi. because i don't know if i can stay till that agenda item happens i want to speak to the switch. i am a retired sfu surks d teacher and are taught in the district 29 years and served the district and worked in the hardest schools where you now cant get teachers, and when i retired i got united healthcare and the healthcare services i was eligible for improved dramatically and my copays went down, i was able to see doctors i wasn't able to afford to see when i was working and had blue shield and i'm really upset and disappointed and outraged

at the process that happened around this moving this contract over to blue shield. thank you. >> thank you. no one else approached to the podium and we'll move to the remote public comment and the moderator will notify of callers in the queue at this time. >> board secretary, we have 9 callers on the phone line, zero callers entered the public comment queue at this time. >> thank you modraert. hearing no further callers, public comment is now closed. >> thank you. agenda item 4, please. >> item 4, approval with possible modification of the minutes of the meeting set forth below. this is action item and will be presented by president hao. those minutes include the june 7 board meeting, the june regular board meeting. >> colleagues we have three sets of meetings before us and i welcome any

comments or feedback or corrections you may have noted. >> move approval of the three minutes june 7, june 13 and june 18 meetings. >> second. >> it is properly moved and seconded and we'll take public comment on these items. [providing instructions for public comment] no one approached the podium and move to remote public comment and the moderator will notify of callers in the queue at this time. >> board secretary, we have 8 callers

on the phone line, zero callers entered the queue at this time. >> thank you. public comment is now closed. >> alright. we'll take a roll call vote, please. [roll call] >> i am going to pass since i was not attending but they look reasonable. abstain. >> alright. these minutes are passed. thank you. so, next agenda item. >> item 5, election of the health service board committees. this is action item and will be presented by president hao. >> well, we have come to that time of the year where we will set up new standing committees of this board, so i would like to nominate the

following members of this board for the following committees. for the governance committee i like to nominate vice president zvanski to be chair of the committee, and she will be joined by commissioner wilson as well as me and for the finance budget committee i like to nominate commissioner sass to be chair and joined by commissioner cremen and howard. that is the motion on the table and open for discussion. no objections or discussion then i'll entertain a second. >> so moved. second. >> alright. it is moved and seconded. we'll take public comment on this item, please. [providing instructions for

public comment] no one approached the podium and move to remote public comment and the moderator will notify of callers in the queue. >> board secretary, we have 8 caller on the phone line, zero callers entered the queue at this time. >> thank you moderator. hearing no caller, public comment is now closed. >> thank you. we'll take roll call vote, please. [roll call] >> thank you. and thank you for your service in the upcoming committees. we'll take the next item,

please. >> item 6, president's report. this is discussion item and presented by president hao. >> welcome to the new fiscal year and new cycle of our board meeting. we will soon find thinking about rates for plan year 2026. we just closed out a year where there were some changes to our plans and i know that has caused some concern, but we hope to be able to work through those with the staff and to alleviate any concerns you may have going forward. but we look forward to serving our members and to being thoughtful what that will look like in the upcoming year. that is my report and happy to take public comment. [providing instructions for public comment]

we'll begin with in person public comment. no one approached the podium. we'll move to remote public comment and our moderator will notify of any callers in the public comment queue at this time. >> board secretary, we have 9 callers on the phone line, zero callers entered the queue. >> thank you moderator. hearing no callers, public comment is now closed. >> thank you. and agenda item 7, please. >> item 7, director's report. this is discussion item and will be presented by sfhss executive director abby yant. >> thank you. good afternoon commissioners. i just wanted to acknowledge as we all know the rates and benefits got full approval at the board of supervisors and passed on the second reading, so we are proceeding with our

implementation plan which gets a snapshot of coming up later on the agenda. i also want to take note of equity inclusion update luteesha harris provides for us noting august is transjnder history month. honey mahogany is appointed as the new director of transgenter initiative and welcome her on board to continue the great work that office has begun. the last report give on the lease agreement. we did move off the first floor, we closed the wellbeing center, and we relocated eap and wellbeing to the second floor of the 1145 building we occupy and so that's pretty much done. there is still like all good construction projects has a solid 5 percent that needs to get completed, but we have a great relationship with trinity and everybody is

proceeding as planned. the healthcare affordability board and advidesy committee at the state level continues to grapple with the issues we grapple with on the local basis the cost of healthcare, improving the primary care subs and behavioral health and the work is monumental, so i just would like you to know we follow that closely. it will have impact over time with the work we do here locally. i do want to welcome on board here today-chow who joined the finance team. thank you and welcome. >> welcome. >> we continue to enjoy a great relationship with our homan resources department personnel officer who is super efficient and helps us fill opens very rapidly, so really pleased to continue to keep our vacancy

rate low. we have some turn-over. the majority is people finding opportunity to promote within the city, stow it is a good thing for them and then it does require a replacement staff. much of the other report, i would call your attention to the operations dashboard that has really--the tool itself really developed and i think it gives you a good snapshot in time of how operations has really stabilized and improved their services and continues to do so as we ready for open enrollment that will be quite busy with the plan change for the retiree medicare product. and communications is a very big part that, so we got a good stable method for monitoring and tracking the activity of our call center and we'll talk more about how our call center coordinates with blue shield

call center in very quickly right now. we are actually in a soft launch now quitely testing all of the systems. carrie provided us with the activities on the mental health awareness month. that has really grown over the years. i know commissioner howard and i just spoke earlier today about the great mental health services that eap and particularly for the public safety department is really taken hold, the services are available, our members are using them, the work is difficult, but it continues and we get our members also enjoy the mental health services provided by our health plans. i think that's all i have for the director's report. i can take any questions. >> we do have a ac system working very well for us, loud.

it is coming through out to the public via webex and sfgovtv it isn't interfering with that, but i'm guessing the crowd might need us to speak into our microphones a little closer while the air is on. thank you. >> we can't hear each other. >> okay, yeah. >> we like a efficient ac system so thank you. but, executive director yant, i want to commend you and the staff for improvement in all your metrics year over year. i recognize data doesn't always tell the story of possibly the complexity of the calls and other things and so, but i do want to point out that appreciate the improvement and services to the members. >> absolutely. >> any other questions or comments about the director's report for director yant?

