Review. We reviewed major trends, particularly in the general fund over the past five years. Our source document for this analysis was the citys comprehensive annual financial report. Because the most recent Financial Statement is dated as of june 30th, 2016, the review period is from 11 12 to 15 16. Since fiscal year 1112, revenues have increased from 3 billion to 5. 8 billion and expenditures have increased from 3. 1 billion to 4. 3 billion. We found these actual operating results have been more favorable than projections. I apologize for this chart. Some of the key got cut off. So the blue bars show budgeted revenues, and the red bars show budgeted expenditures. The green lines show actual revenues, and the purple lines show actual expenditures. What this table shows you is actual Fund Revenues have exceeded general Fund Revenues in each of the five years, and actual general Fund Expenditures were lower than budgeted general Fund Expenditures in each of the five years. So this surplus year to year has provided a boost to the citys reserves. Since the school year 1112, the fund balance has increased from 456 million to over 1. 4 billion, or 214 . The citys most Discretionary Fund balance, which is the unassigned fund balance that you see on that table, grew over 1,000 from 7 million to 242 million. This is, we would note, in addition to the other city reserves, which include the rainy day reserve. Since 2000, there have been a few legislative efforts to address certain aspects of the Budget Review process, particularly related to the boards role. In 2001, the board passed an ordinance requiring the mayor to submit a preliminary budget on april 1st and stated the intention of the board to establish a new budget timetable by september 2002. In 2002, that resolution followed, and it added a commitment of the board to include policy directives to the mayor. In 2005, the board passed a resolution to provide by the mayor on june 1st. It was not signed by the mayor. One proposed a new timetable for the budget in july with a march 1st preliminary budget, and a may 1st proposed budget. This did not pass. Instead, in september, the resolution that did pass reiterated the current schedule, which is the may 1st deadline for enterprise budget and june 1st for general fund. We would also note that the controller initiated a budget Improvement Project in 2008, which included a perth comprehensive stakeholder survey, and some of the key recommendations of that process included the integration of Performance Management into budgeting and the need for the mayor and the board to provide policy direction in advance of the budget process. To understand how San Franciscos budget process compares to other cities, we surveyed 26 jurisdictions. We did not include a discussion of the process in our report because its a difficult subject to survey since many aspects of this process are undocumented. We do believe that our recommendation, which well discuss regarding policy priorities, addresses the issue. We reviewed how legislative bodies receive budget information and found that onethird produced independent analysis and review. Several of these jurisdictions having offices similar to ours. We reviewed the reports produced by those offices that would be beneficial to this board in its review. Some of the context provided in those reports includes citywide and Department Budget trends, budget risks, such as Revenue Sources that have not yet been approved, the status of prioryear projects for appropriations, and major initiatives and program changes. As you all know, in november of 2009, San Francisco voters passed proposition a, which amended the city charter to transition to a twoyear budget cycle for all departments. According to our survey, only three of the 23 use a twoyear budget cycle. None of those are fixed. Means that for each of the three jurisdictions theres some midcycle review or reappropriation. This indicates to us that the twoyear fixed budgeted process is an uncommon practice. Finally, we looked at the timing of the Budget Review and approval. We looked at major opportunities for legislative review and engagement and found that in some jurisdiction, theres a process by which the legislative body reviews a preliminary budget. Some examples are alameda county, which reviews the maintenance of effort budget submitted by the county executive that speaks to some of the gaps that the county executive sees forthcoming. Gives them an opportunity to comment. In new york and portland, the preliminary budget is released in january and march, respectively, if for legislative bodies to begin review. We also found many jurisdictions provide policy direction to the executive office early in the Budget Development process. Some examples of those are oakland, where the members submit a list of their priorities early in the winter. San diego, where the priorities are vetted such that theres some consent built before theyre submitted to the mayor. In sacramento, where their Budget Office does sort of a Feasibility Analysis of recommendations and presents forward the ones that will be most feasible for implementation. We also looked at the timeline that these legislative bodies have. We looked at those timelines as theyre required by law and as theyre implemented and practiced. We found there are 72 days on average for which the 23 bodies have to review the proposed budget. And that is compared to the current review period for San Francisco, which is 60 days. In conclusion, we presented in our report three policy options for the board to consider. The first is to direct our office, the budget and legislative analysis to produce a budget overview report as part of our annual Budget Review in addition to the current reports that we produce that would look at some of those major citywide trends discussed. The second