Pay for general city responsibilities which is things like Retiree Health subsidiaries , Health ServiceAdministration Costs and those dollars that we must spend keep City Services running and were obligated do not have a policy choice to make to reduce them without other action and that leaves about 2. 5 billion that is available that is truly a matter of policy addition correction so in that light our 715 million is much larger share puts us at about 30 of the total discretionary dollars that are available to allocate and so that is a big portion its a much bigger portion than when you look at the higher level numbers and that is one of the reasons that our budget is a major factor for the citys general Fund Balancing plan and vice versa when the general fund is in trouble were in trouble and when were in trouble the general fund is in trouble so thats why were always working very carefully to coordinate with Mayors Office and Controllers Office on our Financial Planning so that it alliance with the citys approach. So any questions on that piece of it . Commissioner. With regards to our 715 million general fund support at 29 how did that compare to other departments, what are the next top three perhaps . All right, here we go. Lets see. So if you look in the second column of numbers you can see the general fund support so just to kick a couple off theyre on the prior page so you can see Police Department at 459 and weve got the Municipal Transportation Agency received 313 million and Human Services agency 241 million so the biggest general Fund Recipients are are the core city and county functions so those are the Public Safety so Police DepartmentFire Department and sheriff those are all big general fund draws primarily because of the large Core Functions that dont generate their own revenue and on the traditional county side its us and the Human Services agency so those safety net Human Services programs socom bine those five departments and you get a pretty large share of what the the general fund dollars are used for. Any questions . Please have empathy for mr. Wagner to stand during the presentation. Im trying to go fast. With regards to other departments and their financial staff us, the other departments as far as you know and the most general way healthy do they have reserves like we have reserves and i guess this is if theres a battle for an apple pie how hungry are they. [laughter] yeah, um, its a big question and its a lexture so a lot of people are True Enterprise departments they have their own reserves and so if you particularly want the ones that are receiving the vast majority of their revenues are earned revenue which are general fund most have their own reserve like the Public Utility Commission and the airport building inspection and financial Transportation Agency and they have reserve policies and they built their own reserves and the flip side of that is that there is no general fund to bail them out if they get in to financial trouble because they are responsible for generating their own revenues. For general Fund Departments, most do not center a reserve and the general fund itself theres a general fund reserve for the city and that is health and appropriateed in the budget each year we started the policy about three years ago and working with the Mayors Office and the Controllers Office of creating a management reserve for d. P. H. Done through the budget appropriate ordinance that allows us to as you know, when we know that there are potential volatility in our federal revenues to set aside dollars in a reserve to account for that future liabilitys that we might have and that is a pretty new policy that something that is again about threeyearsold and i dont think that it is replicated in any other general Fund Department and the reason for that is we had a lot of experience with especially when we get these big pieces of federal revenue theyre funded through an i. G. T. And they take forever to get the red tape done to get us paid so you have a short fall one year and a payment the next year and maybe you get paid twice this year and zero times next year and that fluctuation of revenue was hard to manage and caused a lot of volatility on the citys general Fund Balancing so that was one of the steps that we had taken as part of the Health Commission s kind of Financial Sustainability direction is to put that reserve in place to weather some of that volatility but for the most part aside from that so that is a big positive for us and for the citys general fund for the most part, the general fund does not have other general Fund Departments dont have their own reserves and ill talk about it a little bit later in the presentation but the city has over the the last seven or eight years worked hard to buildup those general Fund Reserves and do better Contingency Planning for future downturns than had been done in the past and i think thats another Financial Management legacy of the past administration. Thank you. Any other questions at this point . No, well, are you able to continue. Yes. I keep plugging away. All right, so i want to re visit what we talked about last year which was the approach that we had adopted going in to our last fiveyear Financial Planning cycle and so as you may recall what we talked about last year and this is after a historical period where the department of publichealths rate of growth in general fund was high where our general fund support levels were growing at a rate that was faster than tractortrailer rest of the city and so at last years Financial Planning session, we kind of took the view of