>> [indiscernible] >> alright. then we'll take public comment. thank you. [providing instructions for public comment] we'll begin with in person public comment and no one approached the podium and move to our remote public comment and our moderator will notify of any callers in the queue at this time. >> board secretary, we have 8 callers on the phone line, zero callers entered the public comment queue at this time. >> thank you moderator. hearing no callers, public comment is now closed. >> thank you. next agenda item pleaseism

>> 8, sfhss financial report as of may 31, 2024. this is discussion item and presented by iftikhar hussain, sfhss chief financial officer. let's make sure your mic is set. >> can you hear me okay? too loud, sorry. >> no, no. >> alright. good afternoon. the cfo for hss. happy to report the trust balance in the 11 month of the year look good. we did see an uptake in claims, which is seasonal and consistent, but what we saw last year. in the detailed report you see this month, we added last year's data for comparison and you can see this year activity was with last years. but what are in a good place.

we think about the end of the year there is drop of $5.3 million, which is healthy because we had built into the rates a $14.9 million stabilization which would have dropped the balance. the pharmacy [indiscernible] interest income have gone up, 5.2, the highest we had, because of rates. the sustainability fund net increase because we got reimbursed for activities or expenses we had last year, so the reimbursement came in this year and increased. we do expect the general fund to be ahead of plan and we had committed to the mayor and the controller that we would come in ahead of plan mid-year planning for this year, so we will exceed those targets. the primary variance remains due to vacancies we now filled. and then the audit activities are ongoing.

we have mgo looking at the trust balance and we are in the year-end close process and they will do the review and we'll present their results in november at the november meeting. happy to answer any questions on the financial's. >> thank you so much for your report. i have a quick question. when you say the claims are seasonal, is there a particular reason for that or just saying that is the trend we experienced? >> that is the trend we experienced. i think the claims come in 45 days-paid 45 days late, so i think this is really the spring activity coming through. >> okay. thank you for the clarification. >> yes. pardon me? >> thank you for the clarification. >> sure. >> any other questions or comments by board members? alright. thank you for your very thorough report. we'll take public comment. [providing instructions for public

comment which are displayed on the screen] we'll begin with in person public comment and no one approached the podium. we'll move to remote public comment and our moderator will notify of any callers in the queue at this time. >> board secretary, we have 9 callers on the phone line, zero callers enter the queue at this time. >> thank you moderator. hearing no callers, public comment is now closed. >> thank you. next agenda item, please. >> item 9, dependent eligibility verification audit. 2024 update. this is a discussion item andprinted by olga operation manager with sfhss. >> good afternoon commissioners. hope you can hear me okay. wonderful.

operation manager with the health service system. i'm excited to share today the results of the 2024 dependent eligibility verification audit that was conducted earlier this year. before we jump into the deva audit i want to highlight a few of the notable results. this year we audited 985 of our active employee members with a dependent population of 2127. we had a very successful completion rate compliance rate of 95 percent, with the financial savings of $417 thousand on a annual basis for terminating coverage of ineligible dependents. the dependent eligibility verification audit is a reverification process of dependents that are covered for

health and dental benefit. it is industry standard among health plans in order to insure that benefits are only provided to eligible dependents. the result of the audit help to reduce the cost related to premiums and insure sustainability in premiums across the board and the coverage of people who are not eligible for health benefits provides a financial risk to the plan administration and to eligible employees. a little bit of history of the dependent eligibility audit conducted by the health serveest system, the first audit conducted in 2018 with the full population of the system retirees and active members being audited because of the size of the population the audit was conducted by a

external vendor. there were some challenges, specifically around consistency of verification documents that could be provided by the members in compliance, and so taking the lessens learned from the 2018 audit, when we chose to make the-to do the audit in 2022 be a internal audit, we had a lot of research done on the standard practices among other entities who conduct the deva to evaluate what kind of documents they collect for continued eligibility and that was utilized in the 2022 retiree pilot. we had population of 634 retirees audited, only spouses and domestic partners were included in the population so 1 to 1 ratio of members to dependents and we had a pretty successful completion rate there as well, 97 percent of the

dependents passed the audit. i believe only 19 dependents were terminated due to ineligibility at the time. now, taking the lessens learned again from the previous in-house audit we applied the lessens to the 2024 population with the active employees. however, here we did include children as part of the audit so you can see that that ratio between members and their dependents have increased so we are looking at a population over 2,000 dependents audited. taking a look at the audit timeframe in terms of the communications we sent out to our members, we had a pretty robust campaign of educating our members on their requirement to comply, how to comply and the pathways to comply. with our first letter sent out to our members, we educated them on

which of their dependents were going to be audited this go-round. what documentation they can provide to insure compliance with the audit, and the pathways to be able to do this so a robust communication do members audited with this pilot. throughout the compliance period, which was april 1 through april 30, we also sent additional letters to our members. first, those who attempted to comply but maybe sent an ineligible letter or wrong document. we communicated with #24e78 via mail and let them know what is missing to meet compliance. those who failed to engage at all by mid-point of the audit we sent a reminder letter to increase chances of a high rate of compliance for those members. at the end of the audit after everything was processed midmay

