Budget and Appropriations Committee meeting. Im matt haney, chair of the budget and Appropriations Committee. Our clerk is miss linda wong. I want to thank sfgovtv for broadcasting this meeting. Madam clerk, do you have any announcements . Clerk yes, mr. Chair. Due to the covid19 emergency, to protect the board of supervisors, City Hall and the legislative chamber are closed, but the meeting will be held remotely. Committee members will attend the meeting through Video Conference and participate in the meeting to the same extent as if they are physically present. Public comment will be available on each item on this agenda. Channels 26, 78, 99, and sfgtv. Org are streaming the number across the screen. Public commenters will be allowed three minutes to speak. Public comment is allowed by calling 4156550001, meeting i. D. 1873640346, then Press Pound and pound again. Press star, three to enter the queue. Best practices are to speak slowly and clearly, call from a quiet location, and turn down any speakers or volume. Chair haney madam clerk, thank you. Will you please call item 1 . Clerk yes. Item 1 is a hearing to request the budget and legislative analyst to provide a Budget And Policy analysis of nonprofit Service Provider Sustainability and related issues of Pay Equity, to provide an Overview And Analysis of what actions the city has taken to ensure the Viability And Sustainability of nonprofit organizations that provide services for the city, an analysis of whether the City Funding is keeping up with the cost of doing Business And City mandates, and requesting the budget and legislative analyst, department of public health, human services agency, department of homelessness and supportive housing, department of children, youth, and their families, and Controllers Office to report. Members of the public, please Press Star, three to be entered into the queue, and for those of you who have already done so, wait until the system has indicated you are unmuted before you begin your comments. Thank you. Chair haney thank you, madam clerk. The departments that are on stand by to answer questions are d. P. H. , h. S. A. , h. S. H. , dcyf, and the Controllers Office. I want to thank everybody for being here with us, our c. B. O. S, representatives of our labor unions and workers. I think that the reason for this report and this hearing should be obvious. We are relying increasingly on our nonprofit providers, our c. B. O. S to provide really essential services for our city, and yet, we hear again and again the challenges that they have to keep pace with the cost of living increases, to make sure that theyre able to fill vacancies, so that their workers can live and thrive here in the City And County of San Francisco, and its critical as we enter this Budget Process that we are keeping those questions at the center and we are having them guide the decisions that were going to make in the coming weeks and months. This is one of the presentations that we requested, that i requested from the budget and legislative Analysts Office because of now important it is to us ahead of the Budget Process. I want to thank them for this analysis, and we look forward how it can guide us as we look towards our larger budget for 2122 and 2223. So with that, im going to turn it over to Dan Gonchar with the b. L. A. To make his presentation. Thank you, Chair Haney. Im going to try to pull up my slides. Okay. I assume that you can see the full slides on your screen . Chair haney yes. Yes, we can. Okay. Well, good afternoon, Chair Haney and supervisors. Im Dan Gonchar from the budget and legislative Analysts Office, here to present my presentation. This is the second of three reports as part of the Boards Prebudget Review activities. We provide discussion on additional considerations, including various concerns raised around Pay Equity. We were asked to answer several questions regarding nonprofit sustainability and Pay Equity as it relates to the citys mandates, but there were two central questions one, whether or not the city is unsuring the Viability And Sustainability for its nonprofits contracts out to other organizations, and if these nonprofits are keeping up with the cost of doing business as per city mon date. The department of children, youth, and their families, the department of public health, the department of homelessness and supportive housing, and the human services agency. Limited Compensation Ordinance was initially adopted by the board of supervisors in august 2000 and include contracts that provide professional services, construction services, grants, leases, and subcontracts. It will created to help Contractor And Subcontractor employees, whether they be working forry profit, not profit, or public entities, such as ihss workers, with a wage that better allowed them to afford living in the Bay Area. Updates to the m. C. O. Established an hourly wage for nonprofit contractors and Ihss Wage earners at 10. 66 with minimum hourly and paid time off requirements. Where theres no Budget Shortfall anticipated, the budget also requested a report on whether will theres sufficient funding in the proposed budget to bring rates for nonprofits and public entities into the range with for profit contractors. As we move forward in time to november 2018, the board approved additional amendments to the m. C. O. , giving the ordinance its current structure and increasing minimum compensation for nonprofit contractors to 16. 56 per hour as of july 1, 2015. The november 2018 m. C. O. Amendment also included annual increases starting july 1, 2020, and every year after on july 1, corresponding with the prior years c. P. I. Increase. It maintains that the increases in hourly gross compensation will go into effect only if the city appropriates funds for the increases and if the funding is sufficient to pay for the increased hourly organization. If only a portion of the c. P. I. Can be covered, then the wage would increase by that percent alone. The current m. C. O. Rate for nonprofit contractors is 17. 05 an hour. It applies to organizations with five or more employees. Covered employees include those performing any work funded in part or whole under the applicable contract no matter where they reside in the u. S. , inside or outside of San Francisco. As part of the 2018 amendments to the m. C. O. , the board required the Controllers Office to convene a nonprofit Working Group comprised of city, nonprofit, and labor union staff, to consider and advise on how to address equity concerns that result from increasing the m. C. O. For nonprofit contractors. Specifically, the Working Group was charged with looking at Wage Equity, which is defined as the inequity that occurs when workers funded by a City Contract receive a higher wage than workers performing the same work but are funded by a nonCity Contract, and Wage Compaction or by other Funding Sources, and Wage Compaction, which is designed as the inequity that occurs when wage levels are reduced because one worker funded by the City Contract received an increased wage while other workers did not. The Working Group met three times to discuss the challenges with the m. C. O. And proposed how to allocate city funds across providers taking into account Wage Equity and Wage Compaction. In april 2019, the Working Group published a set of seven recommendations that mentioned the challenges of staffing and the cost of services given the high cost of living in San Francisco. The various need for the diverse nonprofits the City Contracts with, and provide cost estimates for what the city would need to spend to address Wage Compaction and Wage Equity concerns. In order to address Wage Equity and compaction, the Working Group estimated that the working cost or lowest paid workers on City Contracts up to the m. C. O. Would be 1. 3 million. The Working Group estimated that the Wage Compaction or the indirect costs of lifting wages for workers making under 30 per hour for City Contracts would cost about 12. 9 million, for a total of 1. 2 million. The group also estimated that the Wage Compaction for workers making under 30 an hour on nonCity Contracts would result in additional costs of 12. 