recommendation would be to amend the code to require the mayor to submit the proposed budget for the citys general Fund Departments to the board no later than may 1st. The final recommendation is for the board to produce a list of annual policy priorities to submit to the mayor by february 1st for incorporation in the proposed budget. Thank you. Happy to answer any questions that you might have. Supervisor cohen thank you for the thorough present takes. Supervisor yee has a few remarks. Supervisor norman yee thank you for your report and the options that you laid out. Well take these options very serio seriously. They look to me like some things that can really benefit our process from the board of supervisors perspective. I just want to ask one thing i didnt get from this report. One of the Major Concerns we had from last years budget process and on the previous is this whole how do we change if theres any possibility, this whole process of add backs. And this report doesnt seem to address that. Is there a reason . I think theres a twopart answer to your question. The first part, in doing a survey, we were not able to identify other jurisdictions and how they did it because its not really a documented process. So it wasnt really unlike some of the other things we speak about in the report, there was nothing we could point to that shows how other jurisdictions do it. The other piece of it is again, just reiterating, one of the things we really focus on in this report is the idea of formally developing policy priorities and working for the board of supervisors to work with those early in the process. We see that actually is informing the budget as a whole, but also to the extent that were reappropriating funds that were identified in june, that those could actually inform that process. And then ms. Guma phonetic spoke about what other areas did. Im going to have her add to that just a little bit. Supervisor norman yee thank you. Thank you. Thank you, supervisor yee. In our survey, what we found were good examples in a couple of other jurisdictions about how our peer Office Supports their legislative body in developing the policy priorities. I think particularly we thought that sacramentos process is something that would be a good model to consider here where the Council Members develop their list of priorities, and the budget analyst staff work with the Council Members and the departments to assess how feasible the implementation of those recommendations would actually be. They go through a process of evaluating the process and through that, they develop a final list of policy recommendations thats presented to the mayor for incorporation into the budget thats been cleared by the department. Thats been you know theres some assurance that they will be actually able to move forward with those programs or expansion of programs that would be a policy priority. Supervisor cohen do you have another followup . Supervisor norman yee yeah, i guess maybe one of the followups we could have is have individual discussions between Committee Members and some of the sacramentos counsel. Okay. That would be helpful. Do you actually know who they are . The Council Members . We spoke with the budget analysts in sacramento who facilitate this process. If there was a meeting you would like arranged, we would be happy to do that. Thank you. Lets continue with the presentation. Next up is mr. Ben rosenfeld who is our city controller. Good afternoon. Members of the chair. Ben rosenfeld. Similar to the review madame chair asked regarding other practices, you asked us for a Qualitative Survey regarding the local process. So we worked through the process this fall and issued a report about six weeks ago now, which is available on our website, regarding our findings. So i will briefly touch of these here. Generally speaking, though, we administered a survey to multiple stakeholders, including Board Members themselves, members of the Mayors Office, members of the budget legislative analysts office, and others who participate in the process, whether they represent advocacy processes and lastly surveyed a number of Different Department staff. We were fundamentally asking two different questions, which at a high level, which aspects of the boards approach from the budget process from your perspective is effective and what could be approved. It was broad across the responses, in terms of what was working well. For many respondents, Schedule Management was high on the list. The comments that the board is effectively conducting a process to meet its charter deadlines that result in both the committee proposing a budget to the full board, and the full board adopting a budget by the end of the july, as the charter requires. There was also a fair amount of feedback that the boards process did allow for a number of different opportunities for Public Participation in the process, whether they be commenting in Public Comment on different proposed budgets or the mayors proposed budget or a number of Community Members thought they had access to Board Members who were receptive to their concerns. When asked what aspects of the boards budget process could be improved, a number of different themes were reported. These varied between groups. Generally peeking, they fall in these areas. Transparency, the key parts of the budget process. Time pressure, a number of different participants felt it lacked for adequate time to conduct tasks at hand. Third, feedback from different groups that the boards approach to the budget could be more policy focused and less lineitem focused. Fourth, that some specific example of communications could be improved so that different stakeholders had clear expectations of how the process was going to work. And, lastly, this cuts across several themes above, that the process the board uses to reallocate savings