we communicated through disposition to inform they were successful or inform them to let them know their dependents would have the coverage terminated. we wanted to make sure all notice requirements were met. we have three groups of members that were being informed. those who were successful the happy pass and let them know their dependents continue to remain eligible for those who failed to comply for any of their dependents, they were notified those dependents would be terminated and the date of the termination and then the third category where it was the mix where they complied for some dependents and not others and we were able to notify them of those who they complied for and those who didn't. for the population of members who failed to comply with the verifications for their dependents, we also sent out

an e-mail communication and that kind of spiked more compliance among our membership. and here you'll see, we tried to be as creative as possible with this really bright pink envelope that all our deva communication team to encourage members to comply, because making sure they were able to comply, not just because the dependents were eligible, because they are actually complying as well was really important to insure we are maintaining eligibility and maintaining coverage for the dependents who are actually eligible. and the full implementation of this audit is very much a coordinated effort among multiple divisions of the health service system. the communication team was involve said in the development of the letters, the education materials for our members, the development of our website

and leading members to resources that educate them how to comply and the pathways for compliance. we included a list of acceptable documents with our communications along with posting them on our website and providing our members samples of the type of documents and what pages they need to provide in order for them to make it easier with the compliance process. our communication team also was very much involved in making sure that the reports necessary for the disposition letters were completed timely, so that we are communications with members were timely. our enterprise and analytic team did a lot of work within our systems to make sure we were able to complete the audit internally both in building out the e-benefit platform for our members to comply.

insuring we were able to keep track of our compliant members within the sales force system and insuring integration between the people soft system and our document management system where we were able to view the documents provided by our members. there was a lot of behind the scenes planning, a lot of implementation of system changes, and so i believe that we did a great job in being able to coordinate the needs from what member services needed in order to implement the audit and getting the support of communications and our enterprise analytical team. jumping into some of the results. as we can see, we audited three different populations here, children for children members were required to provide a birth certificate. for a spouse, members were required to provide their federal income tax returns for year 22 or 23.

specifically indicating they were filing taxes jointly or separately dependent on the situation and also had the population of registered domestic partners audit and that was a split population where there were some partners claimed as irs qualified dependents, and for those the member was required to provide income tax again for 22 or 23 year indicating the dependentancy. for those registered domestic partners who were not claimed as tax dependent, members were provided a list of other documents that they could provide as verification that continued financial inter-dependentancy. >> do you also do a verification of for example, adult children who

remain dependents? >> that is a separate audit. adult dependent student were excluded along with unified school district. >> you require documentation when signing up for benefits? >> that is correct and the audit is forthcoming. >> thank you, just double checking. appreciate it. >> of course. and so, looking at the results we had a really high compliance rate or response rate among our members, especially during the early part of the audit period and that was a really good sign we are going to get to the high percent of compliance. as you can see, at the time the data was pulled after the compliance period, only 104 dependents were terminated for ineligibility, which is that 5 percent of the population audited.

now i'll jump to the construct of the way member services supported or conducted this audit. we had three dedicated benefit analysts that processed the over 1400 documents that were submitted by our members. they were also dedicated to a specific deva phone queue we had set up for our members, who were calling to get support on compliance. we had one supervisor also dedicated to this project to insure the documentation of the process was available, the training were available to our staff, and to insure any escalated issues would be quickly resolved. as you see here, a lot of our members ended up complying through the e-benefit portal, 77 percent,b which is great. we took a lot of time to develop that pathway for them to comply and it was a

resource heavily utilized. interestingly enough, i did a look at our 2022 data, the numbers were flipped. only 25 percent of our retirees utilized the portal in the 2022 audit period. we still have a ways to go for that full utilization of the portal. one thing i also want to point out, we did this parallel approach with insuring that majority of the children we were auditing were going to remain eligible, because most likely they would be and the type of document they would be providing would be their birth certificate, the parent relationship wasn't dpoeing to be changing. al among the audited population, we evaluated 1200 of our child dependents. this was a very manual process to review our document retention system and of those all most 800 were identified as having complied

already, so that allowed us to keep that high number of child dependents continuing with their coverage. now i'll jump into the financial results we see across three audits completed in 2018, 2022, and this year in 2024. as you can see, the annual per person savings for ineligible dependents is relatively consistent and overall savings for those terminated for ineligibility is quite significant on a annual basis. before i conclude, i wanted to address a few of the lessens learned and the challenges that we experienced with the audit. of course, making sure members are educated about why the audit is happening was one of the

challenges. a lot of folks did feel this was with any audit there is going to be that sense of feeling like they-it being highlighted for doing something wrong, which technically this absolutely wasn't that. we made sure to address that by identifying that all of our members are getting audited and that the consistency in the approach of the audit was going to be applied to all of the population to secure that trust that no one is singled out. the other part of it is that, in the two pilots as you can see, the populations audited were quite small. in order for us to increase the volume of members audited on a annual basis will require additional strategy whether the audit next time will take place internally or with support of external vendors. for lessens learned what we

used across the board for 22 and 24 is consistency of compliance documents. that really helped out not just the team processing the verifications received, but also fwr the members knowing that it is only those documents that are going to insure their compliance and they knew everyone else was going to be requested to provide those documents as well. and so as far of next steps, we are still evaluating how we can proceed with these audits going forward, the capacity we will have internally or externally and what that population is going to look like. just as a note, the general appeal period ended yesterday for those members who had their dependents terminated and potentially second level appeals may be coming. the next couple slides are just general in the appendix are much more