7 million. The three City Staff descended on these estimates and asked that the Working Group provide an actual estimate needed depending on the variable responses by nonprofits. So in 2019, the city began allocating additional funding appropriated explicitly to cover nonprofits and covering the july 1, 2019 increase and the m. C. O. Rate, which again lifted it above the citys minimum wage after a few years of parity. In preparing the fiscal year 201920 or sorry. In preparing the fiscal year 201921 twoYear Budget, the mayor allocated 3. 9 million in each of the two years for the m. C. O. , and the board of supervisors increased this to 5. 8 million in each year to offset the cost of the m. C. O. Increases. The controller ran a Survey Process in 2019 to address the m. C. O. Related costs of Wage Compaction and Wage Equity and also for directly increasing the wages of City Contract workers at nonprofits to align with the m. C. O. The Controllers Office worked with city departments to distribute an application to over 850 nonprofits across the city. The Controllers Office allocated a total of 5. 6 million. Upon completing the Survey And Application process, the city distributed 2. 76 million for direct Wage Increases and 3. 8 million to address compaction across 515 contracts and 116 169 contractors. Ultimately, the city focused its funds for workers on City Contracts and did not use any of the funding to address Wage Equity concerns as funds were limited and the qualitative and quantitative items in this funding were hard to validate. A breakdown of the distribution of these funds by department is shown in exhibit 2 on page 9 of our report. The Controllers Office reported that there were Data Validation issues as part of their Survey And Allocation process, which is discussed on page 9 of our report. While this process ran into many challenges from sur vying nonprofits to validating and correcting data, it surveyed m. C. O. Issues across the city and worked to address Wage Compaction concerns. However, this was a onetime process and has not been updated by the Controllers Office. Our discussions with departments found that d. P. H. , h. S. H. , and h. S. A. , utilized the information from the Controllers Process in 2019 to help dermal indications for the current Year M. C. O. Because theres no other reasonably efficient methodology for allocating m. C. O. Funding. Dcyf used their database thats updated every year to form m. C. O. Allocation. The current Year Budget did not initially include appropriations due to projected shortfalls. However, the board appropriated about 2. 1 million to support nonprofit Wages Contingent on the passage of prop f, which was the Business Tax Overhaul in november 2020. In december 2020, it was estimated the cost of increasing m. C. O. For the remainder of the current year as well as next year, fiscal year 202122 as shown on page 11 of our report and at the bottom of this slide. Theres also a 10 million minimum wage reserve. This has been in the budget since fiscal year 201819 and serves as a contingent Funding Source if the departments do not have the appropriate funding for wage costs. Our discussions with departments revealed there are significant challenges to provide funding for nonprofits to comply with the m. C. O. Wage compaction and Wage Equity remain two of the issues currently surrounding the m. C. O. Theres no citywide policy defining the citys responsibilities to cover these costs. In addition, the nonprofits themselves very tremendously and many nonprofit employees may live or work across multiple jurisdictions. The mechanics of the Allocation Process can also be difficult as the current process for allocating m. C. O. Funding is relatively new and was initially centralized through the controllers 2019 Application And Survey information. In addition, there is not one easytouse formula that helps Departments Drbs M. C. O. Allocations. D. P. H. , for example, uses a fee for service rates and does not have Salary Level data by individual to validate data from nonprofits. While Wage Compaction was addressed through this process to some extent, there were concerns about the validity of the data and information surrounding nonprofits. The Controllers Process provides a template for [inaudible] funding allocation, but this was a onetime funding effort, and its unclear how this process would move forward over time, and this information has not been annually updated across the city and could quickly become out of date. A few departments expressed support in our interviews in increasing m. C. O. Interviews. A combined process that provides one Allocation Amount has the potential to give nonprofits more flexibility in how the funding is spent and how to better match their internal needs. One of our policy options addresses this issue. Specifically, we know that the board of supervisors could request that the Controllers Office consider leading a regular periodic survey at least every three to five years of the citys nonprofit partners. Such a survey should include the number of workers at or just above the m. C. O. Wage rate and other Funding Sources leveraged to help identify and address sustainability concerns surrounding the m. C. O. Our analysis found that the m. C. O. Has outpaced inflation in the past ten years when comparing increases in the San Francisco Bay Area consumer price index. Exhibit 3 on page 10 of our report and displayed on the slide shows that the current m. C. O. Wage rate for nonprofits is 1. 89 higher than it would have been under routine increases with c. P. I. , otherwise, it would have been 15. 69 an hour. From 2015 to 2016, the m. C. O. And c. P. I. Rose in similar levels. However, in 2018, the m. C. O. , increasing the minimum wage to 16. 50 wage, this is when the city began providing additional support to nonprofits specifically for complying with the m. C. O. Cost of living increases adjusts for overall increases costs year over year and has been a practice of the city going back well before the m. C. O. Was established. This is not explicitly a cost of living adjustment or cola, as the cost of doing Business Funding may be used for other purposes beyond increasing employees wages. However, the departments we spoke with reports that it is generally the Citys Policy to encourage contractors to pass along any cost of doing Business Increase to their employees through salary increases. The cost of doing Business Funding allocated by the Mayor And Board of supervisors is funding that is in addition to the m. C. O. Funding provided since 2019. Over the past five years, the cost of doing Business Allocation has averaged 2. 7 per year. Exhibit 5 on page 13 of our report, and exhibit 6 on page 14 of our report, and shown on this slide, shows the Percentage Change each year in the cost of doing business and in the c. P. I. Over the past five years. When comparing the cost of doing Business Increases with changing c. P. I. Over the past five years, the cost of doing Business Increase has averaged slightly below cost of doing Business Increased, with a 2. 7 compared with a 3. 