Code, 3501008 and then press 1 and then 0. You will be lined up in the system in the order you dialed 1 and 0. While youre waiting, the system will be silent. The system will notify you when youre in line and waiting. All callers will remain on mute until their line is open. Everyone must account for this time delays and speaking discrepancies between live coverage and streaming. Preferences are to call from a quiet location, speak clearly and slowly and turn down your television or radio. Alternatively, you may submit Public Comment in either of the following ways. Email me at linda. Wong sfgov. Org. If you submit Public Comments via email it will be included as part of the legislative file as part of the matter. Comments may be sent to city hall 1 dr. Carlton b. Goodman place room 244, San Francisco, california, 94102. Madame chair, this concludes my announcements. Thank you very much, madame clerk. Can you please call item number one . Yes. Item number one, hearing budget process and updates for fiscal years 20202021 and 20212022, hearing to review the budget process and related updates and requesting the Controllers Office, Mayors Office of Public Policy and finance and budget and legislative analysis to report. Public comment should call the number and then press 1 and 0 to line up to speak. Thank you very much. And today we have ashley from the Mayors Office. Kelly kirkpatrick is also available to answer any questions. Also, mr. Ben rosenfield, our controller, can join us for a short period of time. As reminder, the focus of todays meeting is to hear the mayors budget instructions and process for departmental budgets and then mr. Rosenfeld will share Historical Context of past recessions in our next meeting. Ms. Grockenberger. Thank you, chair fewer. Good afternoon, supervisors. Im the deputy budget director in the mayors budget office. Today im going to walk you through the revised budget instructions for the upcoming fiscal year 2021 and 2022 budget. With that, kelly if you could share the slides. I hit shared. Its just a little slow. Yep. Thats ok. We see it. There we go. Its just in presentation mode. Ok. Great. So, as you recall, the mayor initially offered these instructions to departments back in december and at the time we were projecting a 420 million shortfall. With the change financial land secretary of defense due to covid has led to not only a delay in our budget process, but revised set of instructions to help balance the budget. Last week, kelly and ben walked you through the details underlieing the revised instructions, but this is a quick reminder. Were facing a 1. 75 billion shortfall in the current year and upcoming budget years. That is made up of a shortfall of 250 million in the current year. And a 1. 5 billion shortfall in the budget years. With deficits exceeding 1 billion projected in the out year. Next slide, please. Meanwhile, were tracking a number of risks and uncertainties that could have a Significant Impact on these projections. These include the duration emergency, a slower later economic recovery than the one we are projecting. Unknown levels of city spending related to covid in the coming years and, of course, risks around state and federal revenue. Next slide. And so now im get into the specifics of the budget instructions that the mayor issued. Next slide, please. Next sly. Ive advanced it, but apparently there is a lag. [laughter] maybe ill stop sharing and try again. Give me one second. I have reshared. Its not coming up. Yes. Were not seeing it. Ok. I have sent the presentation to the clerk has it. I can try again to get a p. D. F. And see if that works. Or if there is any other i. T. Suggestions, please let me know. I do have a copiful y copy. Would you like me to try sharing it . That would be great. Let me unshare. Ok. I stofped sharing. There we go. Oh, great. Ok. I believe were on slide number five. Oh, wonderful. Thank you so much. Ok. So, the given the significant shortfall that were projecting, the upcoming budget is going to require a mix of tough decisions and reevaluating the city does business. And we are asking departments to make significant reductions to help close our significant shortfalls. And, quite frankly, we need to reevaluate the way we do business in a covid landscape while not losing sight of needing to preserve vulnerable and underserved residents in communitis that are facing steeper obstacles in light of this Health Crisis. Next slide, please. Thank you. So, unlike in prior recessions, these shortfalls are coming late in our budget process and were asking departments to provide concrete and Actionable Solutions to help close the shortfall. So, all general departments must propose 10 reductions in adjusted general Fund Supports in 2021, that grows to 15 in fiscal year 2022. And given all the uncertaintis that were tracking in our revenue picture, we are asking that departments provide us with an additional 5 contingency in fiscal year 21, the first year of the budget should the fiscal picture worsen. Every department will need to make reductions and it is not a matter of if, its a matter of where. Of course your Nongeneral Fund departments will balance costs within their own revenue projections. Next slide, please. Slide seven, please. Thank you. We recognize that 10 to 15 reductions will come with incredibly difficult tradeoffs and weve advised departments