in depth information for you on the status of the different populations we audited, and their compliance within each of the populations and also the type of communications we sent out and the volume of communication we sent out. be happy to answer any questions. >> thank you. thanks for the very thorough presentation. any questions? >> i like to know, for the ones-i'm just looking at where you have people who didn't seem to respond. is there any follow-up that is done with phone calls or any other efforts to get their attention and get some kind of response from them? >> yes, we had a couple of follow-ups for our members. for those who had not responded in the middle of the compliance period, so middle april, we sent them a

second letter. for those who also failed to respond by the end of the audit, we sent them an e-mail. what we really did with this population, because we were still--we are doing it as a pilot to see what works best, for those members who ended up complying after the compliance period, even after the termination during the appeal period, as long as they complied we went ahead and insured we continue their benefit so the end result is three months worth of communications, and a opportunity to be able to comply. >> okay, that's a lot of work. >> definitely is. >> kudos to the staff for following through. >> thank you. >> really very tedious and i have to admit, as somebody who is now retired, we don't always respond, so on behalf of my colleagues, i apologize

are, but i appreciate the tenacity of the staff and also what it means to our system; what some don't realize is that translates to real dollars, so sometimes it is saved dollars, and sometimes it is dollars that need to be spent for dependents who need those services and somebody drops the ball, so there is a lot of work uvvaed. involved. thank you very much. >> thank you. i have a couple questions too. how did you select the 985? how many appeals have you received? >> the 985 actually started off with a thousand. some ended up reducing due to no longer employed with the city and things like that by the time we sent out the letters. the process had started early in january, letters weresent out late march so there was some discrepancy.

the way the members were identified was through identifying all active members and we went with the last digit of the dsw number being zero and selected a sample of those who met the thousand mark. and in terms of appeals, i believe-- >> good afternoon commissioners. rey guillen. if a member responded after the deadlines or after their dependents were initially terminated, as long as they are able to verify the dependents we reinstated coverage so no appeals were necessary from that group. in total i believe we received 8 appeals from members that failed to comply with the audit. a number of those included appeals for spouses that were terminated

because they are not filing taxes as a married couple and so, as olga mentioned, and i believe it there was one other situation where the dependent couldn't provide any acceptable documentation, but as olga mentioned, those appeals, if the member decides to proceed with the second level appeal will be making their way to this board probably beginning next month. very small number compared to the total population that was audited. >> i want to commend you and thank you for your flexibility in the way you have worked with the members to make sure they-even though they were late, that their coverage continued. >> very helpful. >> yes. >> it also means a lot of us don't get extra phone calls. [laughter brash

]. thank you. that is a lot of work. >> alright. any other questions or comments? so, let's go ahead and take public comment. [providing instructions for public comment which is displayed on the screen] >> board secretary, we have 9 callers on the phone line, zero callers entered the queue at this time. >> thank you moderator. public comment is now closed. >> thank you. we'll take the next item, please. >> item 10, board education

health insurance portability and accountability act, hippy. a training 2024 year. discussion item and will be presented by rin coleridge, sfhss enterprise system and analytics. >> you don't get a break do you rin? >> sorry? >> you don't get a break. >> it happens. good afternoon. rin coleridge director of enterprise system and analytics and also fulfill the role of the hippy privacy officer. we are doing our annual training today, and today for the benefit of new commissioners, we are going to revisit high level about what hipaa is and for our ongoing annual training also do a quick visit what is new for 2024. so, let's start by talking about what

hipaa is. so, it is actually comprised of a bunch of different rule jz the key ones are privacy rule, the security rule and notification rules. at the end of the day it is trying to protect privacy for patients around their personally identifiable information and around protected health information and we'll pget into that how we define that. and there is penalities involved with this as well. but, really the privacy rules gives a array of rights with respect to what patients or the individual have control over their own information, but it also defines for the rest of us that full under this, how we can use that information so that it is protected and so for us, hss, we are allowed to phi for treatment, payment and

operations. there is also the security rule and this more if you think on the system it side. it lays out various rules to be held accountable for administrative controls, physical controls, technical controls. we are making sure the information is available. we are checking the integrity of the information and also that information stays confidential. putting all the guardrails and also allowing it to move. it is trying to strike that balance again between protecting information and allowing it to flow forward and just so you know, it applies to our subscriber and members and the dependents have their hipaa rights as well and deceased members and dependents also covered under hipaa. just because someone may not be with us doesn't mean we don't apply the hipaa guidance for those individuals.

it applies to medicaldanter prescription drug, long-term care health and flexible spending accounts. now, let's flip that around and see what hipaa is not. it is actually never limitation on the individual who is the subject of the information. if a member wants their own information, they are absolutely allowed to do that. there isn't restriction on that. i think what is a important note is that it is not necessarily applicable to employers, departments, agencies educational institution or law enforcement and so, wlaut it is applicable to is something we call, covered entities and so a cover entities could be healthcare provider so i think you understand that. it could be a healthcare clearinghouse so that might be things like a third party organization maybe doing

repricing or doing billing activities and the third item in that area is health plans and this is the one that the health service system falls under. we are considered a covered entity. our restrictions-we have restrictions around sharing phi with the employer, but likewise, i think about experiences in my time in the city where we had to work with other departments and we might need data from them to help with long-term disability claim and i hear people in those departments and say, that is under hipaa, we cant give it to you. that doesn't work, because a couple reasons, one you see here what hipaa is not in a later bullet point, but disability insurance doesn't necessarily come under hipaa guidance and then the other thing is, the actual hipaa regulations, who has to protect that information is a covered entity. not all city departments are

covered entities. certainly when we think department of public health, no-brainer, public entity. those are distinctions we have to consider, but we are covered entity. >> covered entities can communicate with each other and share the information? >> generally speaking and if is third party for example aon, we have business associate agreements and there are business associates, so it is legal framework how we were able to then share information. >> okay. thank you. >> the other times you can potentially share information with the third party is if that individual them sevl request it. on our website, there are forms which goes back to your rights as the individual where you can say yes, i want my information or i want my information shared with this other third party. >> but it has to come from the member? >> that's right. >> it has to be documented.