2 increase in c. P. I. In the San Francisco area. However, the Citys Cost of doing business has increased the last two years over the citys c. P. I. Taken together, the city appears to be getting closer to meeting the increased needs of nonprofits given the m. C. O. And other costs. Similar to the m. C. O. Increases, the cost of doing Business Allocations must be approved by the board through the annual Budgeting Process. A few nonprofits that we spoke with expressed challenges with that given that it can be hard to know what the budgets will be and adjust spending appropriately. This may come at the expense of the Mayor And Board being able to determine such amounts during the annual Budget Process. Once the budget is approved by the board and mayor, departments apply the cost of doing Business Increases to their nonprofit contractors. Exhibit 7 on page 16 of our report summarizes the varying policies for how the four departments we interviewed allocates the cost of doing Business Increases. Generally, the fund is only applied to general fund dollars. However, h. S. A. And d. P. H. Leverage state and federal dollars given how extensively their department is blended. From our discussions with departments both on the implementation and nonprofit side, we were told that it is difficult to build a onetime cost of doing business into salaries, which is an on going cost. While the onetime current Year Cost of doing Business Allocations were likely an aberration due to covid19, a return to twoYear Cost of doing business was preferred by departments and nonprofits as they can better anticipate funding, update contracts if needed, and reduce uncertainty. One of our policy options addresses this challenge. Specifically, we noted that the board of supervisors could request that the Controllers Office and Mayors Budget Office explore and report back to the board on opportunities to regularly set a cost of doing Business Funding level that includes any anticipated increased needs for m. C. O. Funding which would provide more predictable increases to the department and nonprofit contracts on an annual and on going basis. As part of this report, we were asked to provide information on the extent of pay inequities between city and nonCity Staff that are contracted to perform comparable work. Throughout our discussions with departments, we were told anecdotally of pay of workers who were doing and not doing the work. Nonprofit workers allocated and were able to receive a Salary Premium to make their wage more comparable to the civil salary workers, however this appears to be unique to the covid19 pandemic. There is no known legal or Policy Requirement that the City Match Compensation between City And Noncity workers for similar jobs. Further, it would be challenging to match full City Compensation through additional resources to nonprofit contractors given the level of benefits available through city employment. However, concerns continue regarding the not matching and inequity. An additional question that was raised as part of this report is related to how much nonprofits contracting with the City Relie on additional sources of funding to provide services and what portions of services to residents the city does not cover given its contracts. Some departments provide a cost of doing business moneys to Funding Sources that are leveraged. For instance, dcyf reports that it attracts other sources of funding for all its providers. Across all of these contracts, dcyf accounted for approximately 34 of funding by these programs. This provides an indicator for how much additional outside funding leveraged through dcyf, but it does not indicate if city funds are inadequately covering costs. Im just going to wrap up by restating our two policy options that we include in your report. The first is that the board of supervisors could request that the Controllers Office and Mayors Budget Office explore and report back to the board on funding opportunities to regularly set a cost of doing Business Funding level that includes any anticipated increased needs for m. C. O. Funding which would provide more predictable increases to departments and nonprofit contracts on an annual and on going basis. And second, the board of supervisors could request that the Controllers Office consider leading a regular periodic survey at least every three to five years of the citys nonprofit contracting partners to help assess the state of their workers. Such should include the number of workers at or just above the m. C. O. Wage Rate And Funding to help us concerns around the m. C. O. And that concludes my presentation. Im available for questions, but i believe, Chair Haney, you want to move onto the next. I can be available for questions later on in this hearing. Chair haney thank you so much, mr. Gonchar, and thank you for your work and for those recommendations. Im going to hold questions for you and for everyone else until we hear from the remaining presenters, so with that, im going to turn it over now to folks from the human Services Network who are here to present. Awesome. Good afternoon, Chair Haney, and to the supervisors. Im brett andrews, the c. E. O. Of p. O. C. And cochair of the human Services Network, h. S. N. Im joined here by cheryllynn adams, cochair of the h. S. N. , as well. I just want to thank you for the opportunity to present today and in particular to you, supervisor haney, for calling this hearing on nonsustainability and Pay Equity. H. S. N. Is an association of 110 community based nonprofit agencies united as a public Policy Organization dedicated to addressing the critical issues of health and human Services Sector in San Francisco. I know that most of us can agree that San Francisco is second to none in providing client centered, community based, and culturally appropriate services. A key to that success is the World Class Model that we have, is the longstanding and intentional partnership the city has with the nonprofit sector. And while over the years, we have had some successes on moving the needing of the cost of doing businesses most recently with m. C. E. , we have not addressed the issues of sustainability and Pay Equity in any consistent and lasting way, and i would assert that the city should apply the same essential factors of consideration to the discussions and the negotiations with the nonprofits as it does its for profits and various city departments. These considerations would ensure healthy nonprofits to have the necessary resources to provide effective, high quality services that all san franciscans can benefit from as we seek to recover and thrive. In a minute, youre going to hear from Cheryl Lynn on a few public policy recommendations that include the ability to provide staff their liveable wages and provide benefits that enable them to live and work as a part of their San Francisco community, recommendations that reflect the value of their work and their skills, and their critical roles as essential workers before and during the covid pandemic. As we have these discussions, it is important to elevate and incorporate racial and cultural equity, as many of our nonprofit workforce reflect the high proportional representation of our Bipoc And Lgbtq communities. Quickly, i would just share a few highlighted challenges that weve faced over the years. The nonprofit contracts are consistently underfunded, inflexible, and dont reflect the true cost of providing the service. The lack of Pay Equity with other sectors, particularly with the city, creates Recruitment And Retention challenges, and it hampers a nonprofits ability to build and maintain a good budget. The inconsistency of the cost of doing Business Increases, i did see that chart that reached back five years, but i would say if you reached back further, ten and 15 years, there are many years that we didnt receive a cost of doing business, and every year we dont receive an increase, that is, in effect, a cut. So im glad we started when we did, but it is very clear we have a lot more ground to makeup if indeed you looked further at that report. The m. C. O. Funding does not fully address the impacts of Wage Compaction for its employees making more than the m. C. O. Rate. I will say that so much of what we are discussing today represents the continuation of a discussion that we have had for years, if not decades. It is my great hope and i hope our shared goal that we can take this discussion further and take the proportional steps and subsequent actions in the near term that will sufficiently, effectively, and permanently address the nonprofit sustainability and Pay Equity issues that we face every day. Im going to stop there and turn it over to Cheryl Lynn, and shes going to present a few policy recommendations for you to consider. I want to thank you for the opportunity to present, and i want to thank you for your time. Hi, everyone. Thank you, Chair Haney. Thank you, members of the board. We are really im Cheryl Lynn adams, as brett said, h. S. N. And Larkin Street, and really proud to speak to some policy recommendations. I appreciate the work of the controller on the report or the legislative report that was just released. Thats super great and just wanted to highlight some of the recommendations that we concur with and maybe push a little bit farther. I want to start by saying that while the m. C. O. Is at 17. 