saying what would happen if we sort of planned for ourselves to grow but grow no faster than the rate of growth as the general fund as a whole and so essentially we would be taking no more than our share of that growth in the tomb total city revenues and that was the principle to set some longterm Financial Planning targets for ourselves. The illustration is here where this is sort of saying if we start out with 30 of the numbered and hold ourselves and say were going to grow but were not going to grow more than our share were not going to eat in to the share of other departments, at the end of the planning cycle, as it looks on the bottom, were still at 30 . We grew but were still at 30 of the discretionary general Fund Revenues. The top is where were growing faster than the general fund as a whole when we do that overtime we eat up a greater and greater share of the general fund dollars that are available and that leaves a smaller pool available for other general funded services and puts pressure on the general fund that ultimately comes back to us when theyre a large deficits and were asked to reduce our share of those deficits. So were trying to say lets try to grow at the pace that the general fund dollars are growing that will prevent us from being in a deficit in the city it comes back as a largecut targets and were growing services, shrinking and growing and were just going to keep at a slow and modest but steady rate of growth in our inflation. So last year this is kind of recaping at what we looked at last year when we went through this exercise, we had used that principle and said, lets look at what the projections are for the rate of growth in the citys general fund and say if we grow no faster than that rate of growth so we just keep to our share what would our level of support would be to accomplish that and so at the top of the page for 17 and 18 those were our targets we calculate inside that way and 711 million and 740 million for 19 and 18 and below that is the adopted budget for the 17 and 18 you can see that theres the level of general fund support and its 715 and 770 so its over the target but that difference was funded because as you saw at the presentation three or four months ago we ended fiscal year 16 and 17 with a large surplus due to Revenue Growth and those dollars were programmed in the mayors budget to fund our d. H. R. Contributions some of the items in the mayors budget such as the humming bird, the saint marys some of those other prioritys so our net general fund when you factor in the surplus is 682 million and 704 million over the two years so were doing better than that target that was adopted by the Health Commission last year. Thats a recap before we ended up compared to our discussions last year. So now what im going to show you is we have updated this projection and im noticing the column might need to be widened. I see theres a little bit of a all right. So ill do this and ill scroll back and fourth and this is an updated version of what we looked at last year at Financial Planning session and this is essentially taking the mayors financial forecast and isolating the d. P. H. Only portion of it and so you can see at the top there there are expenditures and those are broken out by the large catagories, salary and Fringe Benefits and contracts and other items Electronic Health reports or materials and supplies, equipment, and facilities. On the bottom is our revenue projection again this is the revenue projection that is assumed in the mayors fiveyear projection and general fund support and between our expenditures our revenue how much general fund support will we need to kind of and baseline projections and so to provide a little bit of context on what these are showing us, you can see where the growth is and where the changes are so for example, salaries and the line below that accounts for 250 million of expendsture growth so its the single largest driver of our expenditure growth over the five year projection. Other items driving Cost Increases are inflation on our non personnel costs so our contracts are purchases particularly our pharmaceuticals and our growing at a rate thats much faster than inflation and to all those if they continue at their rate of growth will drive up our expenditures and when you a five correction protection we projected if can he continue at this pace our general fund support will grow to 1 billion n. Should read 22 and 23 fiscal year 22 and 23 so that would be a pretty significant rate of growth and this, what you are seeing here is mirrored in the larger and it shows the city deficit growing to 700 million by the end of the fiveyear time line. What were doing similar to the past if we look at fiveyear projection and say how do we expect the rate of those general Fund Revenues to grow, and then lets hold ourselves to that same rate of growth what would we have to do to get our general fund down to that level so ill walk through this spread sheet and show you what that kind of projects out to and at the top line, those are the numbers taken from the last page so and in the next section we take the 1820 budget so this is the upcoming two year budget and and savings proposal so that target and our general fund targets and 19 and looking out in to the following three years, were saying ok after that adjusted total after we kind of do what were going to do in this two year budget what will the years look like and in those areas what were doing here is the same thing that we did last year were looking at the rate of growth in the general Fund Revenues of those are the revenues the mayor and the board of supervisors have to allocate and this is the projection from the citys fiveyear Financial Plan and you can see i have circled down here that over the four years of this projection theres an average growth rate of about 3. 