>> absolutely. it is reviewed and we have a work flow around that. let's continue to talk about what hipaa is not. sometimes it may not apply to pharmaceutical companies. pharma is not a health plan. certainly if they are doing maybe some kind of research activities where it is involving patients and other care may might fall under some of the constructs but as a general rule, they are not hipaa. it is again this is what i really wanted to call out, does not apply to long-term disability, worker comp, accident or life insurance. the other becoming more prevalent is around wearable health technology. i got my watch doing some things, and people with their phones and their apps, and so, maybe in maybe out. i think it is a education point for members. if the company providing the app or wearable technology is working

directly as a business associate for a health plan, maybe you see this if it is a heart monitor. your provider sent you home with the monitor so you wear that and tracking the monitor may be provided by a whole other company, but in that case, that would fall under it. if it's just somebody else that is like, track your sleep or twrack the member of steps and just a tech company doing that and you are tracking for yourself, that is not necessarily a hipaa thing so that is how wearable technologies fit into this. certainly, if you take your own data you are tracking and then you turn that over to the healthcare provider and say hey, look at this, then nowthalities that's with the healthcare provider and they got it and now back into hipaa land. let's take a look at the next slide. >> interesting. >> let's get into exactly what information is protected. so, this is the term we'll use,

phi, protected health information. sometimes people say personal health information. i like to say protected. you got the identifier. this is something that makes the data individually identifiable and if you go to our appendix you see 18 identifiers. if that is health data that is phi land. you may dealing with information where it doesn't have a individual identifier, but if there is reasonable basis you can identify who we are talking about, that falls into phi. here is a example, maybe i say the mayor has x, the mayor of san francisco has x. i think some person jumped into your head now. as you can see, i never gave names, didn't give social security numbers, i gave no individual identifier but there is a reasonable basis you know how who i'm talking about. when you are dealing with phi think from that perspective as well.

you take your individual verifier and match with history. again, it is either created or received by a list of things there that i wont necessarily list, but-and it relates to your past, present or future physical or mental health condition so keep that in mind as well. that's what protective health information is. keeping in mind, even though you might see in the list it is created or received by and might see life insuring or school or university and i had previously said, they were oen the hipaa is not these things slide. because we get back to the covered entity. it could be true there are organizations that deal with

health information but that doesn't mean they are subject to the regulations under hipaa and that is the covered entity piece. let's talk about you. you and your role as commissioners of course might receive and consider and act upon second level appeals and so as part of this process you may encounter significant amount of protected health information, and likewise, i know you all tend to receive communication directly from the member outside the appeals process and that may contain phi. it is up to the member what they want to do with their information. if they want to communicate it to you, by all means. now that you received it and you are part of the covered entity you are under hipaa requirements how you treat that data. we like to comply with the minimum necessary requirement. it is a easy mantra to get you

out of trouble not doing things you shouldn't, so what that looks like is, keep every minimum as necessary. if you dont need it, don't save it or request it. if you are trying to resolve some sort of vision issue you don't need somebody's dental history. we try to keep the information very restrictive to what is required for the matter at hand for answering the question for whatever the issue is, but that is always a really good guideline for that. the other way we deal with hipaa is you deidentify it. if you are back to not having it meet that phi definition of being individually identifiable with the health information, which essentially means the 18 identifiers in the appendix are gone, then it is the identified so it isn't phi, not individually identifiable. there is requirements depending on the size of the geographic region

like the zip code can only be the first 3 digits. that is how aggregate sometime youz have to keep the nrfshz. let's get to the bad news. if we go wrong, there are fines. there is penalities and i won't read all of these on here. you can see there's a little chart that goes green, which is still a penality, doesn't mean good, but the lower penality, versus the red with the higher penality and the variability with how these are designed in terms of the fines is was there neglect and timeliness remediating the issue. there are criminal penalities that could also apply and other consequences we have of violating hipaa. :lawsuits, restitution and termination. also, if we ever have a issue that impacts more then 500 individuals within our area we also have to

notify our prominent media outlets. i think you have seen some pop up in the media time to time, so we doing our best not to be one of those people, but also reported to health and human service and have to report to california state attorney general office. all sort of ing thes we done want to get there. let's talk about cybersecurity because this is a integral component of hipaa when we talked about the security rule and also when we talk about willful neglect. we should be able to address the things reasonably we can expect. we know there is a lot of actors doing things with phishing e-mails, or really good people hacking into various organizations. we know we shouldn't be sharing pulse words. the easy stuff be shouldn't reply to an e-mail that says you have to act right

away. in the past we had breaches with every one of our vendors. we absolutely have. you can see that in the news about the different organizations impacted. in 2024 there was change heth care which is part of uhc and estimated that impacted like a third of all americans. a more recent one, kaiser wasn't a threat act but realized they were out of compliance where they had trackers in the website and that information was shared with third parties having your trackers is sort of a common tool in web sites to help taylor information better. that impacted 13.4 million individuals so that is happening and happening every day. i don't want to say on the report, because i feel like i'm testing fate. let me knock on wood. we have not incurred a breach,

but we remain vigilant and you are part that. here is resources for you all. we got annual cybersecurity training and health service board secretary will coordinate that with all you and so there is-they are quick videos online to give tips and tricks how you can get a little bit more informed about what to do and what not to do, because generally speaking the weakest link continues to be us humans. if you are ever in doubt, feel free to pick up the phone, privacy officer as a resource, and other people. it is always best to ask before doing. and complying with minimum necessary is a very easy way to limit the information getting out there. we have computer usage standards, and the reason we provide you computers is also to help keep us more secure so you don't have information going on