05 and will be going up, thats not what were looking at to have a liveable wage for health and human services in San Francisco. If an apartment is 2100, we have 67 of our staff at Larkin Street that live outside of San Francisco but come in every day from sacramento, from tracy, from vallejo, to do the work, and did that throughout the pandemic, that we really do need to raise the level of compensation. The floor needs to be higher, get us closer to parity with the city workers. The cost of doing business as noted needs to be an allocation thats every two years, not an everyyear allocation. It needs to be at least 3 in order to be able to keep up with the regular inflation that exists, right . So it should be at least 3 , and if the c. P. I. Is higher, then it should be a little bit higher. Its important to note that most of us have wages. Many of us are labor, and so our everyyear increase to the workers is more than 2. 5 , is three or more, 3 or more, so really, the cost of doing business and the m. C. O. Are helpful and important and critical, but we need them to be on going, and we need to continue to work together, and those allocations should actually reflect the increased costs that we all experience in Rent And Food and everything else that were trying to provide services to within San Francisco. And i would also highlight that some of the things that we talk about when we talk about whos on City Contracts and whos not isnt a clean kind of this workers is being paid somewhere else. Its often folks who might be desk clerks or working in our supportive Housing Portfolio who are on City Contracts doing city services, but because theyre in the sort of funded through the local operating subsidy, theyre not included when we think about the cost of doing business, so it is really looking at fully funding more consistent or use implementation of the cost of doing business, more consistent with how d. P. H. And h. S. A. Has done it over the years. We fully support further study of Wage Parity and where the nonprofit is un up against the city workers. This work, nonprofit work, whether were working with seniors or young people or providing critical services or housing, it is about the connections that people make with the people theyre working with, staff make with the people theyre working with. If that is often interrupted because we cant retain staff or because they go work for our wonderful city, then that relationship is broken, and the young people or seniors have to reestablish a relationship, so it is so critical that we support our workforce, and it is so critical that we adequately pay them. It is not about the sustainability of the sector, it is about the sustainability of the services to the most vulnerable san franciscans. And finally, just echoing freds comments, it is lgbtq and racial equity. Most of all of our customers are bipoc and people of color. Thank you for your time. Appreciate it. Turn it back over to you, Chair Haney. Chair haney thank you so much, mr. Andrews and looking forward to diving deeper into these when we get into the discussion. I want to turn it over to our next set of presenters, seiu and [inaudible]. And i believe were joined by ramses and john avalos. We got you on mute, ramses. Oh, great. Thank you for pointing that out. Im here now. Hi. My name is Ramses Nichols [inaudible] and im going to start off with a bit of an overview over the past decade as we found ourselves more involved in the nonprofit industry and the public services there and the many thousands of workers who are part of this in San Francisco every day. We continue to believe that the best advocacy on workers in this city are those providing the services on the frontline. There are thousands of folks working in the field providing services to everybody in San Francisco, and through the first decade, money of us got involved in the first recession in 2008, fighting back budget cuts to the services but we felt it strongly to remain as much as possible. And then also fighting any cuts to the job. A lot of people, including myself, i thought shoot, im going to get cut, too. It was difficult times, and we knew it, and it became a time when we really organized with nonprofits around the city. Moving after that recession, you know, as youve heard from some of our h. S. N. Leaders, we also began to fight for the cost of doing business, coming out of years of having no increases to the funding, meaning our paychecks remained the same for years, and the cost of living kept going up, and expenses kept going up. It saved us for a while, moving up the wages by the minimum wage efforts that was supported by the vast majority of san franciscans. And now were talking more about racial parity, folks going to work and how we can best support them moving up and getting a better paycheck and wages and benefits in order to address things like Turnover And Cost of living in San Francisco. So we have the shared value of this in all of labor. With that said, ill turn it over to my colleague, [inaudible]. Hello, supervisors. Can you hear me okay . Chair haney yes. I im not familiar with microsoft teams. Im nato green. Im the barring Onning Coordinator for seiu 1021. We support the proposals around the cost of doing funding the cost of doing business and the m. C. O. , but we also want to return to this idea that was raised previously about about achieving nonprofit parity or what we might think about as a prevailing wage for nonprofit workers; that the problem that we have is of vacancies going unfilled, of workers not hitting their productivity targets because our Nonprofits Cant Hire enough to fill spots for vacant workers. In 2019, we were at a board of supervisors meeting talking about employment on demand, and all the employers were saying we cannot hit your targets of the city around what you want us to achieve around Drug Treatment without paying more competitive for city employees. Well hear that that is going to have a big budget impact, and we would argue to you that we are already paying for it, but were paying for the consequences of not paying nonprofit workers adequately. Because we cant fill the vacancies, because we have a Recruitment And Retention crisis, because our Employers Cant Scale up to meet the needs of the public to provide services, were paying for it in the form of sick people in crisis in the emergency rooms, sick people in crisis in psychiatric emergency, drug overdoses, police response, unresolved tenant encampments, so we think that investing in the workers that provide these services, many of whom are you know, have lived experiences and come out of the communities they serve, is one of the best ways available to meet the crisis on our streets in the city of San Francisco. So and just the last thing i wanted to say emphasize is the nonprofit in San Francisco is heavily unionized. The top four nonprofit contractors are d. P. H. Are unionized agencies, so addressing this issue is a public health issue. Its a social services issue, its a labor rights issue, its an equity issue, and we look forward to working with you on the wages in San Francisco and pioneering that policy, and now, ill turn it over to my colleague, john avalos. Good afternoon, Chair Haney, and committee members. John avalos with the national union of Health Care workers, nuhw. Nuhw, we represent Health Care workers at Richmond Area municipally services, otherwise known as r. A. M. S. All of our departments in San Francisco have missiondriven budgets. Overall, these budgets are supposed to serve the public with critical and culturally appropriate health services. However, despite receiving funding to provide these services, nonprofits like r. A. M. S. And nonprofits that seiu 1021 works alongside struggle to attract and retain a stable, qualified, and experienced workforce. Because pay and benefits lag behind their counterparts in the county for county workers and workers in the provide sector, turnover remains high. Nearly half of our workers have been hired within the prior two years, and one fifth were hired in the prior year alone. When we bargained our contract with r. A. M. S. Clinicians and r. A. M. S. Back in 2019, our entire Bargaining Committee has actually moved onto work for the City And County of San