5 and so we can change that or tweak that in terms of our growth assumption but if we use that number we should be growing our support by no more than about 3. 5 if were not going to continue to exacerbate the citys deficit. So what that translates to is you take this 813 which is where we should end this budget process and grow it by 3. 5 and end up at 842 and the same for the next year and the next year. So if our general fund stays within that constraints, we wont be cutting services, but well still be growing but we wont be growing at a rate that is eating in to the increasing the deficit and eat north to everybody eels else share of the general fund. And then lastly, what can you do is if you take that rate 3. 5 and compare it to our baseline projection it shows you how far off we are and how much progress we have to make to live with that constraint and thats the number down here in row 25 so you can see weve got our baseline projection is about 878 and were seeing if we stick to that 3. 5 we should be at 842 and that means we need to make up 36 million and that continues each year roughly at that same level in to the future so that says to me is generally speaking, that should be the order of magnitude of what we should think about in terms of restraining our spending and increasing our revenues if we want to live within that constraint and most likely that will be something along the order of if this projection the citys projection stays looking relatively like it is, that well probably be the level of reductions that will be asked for some order of magnitude by the Mayors Office. So those are big numbers but they are not that far out of line with the reduction targets over the past few years so again our year two target this year is 36 million and its a big number but its not something that is so far out of the realm of possibility i dont think we can tackle it with sound approach to our Financial Management and just to give you a sense of how we can move the needle on our general fund support these arent made up scenarios to give you a sense of how much you can move the needle with a 1 change but if we can increase our revenue by 1 it gets us 15 million so 3 growth in our revenue should be enough for us to keep within range of that 35 million target so that is clearly going to be one of our big Financial Planning strategies is looking at ever opportunity we can have to increase our earned revenue and increase our charge capture and look for other Funding Sources and work on opportunities to not have our medicaid drastically cut by the federal and all of those approachs and that will be a key piece in our Financial Planning efforts. Other areas that we have that we can move the needle out without a lot of pain in my view if we can figure out how to ex indicate and if we can limit the growth in our costs and those other areas so materials and supplies if we can do a better job our bulk purchases and limit over consumption of materials we can earn for each one percent we do that its a million and a half dollars per year so thats another area for us to focus on. Professional services again this is not reducing costs its just saying lets slow the rate at which our ex pent attitudes are growing and we have of room to move the needle in the area as well and then lastly this is showing you if we do add f. T. E. S what it does to the projection and you can see it doesnt take much of an increase in our f. T. E. Count to really push our general fund support levels up in those years. So, let me just see if there are questions about that and i know thats a lot of numbers and a lot of acronyms. You actually are saying the way youve broken up your scenario and this target is not unreasonable that we have set last year and it continues to represent a good model to work with because its probably close to the reality that theyre going to need to work on. Its close to the reality that well need to work on and yeah i dont think its unreasonable and what it tells me is that the job in front of us is we restrain our spending and be careful and were not talking about making cuts and dramatic change in the economy and federal and we have to be focused on a level of disappoint ment about growth in our spending and we do need to focus on increasing Revenue Generation and if we do those two things these are achievable goals they will take work and they will take discipline but theyre achievable and reasonable targets for ourselves. The 36 million that were looking at the projected gap or deficit includes the 3. 5 city growth targets and does that also include the 2. 5 mayors budget cut or is that on top of that . So that would be that is correct would assume that we hit our 2. 5 and our 5 target and so we make those reductions and then after we do that were going to grow but were not going to grow at 5 were only going to grow at 3. 5 so we are still allowing ourselves growth but Slower Growth than if they just let things happen on their current course. Besides the 2. 5 caps we have to come up with an extra 36 so this is a total of 6 versus or is it a total of three and a half percent . Yeah, yeah, you are totally making sense so if you looked at what our rate of growth is and this projection so lets see, equals let me just do this really fast because i totally understand your question. So instead of growing at a rate of, you know,