your personal machines et cetera, et cetera. other family members may be using or leave somewhere. we also information gets left on network drives. we have multi-factor authentication set up and never give out log-in credentials so easy items. we put resources on sfhss.org. i got the url in the deck, but you can type in data breach in the search site and that brings this up for you, but this is to help educate our members about how you can stay safe as well as a individual, and also helps all of us with our information. another resource you may able to go to, health human service has a ton of stuff on their website related to hipaa. of course our annual hipaa training and using your city e-mail account for any of your work here we do as part

of the health service system and covered entity so again we got the information locked down and have all sorts of security around our government tenant for e-mails so that is a reason we ask you to use our city system and resources. let's finally take a look what is new for 2024. just the one. it was announced in april by our-all most said harris administration. our biden harris administration. anyway, this is something put into place to support reproductive healthcare and so, i won't read all these to you in the interest of time, but again, it did help try to protect some of those reproductive rights. with that, i'll call out in the appendix the language of the

security privacy rule. if you have any questions i can take those now. >> thank you. thank you for our annual refresher, and also for giving context to our new commissioners. any questions? >> i like to really thank you. this was a lovey and thorough and plain spoken presentation, because often this is very hung up in technological language and this is very thoughtful and really appreciated it. >> thank you very much commissioner wilson. >> thank you. any other questions? if we have questions we can call her back up. lpth. if not, we'll take public comment on this item. thank you and thank you again. [providing instructions for public comment which are displayed on the screen]

we'll begin with in person public comment. no one approached the pode im and move to remote public comment and the moderator will notify of callers in the queue at this time. >> board secretary, there are 9 callers on the phone line, zero callers entered the queue at this time. >> thank you moderator. hearing no callers, public comment is closed. >> thank you. let us take a 10 minute break. we will see you back here at 2:20. please be diligent and return in 10 minutes, because we do want to be respectful of those who are attending this meeting remotely so they are not lingering and waiting for us. alright. see you in 10 minutes. [meeting reconvened]

>> welcome back and thank you for the 10 minute break, being so diligent with your time. we'll take a quick roll call. >> roll call starting with president hao, present. vice president zvanski, present.

commissioner cremens, present. supervisor dorsey, present. commissioner howard, here. commissioner sass, here. commissioner wilson, here. with that, we have quorum. >> thank you. we will take item 11, please. >> item 11, sfhss annual benefit contracts market evaluation and assessment. this is discussion item andprinted by contract manager michael visconti. >> welcome. >> thank you holly. thank you president hao. michael visconti, contract administration manager for the san francisco health service system. today we'll present on the annual benefit consideration and market evaluation as well as our announcement of a upcoming rpf we are planning for life and disability. this presentation will be broken into three parts.

i will begin going through our current plans and benefits under our purview, we will transition to approach to assessing the individual plans which happens throughout the year but a more ernest way this year between the annual renewal process and then a recap of the powerful tools you are all familiar with and we use to insure our excellent benefits and make sure they are sustainable year over year. after that, we will announce what we will plan to do in the fall which is release rfp for life and disability benefit and transition to my partner mike clarke from aon to walk through the history of voluntary life and disability benefits and employer paid basic life and long-term disability benefits as well as the applicable voluntarily benefits currently available through the partnership. go through rating actions, go

through utilization trends, market trends and issue the life and disability rfp later this year. the rfp would be for the 2026 plan year as wetened to do these during this time of year, conclude them in the late winter, early spring next year in time and in line with the rates and benefits process. so, again, these contracts are under the purview of the san francisco health service system. these are our benefits for vision, dental, of course health benefits for the population and life and disability benefit jz we'll go through each of them as each year we do assess them and present them to the board and whether or not we believe it is brudant to engage in a competitive bid or rfp. now each year we present during

the rates and benefit process the approximately 12 major contracts that overvee our benefits for your approval as to the rates and the benefits. in all these agreements there are approximately 27 minute plans that are medical, dental and vision and numerous life and disability certificates through partnerships primarily with hart ford and one with manhattan life. in summary, i will go through each of the benefits presented here and walk through why we believe it is prudent to engage in rpf this year for basic life and insurance and selected voluntary benefits and why we determined that at this time an rfp or competitive bid is best assessed for future plan years for the other benefits and we'll walk through each as we go through this.

so, i mentioned in my opening that this process is done by the executive team at hss, our managers, our esteemed consultant and actuary as aon through the year and in the interim period. we do more targeted market assessment during this period of time andprint present to the board whether we determine a competitive bid such as rfp or formal investigation process like a rfi may be warranted. of course, when there is a rfp for these benefits we announce that to the board and typically over these coming months we analyze what that scope will be for the rfp, narrow the scope down, and ultimatelyprint present to the board on what the final scope will be in advance of issuing a notice of the rfp, a black-out period insuring there are no inappropriate

communications during that time and we have a transparent and above board process for that rfp until we present the results to this board. as many know you worked in the city long enough to know the difference between rfp and rfi but it is good to go through it as refresher. they are powerful tools. a rfi, the last time we used a rfi is in a lead-up to our assessment of both competitive and-sorry, of our-there goes the ac again. if any reason you cant hear me, please let me know and i'll speak up. the last time we engaged in a rfi is was 2021. this is a investigative process and broad forward looking. it is still a formal process. thankfully only takes 2 to 3 months for us. the responses to it are voluntary. there is no requirement to submit financial's so the financial's may be submitted, and again, it can