Francisco. This has greatly undermined the ability of r. A. M. S. To carry out its work. We have to ask the question whether were contracting out these services to actually extend the ability to meet the needs the public has or just to save money . I think thats not a very good question that we should ask ourselves as a City And County, whether were just doing the minimum we can to show the public that were trying to meet their needs. With the pandemic and its immense mental health impacts, the stakes are much higher for our city to provide effective Behavior And Health support. Therefore, parity with city workers is essential at exploring the idea of a prevailing wage should be a continued assessment and should be included in the cost of doing business during our budget seasons. We support including a 3 cost of doing Business Increase for our notforprofits each year in the next three Budget Years. Only by investing the cost of doing business with an eye to our missiondriven budgets and parity for workers can we truly strengthen mental healthnet works and get the outcomes that we week. We hope that you can provide appropriate funding this year and for the years to umm can, and we are here to partner with you any way we can to help make these decisions. Thank you so much. Chair haney thank you. So with that, colleagues, now im going to open it up for questions, and i do want to note that we have representatives from d. P. H. , h. S. A. , h. S. H. , dcyf, o. H. E. , as well as the folks that just presented here. I know i have questions in advance as well as questions my colleagues have. Colleagues, any questions or comments . Supervisor ronen uh Chair Haney Supervisor Ronen . Supervisor ronen first of all, thank you, Chair Haney, for calling this to allow us to deal with a problem that has been getting worse and worse for a very long time as the cost of living in San Francisco and the cost of housing continues to go up. I just wanted to appreciate everyone who presented today. For me, it should be a nobrainer that we are increasing the cost of doing business with our nonprofits every single year. I dont know why we havent instituted that institutional change in our budgeting practices because it should be a minimum. We rely on the nonprofit sector so heavily for the basic human service needs in our city. Sure, we partner and do some of that work as city employees, but the extent to which we rely on the nonprofit sector is so big that we cannot claim being responsible for making sure these agencies retain a workforce to do some of the hardest work out there, so im i guess this is a i dont even know who im asking this question to. You know, i let me pose it, and then, we can figure out where it should go. But basically, what do we need to do and what can we do and what is the extent of our power on the board of supervisors to just nip this issue in the bud once and for all and require a 3 cost of living or cost of doing Business Increase as a minimum floor thats automatically incorporated into every City Budget . I dont know if thats a question for the controller, for the Mayors Office, for the City Attorney perhaps the City Attorney. Lets start there. Do we have a City Attorney standing by for us, matt . Chair haney i dont well, we have a City Attorney with the committee. I dont know that we have a City Attorney prepared to answer the question. Supervisor ronen is it City Attorney Ann Pearson with us . Chair haney deputy City Attorney, are you here . I dont think shes here. Supervisor ronen okay. Then i will be asking the City Attorney this question offline, but in the meantime, the controller or if the controller or the Mayors Budget Office can talk about this. We talk about this issue every single year. What has stopped us in the past from just dealing with this issue on the front end of the Budget Process to make it easier for everyone involved, including city departments who dont really know if their budgets, when they submit them, are accurate. If you could comment on that question, either the controller or the Mayors Budget Office. Hi. This is Risa Sandler from the Controllers Office. I can speak to part of your question, supervisor, which is to say what has happen, and i think that may inform further discussion or questions, which is just really what you can said earlier, that in the annual Budgeting Process, this is one of many items that is either proposed by the mayor or by the board and in the end would end up in the final budget, so its an annual decision that seems to be happening. Supervisor ronen and i guess my question is, and i dont know if you can answer this. Its probably best answered by the City Attorneys office or Dan Gonchar, if you can answer this, i dont know. Its an issue that we deal with every single year, and its fundamental to be able to maintain the human Services System that we have set up over decades in San Francisco relying so heavily on the nonprofit sectors, so why do we torture ourselves, which is what we do every single year . Ive been watching and participating in this Budget Process every year for over ten years, and there is an annual torturous process that we have to go through every year. When we had it at City Hall, people used to sit in the hallway until 3 00 in the morning because the fate of whether or not they could retain their workforce depended on the outcome of this, and it doesnt make sense. It doesnt help anyone. [please stand by] why we cant make life easier for all of us to incorporate that into the cost of doing business in San Francisco or Housing Cost or Budget Explosion or whatever. Just as a matter of fact if its a relatively normal Budget Year that we are just doing that on the front end. Can anyone explain why were not doing that . I dont mean to put that on question. Is the supervisor here . Yes, im here. I dont want to speak to what would be needed for the annual appropriation. Like everything else that we find on the budget every time we review the annual budget. So i dont know how we would go about requiring it to be funded at a certain level every year. I think if the City Attorney can weigh in, that would be great. But like everything else it is subject to the questions and comments. My petition to you, Controllers Office and Madam Mayor is we at the city rely so heavy on the nonprofit sector and that relationship only gets deeper or more expansive. It has never waned or gotten less. As the city gets more expensive, it is virtually impossible for these nonprofits to retain their staff which we rely on for the issues most vulnerable in San Francisco, the kids who are failing in our system. This makes no sense. Number two is let everyone breathe a sigh of Relief And Concentrate on the other issues we have to deal with by taking this off the table and giving the department some clarity, the nonprofit clarity and Workers Relief and just do this one thing as a matter of course. That would be my petition and im going to talk to the City Attorney about what our power is to mandate that, but in the meantime we dont have to mandate if we just did it and that would be my request to all of you. Chair haney, i contacted the deputy City Attorney and will be filing in shortly and participating in this meeting. Thank you, chair for providing this Pay Equity for nonprofit Service Providers and the equitiability for the workforce and the programs they provide for the most vulnerable residents in the city. These are issues i worked on for years even before i joined the board as someone who worked in the nonprofit sector for years and in community as an advocate. So the urgency for us to address these issues in a more proactive and just a more proactive and sustainable way. I think Supervisor Ronen was highlighting and i think the way this has been done on an annual basis with a lot provided from the Mayors Office and the board needing to supplement with addbacks is frustrating and problematic and creates so much uncertainty for the department and the Service Providers. I would very much agree with Supervisor Ronen and the b. L. A. s recognition that we work towards creating a policy around this and a standard practice every year so we could address this really urgent issue looking ahead. I do support fully funding the cost of doing business this year and i would urge the Mayors Budget Office to address that issue. I just have a question around the cost estimate for the b. L. A. s office. What is the cost estimate for the n. C. O. , the direct Wage Increase covered by the n. C. O. As well as the Pay Compaction and Pay Equity for the n. C. O. And what is the cost of doing business . I guess a cost for each percent that were looking at. The numbers that i have date back to 2019 when the nonprofit Working Group met and they came up with some cost estimates. They estimated that directly funding n. C. O. Would cost an additional 1. 