that those reduction plans can include contract savings, reductions in personnel costs, either through the elimination of vacant positions, continued salary savings due to hiring freeze or project suspensions. We have also asked departments to consider streamlining operations and consolidation of units and service, given revised business operations. Of course maximizing any outside revenue sources. Next slide, please. So its extremely tight time turn around and we asked all departments to submit their revised budgetses to us by june 12. It is going to require departments to do a quick analysis in order for us to meet our august 1 budget as the middle deadline. Next slide. Thank you. As the city moves toward reopening, we know that we will need to do business differently and revised budgets from departments should reflect that and so for planning purposes, weve asked departments to identify Core Services and those Critical Services that they performed for the public. But that cant be everything. And we need departments to really work hard to prioritize and think about how their work and services are going to shift, given Public Health guidelines or reduced budget resources. While also maintaining equity in their services when planning for those changes. And were asking since this is all going to require, frankly, a citywide approach and that will be coming over the coming weeks, were asking departments to not communicate or get ahead of changes that are happening and that will come as a result of citywide guidance. And to wait until that guidance is issued. But to be thinking about those things in the meantime. Next slide, please. In terms of managing and making decisions around reopening, were asking departments to think about the shipping workforce landscape, which could mean that City Employees who can work from home should remain working from home and also that essential Public Services that must be delivered in person, how those are going to change, given the new Health Guidelines that will be issued and what services do they provide could be moved online and what equity considerations are there in doing so. Next slide, please. Some additional guidelines we issued to departments. Our hiring freeze will continue through this fiscal year and the next fiscal year, except for direct Covid Response and other essential workforce. In march, we paused cashfortunated Capital Projects and new programs that had not started and we will be releasing our current year balancing plan in the next week to solve for that 250 million shortfall that i spoke of earlier. But for the remainder of the fiscal year, were asking that only those cash funded general funds supported Capital Projects that are necessary to address legal or life safety issues or other essential needs continue and that that work is done in consultation with Capital Planning and the public works department. And then given our delayed budget process, we recognize that there is there will be some continuity issues in considerations for new r. F. P. S and contracts and the Controllers Office is working to provide central guidance in the next week about the procedures for contracts and r. F. P. S that cross fiscal years and we asked departments until the current rebalancing plan has been issued and communicated with all stakeholders. Quite frankly, even if we dont pull back funding in the current year, we still have a long way to go to sthaol . 5 billion shortfall and we need to know what options we have available to do so. Next slide. In order to continue operations from july until the budget is signed in october, we will be introducing an interim budget to the board on june 1. This will largely be a status quo budget to allow baseline appropriations and operations to continue until the final budget is adopted. It will include the wage delay that was triggered as par of the march joint report, but largely the big policy choices that we need to make to close the shortfall will be will be discussed in august. No new funding commitments will be made with an expectation of the july 1 start. Were saving those conversations for the august 1 budget process. Next slide, please. Despite the tight turnaround, we understand that public input and process is very important and it is our expectation that departments with commissions and advisory bodies will provide updates about their reduction plans to those bodies before they submit to our office. Well also be engaging with our labor partners and c. V. O. Partners in the coming week to share this information with them as well. Another big takeaway from this presentation is that the upcoming budget is going require tough and painful choices while also requiring us to reevaluate the way we do business as a city. Were asking departments to make significant reduction proposals to deal with these significant shortfalls, all while keeping equity at top of mind as we move through the budget process. Ok. Some key dates that you are likely all familiar with kind of goes back in time a little bit. But last week, we released what we called our megareport, talking about projections for the upcoming years and the current year as well as covid spending. Theres impacts on us that were still sorting through. As i mentioned, we will be releasing the interim budget on june 1 and then our mayors proposed budget on august 1. With that, im happy to take any questions