usually lead us to a future competitive bid or rfp by helping narrow down the scope or determine which respondent to reach out to insure a competitive request for proposal. a rfp are narrowly tailored. they take 6 to 9 months. it is extensive working relationship with us at aon and our management executive team. it is mandatory that rfp responses include financial's. this is fees, premiums, any other costs associated with the underlying benefits. we have a detailed comprehensive process with evaluation panel and recommendation to the board. so, for those who are not on our board when we last conducted a major commercial rfp, the follow slide is summary of process that leads

up to any determination to conduct a competitive bid. for the commercial rfp released in 2020, we began this process in ernest in 2017. there were multiple presentations assessments and private evaluations by us and the team at aon of additional plan offerings that may be beneficial to our members. a potential to improve on rebate share percentages. evaluate the fees premium performance guarantees and reporting for our then current benefits. through 2019 and into the early part of 2020, we identified the self-funded ppo and flex funded hmo plans as appropriate and prudent to conduct competitive bid and conducted numerous meetings before this board to discuss what we were ideally hoping to gain from our rfp and what our research told us would be a likely result. the benefit that was, a very

beneficial result to us and members. we expanded the commercial benefit offerings offering the helt care canopy care hmo plan in 2022. the population doubled all most every year since then and our partnership with remains strong with health net and canopy care hmo team. we achieved a 100 percent prescription drug rebate share and we lowered administrative fees by 25 percent. we also increased performance guarantees and benchmarking across all the plans as we made that a requirement of the bids. and finally, we had a very successful transition from the active ppo administration at that time to the blue shield team. as we go into shortly, our determination for our life and long-term disability with contracts that expire at the end of december 31,

2025 will be to issue a competitive bid for those benefits for the 2026 plan year. however, we do assess our benefits and i like to go through each one before transitioning over to mark clarke from aon to go through the rational for the rfp. we assessed our dental and vision benefits. both have either a rate lock or a rate cap for the next three years. that expires at the end of december in 2026. for that reason, we are going to assess both of these benefits for potential rfp for the 2027 plan year. such an rfp would be discussed in front of the board august next year and rfp for such a-for those benefits would not be released until approximately 14 to 16 months from now. again, we have time on those. the underlying reasons are on

the page why we are considering this assessment at this time. again, we may conduct early renewal next year in july and august of 2025, rather then typical renewal around november and december with renewal request letters. we may issue request for information as we did in 2021. this may give us the opportunity to narrow the scope of those rfp's, to determine what are important minimum qualifications to bid, as well as to determine the potential respondents to insure a competitive process. for the medicare advantage as you are well aware, we just completed our rfp process for the 25 plan year. we are going through implementation process at blue shield or medicare team

and doing accessment and reporting to the board throughout the process and into next year. for the kaiser hmo and senior advantage plans, we determined this unique staff model, was integrated and competitive pricing gained through the expert negotiations of our execive team and partners at aon made it determine it isn't prudent to conduct rfp for the 2026 plan year for the kaiser hmo or kaiser senior advantage benefit. for the dental benefit, we determined that this very stable and long standing enrollment of approximately 1900 individuals and very competitive annual renewals as well have made it not timely to do an rfp for this population either. for our pna, which is our flexible spending ap count and cobra administration agreement, we had a high degree of market comp tgz

titian in the space and considering a rfi in 2025 to determine whether a competitive bid or rfp would be prudent for future plan years. with that, i will hand this over to my esteemed colleague, mike clarke our lead actuary to discuss intent to issue life and disability rfp. >> thank you michael. good afternoon commissioners. mike clarke, aon. so, as michael indicated, there is intent to issue life insurance long-term disability insurance rfp that will take place in coming months. this would include but not limited to basic life and ltb insurance required through the negotiation mou's for active city county san francisco and san francisco superior court employees with coverage beginning january

1, 2026. of note, these plans are not provided through sfhss for the san francisco unified school district or the city colleges of san francisco, so that's why it is just ccsf and court employee, also these benefits are offered to active employees only, not retirees. just history on the carriers for these programs, these actually haven't been rfp in a dozen years. the last rfp took place in 2012 for effective in the 2013 plan year when etna was selected to provide these insurances and during the course of the last dozen years, specifically in 2017, hartford insurance company acquired the entire book of business from etna. it was entire book of business

acquisition in 2017 and so what followed were contractual updates, getting everything over to "hartford paper" for plan year 2020, 3 year agreements including the one in place year today the three year commitment from 2023 to 2025. the benefits themselves basic life insurance, we do report on the enrolled employee counts when we do the presentations every year or so this past february. for instance, this is where you see those for the basic lifelong term disability insurance, most of the employees are in the $50 thousand basic life insurance, but there are some and couple other levels up to $150 thousand. the long-term disability insurance, again the level is based on mou for specific employee groups. you can see the web links here for where you can find more

information on these covered benefits for employees on the sfhss.org website. supplemental life, accidented death and dismemberment and short-term insurance is available to employees-for this ccsf and superior court. the supplemental life insurance coverages are both employees and dependents. the accidental death and dismemberment provides protection in case of accidental death or some form of dismemberment, vision loss, for employees of dependents and manhattan life provides short-term disability insurance program for certain employees. historically, i say we've seen a good progression overall in the rates for these benefits. since the start of 2017, there

have been three different sets of three year rate agreement periods. currently the basic life insurance rate is a bit higher then it was at the start of 2017, but we've been able to negotiate reductions with the hartford and long-term disability insurance rates and the supplemental insurance rates for those employee paid cov erages, but we review with you every year when we do the rate renewals, the experience-what is called los ratio. what the carriers are experiencing for claims relative to the premiums being paid, and we do feel they remain favorable to the insurer so there is potential to reduce rates not just for the employers through the employer provider coverages and also for the employees for supplemental benefits. just to give a framework of how many claims are typically submitted a year, there is typically 20 employee