3 million and the direct Wage Compaction would cost 13 million and direct Age Equity would cost 12. 7 million. We did note in our report that those in that Work Group come up with more of a range. We also talked about in our report the issues around tenants actually knowing what the cost is. Its really hard to pin it down because there are several departments at play and hundreds of different contractors. Its hard to get accurate data and keep it current plus a recommendation on keeping it current. Those are the numbers we have at the moment. Thank you. What about the cost of doing business . I dont i think this is a current year Business Adjustment. I will ask the Controllers Office to correct me if im wrong. It was about 12. 5 billion to increase the cost of business by 3 . Yes, i am on for the Controllers Office. As part of the final spending plan, there was 12. 5 million set aside. Part of year the Budget Process got delayed last year. In that case it was only a partial year. We could do a quick back of an Envelope Type of calculations if we knew the date it started. I might want to [indiscernible] i can jump in here. As ms. Sandler said, the 12. 6 million that was included in the budget last year was intended to fund a onetime 3 cost of Business Increase. Again, our understanding is that was intended to fund a partial year, so nine months. We estimate in order to annualize that, it would be about 18 million for next year. Thank you. I dont have any other question questions. Supervisor safai, was president walton on i was, but Supervisor Martin and Supervisor Ronen covered my questions and points. Thank you. This is a very important conversation. One of the things i noticed when the b. L. A. Was doing their analysis of the different departments and saying a lot of the recommendations that could help to achieve some of this, but one of the they highlight in terms of policy options is looking at the funding resources for Wage Compaction and wage concerns, im just worried what the majority of these nonprofits, how much of the Salary Or Funding is made up of City Funding. How much of it is how many are rely ant on City Funding for that majority of their funding. Thats a majority of the conversation. One of the things weve learned over the last years is City Cant do everything to deliver all the services in need. It would be good to know how much outside of City Funding. Did you analysis that . We dont have a lot of information on that. It appears that the dcyf contractors, they receive about a third of their funding from the city and the Youth Leverage about twothirds of their funding. We dont know what that means from other departments and there is a representative from dcyf that could correct on that. One of the things that came up in our report is there really is not competition citywide on what the universe of nonprofit contractors looks like, their funding, their workforce. Thank you. I think thats an important point. I think through the chair its really important to have a conversation. I understand Supervisor Ronens frustration because it would be easy to say lets clarify this, but 18 million just for one aspect of this conversation is significant. Without understanding how much of each of these organizations get and how the Funding Sources are leveraged and could they be leveraged in a way to make up the gap, that is a fundamental piece of this conversation. There needs to be an addressing of Wage Compaction and equity concern. That needs to be fleshed out further. Without addressing the makeup of nonprofits, i dont think we can have a true conversation about addressing these shortfalls. I wanted to put that out. It would be important to have the b. L. A. And controller and that will help the mayor. This is the first time the minimum Increase Ordinance has come forward. We havent accomplished everything that needs to be done, but it would be important to look at the Breadth And Range of the nonprofits and how they can provide that. Thank you, colleagues. I have two questions for the department that i wonder each of the departments can answer for us. One of the things that has been a concern is the methodology of calculating the cost of doing Business Increase doesnt have rationale. I know that d. P. H. Determining the cost of doing Business Level on the bottom line of the contract including some federal dollars, while other departments only include general fund dollars. Im wondering if from each of the departments we can hear from the ones here, what your methodology is, what is included and omitted and why. This is a question that we email to all of the departments. As best as possible for the departments who are here, if i can understand from you all what your methodology is for determining a cost of doing Business Increase. Why dont we start with, and i mention them, d. P. H. Jenny louis, d. P. H. Acting officer. Our cost of doing business is allocated against the bottom line. The federal funding that you referenced, chair, is related to med ical and medicare. This has additional obligations so we cant allocate or get additional resources. This is in terms of our copy contracts. I am the hsha contract director. For our calculations, we include all direct operational costs, salary, fringe benefits, and other operating costs. We have passthrough documents that are in the contract as cancel expenditures. And h. S. H. Good afternoon, chair and supervisors. This is emily Cohens Director of strategy and homeless affairs in the department of housing. We apply our cost of doing Business Calculation to those that are general funded contracts. We do not apply it on federal funds and [indiscernible] of our federal s. M. R. To provide those increases. And we also do not provide a copy on a direct pass through. Thank you for this question. We calculated the codb on the Youth Service and service funds. For the department and the methodology that yall use, there are a couple of different pieces and i emailed this over so i hope you can respond to the methodology. In particular, i wonder if your methodology takes into consideration the direct costs of Wage Increases for contract employees making less than the m. C. O. Rate impacts those making more than the rate and the impact is because equitable employees must pay through the contract. Each of those, i can start with d. P. H. Again. We dont dictate how the codb can be used. A majority of our agencies pass on a certain percent of employees, but not something we directly dictate. We do allow our people to dictate their rates to cover the services. H. S. A. Similar to d. P. S. As well. Any operational costs that we have we dont say where they have to use their cost of doing business. We dont dictate the codb. This is in the parameters of making sure they are making less than the m. C. O. We strongly recommend that they are used for wage salaries. The city factors in the Wage Compression Question in the Controllers Survey to help determine how to allocate funds. Also similar to the other departments, we do not dictate how the nonprofits allocate the codb. We do serve on an annual basis the contracts. We keep a pulse on that and we work closely with the Service Provider Working Group. They participate as part of our Service Provider community and any equitable pay they bring up to us. Thank you for that. I did want to ask h. S. N. , human Services Network, to also weigh in on this issue of the methodology and what different factors are taken into consideration and also the consistency across departments in terms of how its calculated. I know this is something that