that you have. Colleagues, any comments or questions . Yes. Yes, supervisor yee . Thank you, kelly, for the presentation. I guess the question i have is, yes, we really have to look at a possible reduction in services, tighten up the belt and everything else. And second, youre having a hiring freeze, means that similar sources will be [inaudible] other than others. At the same time, how do we have this discussion knowing that prior to the pandemic, i was there was a lo of support from the board of supervisors and the mayor herself to be dealing with or to improve our system in regards to Mental Health services. How do we balance that, knowing that no one hand cut or dont expand or start any programs knowing what we know. But this is such a big need. That is a great question, president yee. I think particularly with Mental Health. Its not so much about kitsing about cutting but changing the way services will be provided. They wont be provided in a traditional setting. They might be provided to those in hotels. And these are services that they already have in place to make sure that theyre getting to the people who need them and just new and creative ways given our covid landscape. This could constraints harter and i want to remind supervisors that any additional costs related to covid spending are not included in the shortfall. Anything thats not fema or state or reimbursable next year will add a layer of costs as well to this difficult conversation. Ok, well, hopefully we move forward with more solid thinking around this. Thank you, president yee. Supervisor walton . Thank you, chair fewer. Im trying to figure out the best way to say this. I know that its talked about controlling guidance will be forthcoming, looking at couple of months of the gap with continuing operations through. I guess my question is we should be under the impression that those additional months of july, august and september will probably Fund Services at some kind of reduced rate. Did i make sense . Yeah. I totally i was i was trying to figure out who wanted to take this one. Our intention is to maintain services at the current level. But not add new. In prior year budgets, you know, we had done a twoyear budget last year. And anticipated in that potentially was additional funding above baseline funding. So, our goal is to maintain services and that will all be subject to kind of our rebalancing plan that well be introducing but thats the goal to make the tough tradeoffs about potential Service Reductions in the upcoming fiscal year. Some controls that will be in place to help tide us through the three months is that there wont be any new Capital Spending that will be on reserve, equipment spending and, of course, we triggered the wage delays and so that will also, as well as reduce hiring, will help keep down spending until we can make those tougher tradeoffs that will likely have service or other staffing implications in august. Thank you. Thank you, supervisor walton. Supervisor mandelman. Thank you, chair fewer. I want to echo president yees expression of [inaudible] in this upcoming budge budget and i talked about the [inaudible] with the mayor and the mayors staff as well. I am keenly aware that the last time we went through this exercise, i was not in city government. I was just a protester outside s. F. General as the city was eliminating beds, hospital beds from general on the with the argument that we could do it a different way. We would create beds or we would acquire beds in less expensive ways and have [inaudible] than operating the bubble beds. I dont know if what has happened on our streets in the last 10 years is related to those choices. But you could create a narrative that, you know, the elimination of the psych beds in 20082009 was related to how far things deteriorated there after and that we never really made good on the acquisition of alternative locked and not locked beds for people who needed them. And got us to where we were. And i think, you know, a lot of the work that was done the good work that has been done over the last year, year and a half by the mayors director of Mental Health reform and the folks who worked at Mental Health s. F. And the task force all identified the desperate need for more places for people. So, t not a matter of just delivering services in a different way, but there are, you know a lot of folks out on the street who did not have a place to be, who have enormous Behavior Health needs. As i was saying is yesterday in the board meeting, covid has certainly made this worse. There are more people in psychosis and certainly intoxicated from the substances theyre using out on the street now than, you know, we had seen. And it was horrible before and now it is awful. And so, you know, i think there may actually be an argument that there is some Covid Response, that in the time of covid, we needed to completely rethink how we provide Psychiatric Emergency Services to people because providing them to only 18 people at a time at s. F. General is not acceptable and is not going to work for the next year or two. So i dont know if that means more spending for v. P. H. In behavioral health, but we cant just retrench, like there i really want to encourage the Mayors Office and the departments of Public Health to figure out ways to either through all of this cutting unlock some Additional Resources for placements