deaths a year and 30 new ltd claim and we show 5 year histories on each of the statistics every year when we do the presentation to the board with the most recent being in february. so, trends themselves, what are we looking for? certainly looking for favorable premiums for employers and employees, but i say the advancements in the way the marketplace is thinking about life insurance and disability benefits have come a long way. with the digitalization, the techniques life insurance companies use, not only in under writer and policy management process and also how they engage customers. for instance, big issue in life insurance is people have not named beneficiaries. people may not have thought about beyond the life insurance setting up a will or setting up a trust and these programs have done a great job

of trying to promote employees and their family members setting up those protections in case stuff happens, because certainly when a death occurs most things are not set up, it is very difficult for families to get through those processes, so understanding these capabilities from the marketplace will be a big part of this rfp. enhanced support for those surviving families members and disabled employees. what does it look like? there is high degree of competition. always has been and continues to be. we list the prominent organizations and life insurance disability marketplace at the bottom of this page, and market growth. something we report on every year, especially in our rate presentations is percentage of employees purchasing supplemental life. we feel it is low and we hope through this process we can bring more visibility to the importance of supplemental life insurance

benefits to the membership and hopefully see growth in the percentage of eligible employees purchasing supplemental life because this is a great platform to acquire those coverages. based on the recent rating actions, utilization, market trends, lot of data provided to the carriers as part of this process, what do we expect from a competitive rfp? affordable and predictable rates for employers and members with minimum three year rate commitment is customary over the last 9 years. there is about 7 million in total spend in the basic life and ltd program, 1 million spent by members for those supplemental insurances so we expect to see material impact to those costs. the reduction in the cost. reduction in the premiums is a goal for the supplemental life and

insurances along with just more visibility on education, increased enrollment, aware of the digital tools and other member resources that come with that. with that, michael and i are happy to entertain any questions from the board. >> thank you. thank you so much. i'll start off with my question. back on slide 19, you said even with the rate reductions over time basically it is still-the claim loss ratios remain favorable to insurer. can you flush that out for us? >> sure. so, every-life insurance is a little more straight forward, because an event happens. disability has to do with somebody becomes disabled and have to forecast on the characteristics of the individual disability, what might the insurance company need to reserve to cover the future cost of those

benefits. if we look at the actual claim experience, which is going to go up and down every year for life insurance, just depending on the number of deaths, we have seen over the course of time generally the premium being paid is higher then the claims being paid out. over the course of the last 9 years, we did see a couple bad years of experience in the late 2010's, so there was a period where the harthard had to increase their basic life insurance rate . [indiscernible] i remember standing up here saying, we need to stay on top that and if the experience gets better, we need to consider that in our negotiations with hartfard and we did start to see improvement in the death claims and able to negotiate reduction. for long-term disability, what transpired over time is

frankly, the level of disability experience just has not kept with the insurance premiums. hartfoered -ford is a great partner and trying to bring leverage. they also have to agree to it which is very helpful. we still feel the claim experience is not at a level that is keeping up with the premium and we look at these processes, we will frequently engage in our organization with our clients on rfp for life insurance and disability. certainly to try to keep the premiums in line, and again, give them everything and all the focus and especially post-pandemic on supporting families try to bring visibility how

people can protect themselves up front before those instances may occur. they are low probability instances during active employment but they do happen and are when they happen to you, the hope is you are protected. >> thank you. any other questions or comments? >> i have quick question. thank you. you might have mentioned this and if you did i'm sorry if i missed it. what percent take advantage of the supplemental? >> i can speak for supplemental life insurance, it ranged 6 to 8 percent. during the time working with sfhss, other benefits-i dont know about short-term disability program so not sure how many individuals are selecting that, but somewhere in that 6 to 8 percent raisk. range. we love to see that get higher. >> great. thank you. >> any other questions?

comments? alright. well, thank you. so, next steps with respect to this rfp-- will you be coming back to our board with additional information and timelines, et cetera? >> if necessary we can present that to the board. we do this over the next few months. the timeline for the rfp will logically not begin until early december so line up with our other meetings. >> it is great if you can come back in november or december just to let us know basically the timeline you laid out so that we are fully tracking with the progress. >> look forward to it president hao. >> thank you very much. >> just one clarification so everybody is aware, the way things work-say hypothetically there is a new organization starting january 1, 2026,

anybody who is currently on disability as of december 31, 2025 will continue to have their claim adjudicated with the hartford, so that is the way it works. it is based on data disability and the insuring organization at that time. same thing with the death claims. if is a death were to happen december 31, 2025, that is under the current contract with the hartford. >> thank you for the very important distinction. alright. if we dont have other questions or comments, we'll take public comment. thank you very much. [providing instructions for public comment which are displayed on the screen] we'll begin with unperson public comment. no one approached the podium. the moderator will notify of callers in

the queue at this time. >> board secretary, we have 8 callers on the phone line, zero callers entered the queue at this time. >> thank you moderator. hearing no callers, public comment is now closed. >> thank you. next agenda item, please. >> item 13, blue shield of california medicare advantage prescription drug, mapd ppo transition plan. this is discussion item and presented by rey guillen, sfhss chief operation officer, olga stavinskaya-velasquez, operation manager, tiffany gill, blue shield of california major account executive and charles lee, the blue shield of california manager of group retiree senior markets. >> great. good afternoon again commissioners. rey guillen, chief operating officer for health service system. as secretary lopez mentioned, i will be joined by some esteemed colleagues from