came up a bit in your presentation, but i had received feedback that there was the Inconsistency And Methodology and questions around what is taken into Consideration And Part of what the challenge is. Can i ask brett or sherylyn. Sure. With the organizations that contract with more than one city department, as represented by the city departments, there are different methodologies. Thats just a statement of fact. One works within what is presented to them. I will say certainly with d. P. H. And that is the department that we contract with, the greatest takes the approach of the bottom line of the contract and, frankly, allows us the flexibility to do what we need to do because our cost pressures pay year over year. I would look at how we can be and, supervisors, i wanted to throw this out there. This was a committee on task forces that and i think its important to go back to the recommendations that came out of that. There were highlighted issues of indirect rates and possibly some pilot projects out of the controller projects that we could analyze and address some of the challenges the nonprofits face as they consult with city departments and in order to build and maintain a budget. One of the things i will add on. I think it was highlighted that direct cash payments or subsidies are excluded when h. S. H. Is looking at to what exclude or new for the codb. The problem is in subsidies, they dont administer that themselves. There are still a capturing of the costs that are labor costs, rental costs, or office costs, food costs, or all the costs directly related to that service. I think its important for both the reasons brett highlighted. I think this is helpful just in terms of the consistency and the fact that many of us contract with multiple departments. When there are differences in departments, it can create confusion and inconsistencies and make work harder on Everyones Part and when the work is complicated, its harder to do. I want to speak about the spread. When we talking about organizations that might have multiple Funding Sources, this came up from a supervisor, i think its important to recognize that we will see those were privately contracting with for public funding. We cant just use this money to add on to or to pay on to. Its other public funding resources. So there are restrictions on funding that would prevent some of the potential ideas for funds. This is not how this works. If you contracted with the state, they have their own state of goals tied to unduplicated clients and there is no double dipping that can happen. You need to serve with local dollars, but you couldnt take those state dollars and serve the same group of people. We have to be careful not to double dip. So it just isnt cash or resources to come in to provide the work to the same group of clients. If i could ask dan from the b. L. A. To join us again. Even if you have your presentation still, it will deploy. I did want to go through each of the points of this report and get feedback from each of those tasked with implementing them so we can get clear, next steps here. I know if im right, i know there were sort of two main recommendations here. Am i right . Correct. Theyre on two different slides. This is the first one on the cost of doing Business Funding increases, trying to set up a level. Did you want me to read it begin . Yeah, and well have a response from the Controllers Office. Sure. The cost of doing Business Adjustment is provided for nonprofits at a general sum cost, but its subject to the citys Budgeting Process which leads to uncertainty in the amount of increase and the timing. With the current Year Kind of odd with covid, but it led to a onetime bump in the cost of doing business. So our recommendation that we came up with was to explore the opportunities to set a cost of doing Business Funding level that anticipated any needs for m. C. O. Funding which would provide more predictable increases to department and nonprofit contracts on an annual and ongoing basis. Is this something we would request to be issued every year as part of the process or make it more formal than that as law . So thats a great question. I will speak to it, but i think it would be helpful at some point to have the City Attorney weigh in. I think the options can range from the adjustment to the annual ordinance, a change in the Admin Code and how the Budget Process works. However, the City Attorney might agree and say what is required for a Charter Requirement for these funds to be automatically be programmed in. Thats where theres my expertise and the legal line where i would ask the board to weigh in. Sure. And this is sort of in line with what Supervisor Ronens question was. Is the deputy City Attorney here . I thought i heard she was calling in. Deputy City Attorney has to sign off to join another meeting, but she will be available if needed. I can reach out to her, if i can. Sure. That would be great. Let me know when shes here and we can come back to this. For the Controllers Office, you all are named here in this recommendation. Is there any response you would have on how this works or what role you would play and how this differs now . Sure, chair. Our office supports the board and the mayor through the entire process with how it exists. I would echo what was said. Im interpreting an opportunity here of methods, methods of determining how the codb is determined or allocated and i would be eager to hear what the City Attorney has to support. Can you go to the next recommendation . Sure. This recommendation goes back to a theme that came out in our report that its hard to pin down that question about its a citys support for nonprofit meeting with the n. C. O. And keeping up with costs, what is the position. The mayor and the board of supervisors every year try to pin this down, but to know definitively. This data maybe could be refined in the future. Our recommendation was the board of supervisors could request that the Controllers Office meet a regular periodic survey every three to five years with the city and nonprofit contractors to assess the state of their workers and service sincere. Were including in our recommendation the survey should include the number of workers at or near the m. C. O. Wage rate and the second piece is the survey, we recommend it should include other Funding Sources leveraged to address various concerns around the m. C. O. And that is a concern raised by nonprofit organizations that the codb only covers general funds it primarily covers some costs where it can be used for leverage funds. I think that h. S. A. Noted that so much of their funding is leveraged that they feel its necessary to have a picture of that across the city. For this one, ms. Sandler, is this [indiscernible] for the Controllers Office. Are there certain challenges you foresee with this . What would be your response to this . Thank you for the question, Chair Haney. If were asked to do a report and an analysis, we could do that. It would depend what that work is and the frequency of these items if thats okay. Deputy attorney pearson, ill open this up. Sure. Are you here . I am. Can you see me . Great. So we wanted to know if there is a way to require a minimum Threeperson Cost of doing Business Increase that would be a major change in the Budget And Way of doing business. Im sorry i missed the earlier part of this debate, so im coming in a little bit cold. I would have to give that more thoughts. Many of the agreements are nonprofit agreements. Im not aware that there is any required term that would require an increase to the cost of doing business. I dont know if there is a requirement to do that. I dont know if there would be a to do this. I dont know if that was put in the matters. This would include the full 3 and a big effort on the board to make that up. Its hard for departments because when theyre submitting their budgets, they dont know if its accurate or whether they will be required to do much more and hard on the nonprofits because they have to fight every Year And Wonder whats going to happen to them. As the City Relies more and more on nonprofit workers to meet the needs of our residents, there is a better way to do that where we dont have to do that every