or think about how to do placements differently. But ideally not in the same way that we thought about has new placements differently in 2008 and 2009 because im not sure how well that worked or if we go down a similar path, we need to understand how it will be different. I think those are my points that i really think this is critical and key and something that i care a lot about in this budget process. Supervisor mandelman, has there been an analysis done about the closing or removal of those beds and have you seen any reports or any data around that . I havent. But it would be a very interesting thing for us to do. If it has not been done. Ok. Thank you. Supervisor ronen. Yes. Thank you so much. I wanted to appreciate this discussion and so that you all know that im working, you know, Mental Health s. F. Is our road map to how were going to fix our broken Mental Health system in San Francisco so im looking at whether or not we do sort of an interim version of it, given that budget realities both budget realities and care different realities. Like they do a first phase of it and second phase of it as we come out of this recession. So thats something that im just starting to look at. But it would be great if we could collectively work on that together and use that as a guide for these budget discussions. I think we can think about the policy in relation to the budget deficit. But not let the budget deficit totally control the policy right. We can have an informant. We create a Mental Health s. F. , imagining we were going to bring 100 million more of regular revenue into the discussions so not only are we expecting not to have that 100, 100 million of additional revenue and going only to Mental Health s. F. , but that we even have a bigger deficit than that. So, we need to reenvision this. So, perhaps we can go about doing that. But just a question for you, kelly, about how have we ever required our Department Heads to start from scratch . Like they often just, you know, say im going to take away this. Its easiest to take away this position and this position and this position because theyre because i dont like this person or whatever they do. I guess if i cut my materials in half, ill figure out a way to make it happen or use any own money to buy materials or whatever they do. But just sort of because were in such a grave budget situation, certainly the worst that this group has ever seen. Im wondering if now is a good time to say start over. What do you do . What do you need for it to function . If there is if theres been any instructions in that regard . That is a great question. That is what us budget wonks call zerobased budgeting and and, you know, i think interesting despite all of the difficulties that the Health Crisis present us, what part of our budget instructions are getting at was reevaluating not om the way your department does business, but what are those core functions. I dont imagine if theyll start from kind of brandnew building blocks, but i think those are all really critical questions that departments need to be asking of their own options. So we given departments four weeks to reset and i think many of them have already started. They know that the fiscal picture is bad. There is lots of planning under way and this is an interim process as we go through the next year, how will and we posed them in the covid context to that department. Just expanding on one of those points from my perspective. I think one of the really real challenge this is year, as ms. Kirkpatrick has said, is simply going to be the timeframe over which these choices will be made. Departments will now have four weeks to prepare the hardest budget cuts that they have prepared for in the last decade. The mayor will then have four weeks to make choices. It typically takes us about seven months. I think that kind of completely understand and i do think a lot of departments will start with, as you suggested, what are my essential functions and what arent more fundamental questions. But simply the pace at which this all needs to move will be a limiting factor for all of us in kind of more nuanced analysis, frankly. Yeah. That makes sense. Has the mayor considered eliminating any departments and combining them . I dont know of any specific kind of proposals. However, i do know that efficiencies in the option and thats something we would be looking to, even if its just space to, right. What are the real estate need changes so theres Operational Efficiency consolidation, but i also think that there is space consolidation and kind of turning to some of those ideas as well. Well definitely be on the table. Are the mayors so for like, for example, the board of supervisors. Are the instructions that we work from home for the next fiscal year. Im thinking of the departments that can actually work from home pretty effectively. Weve andly angela might kill me for saying this, but i know were doing pretty good from home. And the city attorneys. Those kind of departments. Is it we can empty fox plaza for a year and save all that money or i guess im a little confused by this. Those instructions. Yeah. At this point in time, were asking departments to do the evaluation. Which of your staff who are successfully working remotely can continue to work remotely and what would that mean . There is going to be City Administrators Office is working on as well as c. H. R. , with more specific guidance that will be coming out in the next week or two about duration, and aligned with Public Health guidance and how should people plan to work remotely and in the next week or two, we might have some departments and agencies. I forgot my question. If i remember it, ill come back. Thank you. Ill ask a question first and supervisor ronen, if it comes to you, then feel free to join in. I wanted to clarify. So, for next year, the 2021 is 10 reduction. 