to different uses could use significant work. If we look at these responses as a percentage of each of the respondents, you see it here. So about 50 of respondents commented that both transparency could be improved and the prosect could be improved. If we look across different stakeholder groups, so the left bars reflect im sorry this is somewhat washed out on the slides you have in front of you, but on the left, you see responses from the Board Members themselves and the offices. The middle bucket represents internal stakeholders, those within the government that are participating within the budget process, and the far right are the extent stakeholders that participate. You can see results varieded pretty significantly across these groups in terms of what people thought could use work. A couple of themes pop up. You can see here for all three groups, the addback process is reported as an area that could bear significant improvement. Those who participate in the boards process, it was said that transparency could be improved. Those are the key themes we see in the results we have. So some thoughts, and theres a lot of different ways that the board could approach these questions. The board has approached the budget process differently over time. There are a lot of different ways to bite into these issues. These are some preliminary thoughts from our office. First is that there are a number of steps that the board could take to maximize their time, the time they have available to review the budget, to reduce the time crunch that falls in june into which the board really packs a tremendous amount of decision making. Part of it could be as simple as it has the fivemember committee begins in march. You could move that up and begin earlier in the process. As you know, the citys budget process really starts in november. Theres a lot to talk about, if the board was willing, as early as january. Secondly, the balance between the may departments and the june departments is an important consideration, how you offload work from june. By maximizing the number of departments and the scale of the departments that the mayor submits to you for review in may, you can really pull a lot of work off of june, which makes more Time Available for other tasks. That was really fundamentally the design that was sought with the splitbudget process, where half the budget comes in both may and june. Thats something we could work with, both the budget analysts and the mayors Budget Office as we frame this coming years budget process, is seeing how much could really be pulled forward to may for submission. Lastly, how you think about what you want to conduct in june and july, what business youre trying to conduct, and how you can pull much of that work earlier into the presubmission timelines is critical. There would be a number of different ways to do that. Similar to the budget and legislative analysts, there would also be ways to identify the policy priorities earlier in the process and begin work on them in a way that would probably provide for more Meaningful Outcomes in the process and also provide for transparent process. Again, there would be a number of different ways to approach that question. We do see and this is a more technical set of recommendations that relate to some of the feedback from different groups. There are pieces of stakeholder education and training that could be enhanced during the process. Thats something we heard from different groups. And then lastly, the addback process itself. There would be a number of different ways to approach this. I thought this chart was interesting because it tells us something about how the changes in the board has approached the budget itself in terms of the addbacks over time. This is showing you the number of addbacks, meaning individual line items in the boards restoration package at the end of the day, backed by year back over time. Its also showing you in the cross hatch bars here, the number of addbacks that are under 50. You can see a remarkable increase in the number of addbacks that the board has allocate through the budget process over time. As high as consistently over 200, as high as 250 different line items in recent years, compared to historical norms in a prior period of under 100. What this means is the allocations that the board is making are increasingly narrow and specific. You see the number of small addbacks increasing. I think this tells us something about how and the question it raises for me is how the board wants to balance what youre trying to do with the allocation process itself. Are you trying to allocate money for different policy Priority Areas or are you trying to do that in addition to allocating to the specific programs within that to achieve that goal. That balance is an important one. Its something that strikes us. There would be a lot of different ways to restructure the addback process, again with the goal of improving the efficacy of that process and the transparency. Here is one outline of one such way at the bottom of the page. I think this is in line with the recommendation you hear from the budget and legislative analysts regarding budget priorities. February through may would be a period prior to submission of the budget from the mayor where the board could engage in a process of developing and adopting as our legislative leaders set up policy goals for the upcoming fiscal year as a board. They would would be highframing strategy choices the board would be making. They would reflect if this was done effectively where the board felt additional investment was needed at a high level to move key priorities forward for the city. You would adopt that as a body. This would provide direction to the departments, to the mayor, regarding what the priorities were. Having done that, you could then, as a body, move into developi