year and give the nonprofits increases to retain staff which is difficult to retain these days. Thats what you meant. Basically. Thats why we wanted to see if the board has the power to make that cost of doing business raise automatic. I understand. Im happy to look into it and report back to the committee. One of the questions was if we can set and rate and make it automatic and this is a different way of stating that, but doesnt make that automatic for the m. C. H. Funding which will provide different increases. If we can require that, there is a Funding Level that is set on a regular basis. We had asked for a response from folks on that. We wanted to know how something like that could be done and what our powers and options would be. Im reading the slide now but i want to make sure what the recommendation is. The recommendation is for the board to somehow articulate there is a certain Funding Level, whether , 3 , 4 , that should be the goal each year. Again, im going to have to think about the different avenues. There would be legislation requiring includes of returns. I wonder if there would be a term that recommended specific Funding Level. Id have to see whether that would be implemented into contracts and grants. Great. Thank you for that response. Im sure well have some followup questions. There is widespread concern about the variability, the cost of living and the cost of doing Business Increases as well as the standardization around it. I did want to on both of these recommendations and maybe it was already included in their presentations, but i wanted to give h. S. N. And the labor partners an opportunity to respond to these as well, as far as whether these two recommendations you believe would solve some of the challenges. And i know you for h. S. N. Have your own recommendations. Can i turn it back over to our labor partners if Theres Anything you want to comment on in terms of recommendations or the comments in terms of solutions. Are john or nato with us . Apparently they are not. This is sherylyn adams here. In terms of the recommendations, i think absolutely we support recommendation 1 was whether or not and agreeing with the comments of having the 3 or an ongoing cost of doing business which is over two years. We would move towards having that every year and implementing that. The recommendation is about considering that to be a citywide policy if im not overinterpreting. We would support that and the need for an ongoing 3 . We would agree that the continued increase of the cost is supported. We would take it a step farther and say that the m. C. O. Is not fully funding to get to Wage Compression and address folks who are doing the work not specifically on a City Contract but are working side by side in an organization doing similar work as their cityfunded partner. And there is cityfunded work for the cost of doing business. We would see the [indiscernible] in our city. In my presentation, i did reference that i believe that the city has contracts with many entities, nonprofit and forprofit. I think in a response, and im sorry, i wont remember the responder, they referenced there are many maybe the Controllers Office or the City Attorney who said there are many nonprofit contracts they will have we would need to see whether an escalating provision exists in the contracts and is there an ability to take the language from those contracts that could potentially be with your forprofit contractors and adopting contract. I believe there is a willingness and a desire to do that i think there is a willingness to want us to do that. I wanted to open it up. I wanted to ask because i didnt see the historical perspective. If ashley is still here, can we ask if she had any contribution on the commitments in the past and how the Mayors Office has presented this. Id like to hear from the Mayors Budget Person as well. Thank you for the question through the chair. I would be happy to provide you with a historic fact of what is included in the Mayors Budget and the cost of doing business and the m. C. O. With the very notable exception of last year when we had a significant Budget Shortfall, there is a cost of doing Business And M. C. O. Included in the budget and wed be happy to produce that for all of you and follow up. I want to open this up to public comment. Madam clerk, can you see if there are any members of the public in the queue. Clerk please Press Star 3 to be added to the queue. Are there any callers in the queue for item 1 . Operator yes. We have 36 listeners and 20 people in the queue. Clerk thank you. Ill unmute the first caller. Im in support of increasing the deficit for nonprofits. Im a participant of Youth Services and the board. Im in favor of getting more Compensation And Equity pay for the nonprofit organizations. They do a lot of work. I would like to know that they are able to do the work and live in the city. Clerk thank you for your comments. Next caller please. My name is stephanie morgan, i would like to echo the comments of those before me. Underfunded contracts make it impossible to maintain a viable workforce. We have seen an increase in the cost of caring for the population we serve who have increased mental health needs, physical needs, increased morbidity due to time in the street as well as increase in age. We are asking that the onetime 3 profit for emergency be extended and the 3 cost of doing business be increased for at least for the next two Budget Years. Thank you. Clerk thank you for your comments. Next speaker, please. I am ray and 24 and a youth that utilizes the services and also part of the youth advisor board. Im completely for this with the past i think a lot of things in the city there is not support [indiscernible] betterpaying compensation to eat. Just because they do have so many clients throughout a day and they dont get the ability to recoup and get the support they need. Connection with the staff is more important than anything. We get that connection and not having someone stay with the program really breaks that important factor. It works for the community and i want to people should be supported by the city. I want to say that during covid these people have been essential workers due to the work they do. Homeless people have been housed primarily during covid and we have people getting off the streets and getting clean and actually helping themselves go to school. Nonprofit workers help many of the marginalized. I hope they can get the Funding Operator the speakers time has elapsed. Good afternoon, Chair And Committee members. I work at Childrens Facility in San Francisco. We connect thousands of lowincome families to Child Care [indiscernible] to our base funding. This is unsustainable. This past year alone we have done a large job. We need to increase Baseline Funding for nonprofits. Thank you. I am the c. E. O. Of the California Association of nonprofits, a statewide alliance with more than 10,000 nonprofits and i myself am also a volunteer for a San Francisco and a nonprofit. Im so pleased to see the Committee And Commission look at making the idea of this cost of doing Business Something that happens without wrangling and debate. Its never been more obvious until this year how much we rely on nonprofits. Our nonprofits bring a lot to the community. All of our nonprofits step up and do whats needed. Please consider this request and please consider making this Request Something that doesnt have to be fought over every year. Clerk thank you for your comments. Next speaker, please. Hello, everyone. Im an intake coordinator. I work with our detox and residential facilities in San Francisco. Working at a nonprofit is beautiful and at the same time it is a challenge. We undertake and carry a full load of tasks and stresses. [indiscernible] we provide through our clients. We have a lack of bilingual staff which is heartbreaking. I know firsthand how difficult these programs are. Ive seen my siblings struggling with addictions. I work in this field because i want to get back. Thats why i achl here asking the city of San Franciscom here city of San Francisco to help us retain and attract valuable staff. Clerk thank you for your comments. Next speaker, please. Good afternoon. My name is