5 contingency, is that right . And it is going on in the prior year reduction . It is a total of 15 ongoing, not total. 10 growing to 15 total. So an additional 5. That additional 5 might have to be moved forward if the fiscal picture worsens. Got it. And this is a question very similar to supervisor ronen is that there arent any city departments considering moving their staffing model to working from home on a more permanent basis. The reason i ask is also in this committee, we have actually authorized many leases and also but these leases were for places like moving out of hall of justice, for example. Or outgrowing the city facility as the government has grown. And now were seeing how those configurations need to be reconfigured and that these leases that were kind of tied into are also will not actually served for our purposes. I asked the citys Attorneys Office to make those choices can operationally and budgetarily over the coming weeks to help inform the budget. Ive thought of all the same questions and i think theyre really important in this, especially upcoming year. I think also that contract negotiations to look back at, for example, when we, at budget, when we asked the director to go back and renegotiate a lease, he was able to negotiate it at 15 discount, saving the city 2. 5 million over the term of the lease. So, these time of things, i think, are knowing that theyre going through recession and that other businesses and services are going into recession and were looking at renegotiating our contracts with these private entities, actually. And weve spent a lot of money on leases, too. I think this will help. And then i have to ask you. I know that the fiveyear r. F. T. Is on hold. Is the Mayors Office considering pulling back on some of that funding . Are there open cycles that are being looked at that will Impact Services . We are looking at open r. F. P. S that have not been issued yet to understand if there is commitment to additional funding for the upcoming fiscal year and wanting to evaluate the additional growth of the contracts. Were working with [inaudible] to make decisions in the next week or so on their baseline allocations and why we had been speaking to them was, is there additional growth expected . I dont know if we can be committing to growing our funding in the upcoming year. We want to do our best to ensure continuity of existing services, however. So, that is the conversation weve been having, working with the Controllers Office right now to understand which grantbased r. F. P. S that were slated to add funding for 202122 are in the pipeline and wondering you know, the controllers guidance that were working with our granting departments on is to understand perhaps do you need some continuity of your existing grant allocations to ensure continuing services can be maintained through the august budget process. But lets pause on the reup you know, increasing or perhaps reallocating the whole r. F. P. Process when the total budget for next year is up in the air. But wanting to maintain Core Services Baseline Services to the extent possible. Ok. Its not coming to me. But this has been really helpful. Thank you. [laughter] i see no one else in the queue. Madame clerk, can you please call for Public Comment on item number 1 . Yes, madame chair. Operation is checking to see if there are any callers in the queue. Please let us know if there are callers already. If you have not already done so, press 1 and then 0 to be added to the queue. For those on hold, continue to wait until youre prompted to begin at the beep. Madame caller, madame chair, there are no callers wishing to speed speak. There is no meeting next week. Happy holidays to everyone. June 3 will focus on the mayors rebalancing plan for the current fiscal year and the controller will be providing a look at prior sessions and [inaudible] on noft profit sustainability. June 10 will be when this Committee Hears the interim project which will keep the lights on in the city for the month of july, august and september. Colleagues, anymore comments or questions . Seeing none, id like to make a motion to continue this item to the [inaudible]. Also Kelly Kirkpatrick and the controller for being with us today and madame clerk, i make a motion to move this item to the [inaudible]. Could i have a second, please . Second, ronen. Could i have a roll call vote, please . Yes. On the motion . [roll call] there are five ayes. Thank you very much. Madame clerk, anymore business before us today . Theres no further business. Thank you very much, everyone. As a woman of color who grew up in San Francisco i understand how institutions can have an impact on communities of color. I think having my voice was important. That is where my passion lies when the opportunity to lead an office in such a new space came up. I couldnt turn it down. I was
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