San Francisco
Department of Public Health
Budget Update
FY 2010-2011
Budget Process – Introduction
In this first budget report to the Health Commission, we are
presenting detail on several important components of the overall
budget that we will ultimately submit to the Mayor’s Office.
These include:
• Regulatory requirements
• Inflationary issues
• Emerging needs that will require additional funding, and
• Increases to revenues that serve to offset these expenses
Budget Process – Health Commission
The Health Commission has taken an active and participative role
in setting priorities and reviewing budget initiatives
The Health Commission has previously approved principles to
guide development of the budget for the Department
At the December 1 meeting the Health Commission approved a
resolution that directs the Department to propose a sustainable
system of care that meets our financial obligations and reflects the
Health Commission and DPH priorities to those most in need.
Budget Process – Integration Steering
Committee
The Integration Steering Committee consists of senior
administrative and clinical leadership from the Department’s
delivery system.
This leadership group has continued to function as the Executive
Budget Planning Committee for the department.
Guided by the principles adopted by our Health Commission, the
Committee works collaboratively to identify and develop initiatives
that work to the benefit of the entire Health Department and its
clients.
Citywide Budget
The City is projecting a $522M shortfall for 2010-11
Departments are asked to propose a base budget with a 20% reduction in general
fund and submit and additional 10% contingency reduction. The combined 30%
reduction combined with mid year reductions, would produce approximately $400M
in General Fund savings, which is short of the projected $522M shortfall. The
Mayor’s budget office hopes to address this remaining shortfall with a combination
of department consolidations, labor concessions, reduced capital expenditures,
transfers from the rainy day reserve, and other solutions.
The Health Department’s reduction target is $68.1M base and $34.1M contingency.
This is in addition to the annualized impact of our Mid-Year cuts. Department
budget submissions are due to the Controller on February 20.
DPH Budget History
(In Millions of Dollars)
1,600
1,473
1,362
1,331
1,400
1,235
1044
98
Amount
1,000
1,001
883
800
1,129
951
1,200
624
676
754
1,045
788
747
1,116
871
926
29
29
820
600
400
-
28
27
200
259
306
290
254
227
268
00-01
01-02
02-03
03-04
04-05
05-06
334
376
411
06-07
07-08
08-09
344
Fiscal Year
General Fund
Jail Health
Total
2008-09 excludes 214 M in bond proceeds and certificates of participation.
09-10
Status of 2008-09 Department Budget
We are currently estimating that we will end this year with a $1.3
projected surplus. This amount has been approximately the same as
what we estimated based on the first quarter report and has already
been taken into account in the City’s projection for next year.
Increased Revenues
Increased revenue provides funding to absorb structural, regulatory and
inflationary costs and contributes funding to offset other budget issues. Consistent
with the first budget principle which states: The Department shall develop a
budget to include revenue increases to the maximum extent possible; we are
carefully evaluating all opportunities to grow our revenues.
We are in an unusual position this year relative to forecasting revenues for the
budget year. While we can make some estimates of baseline increases, major
funding streams are undefined at this time.
Increased Revenues
Medi-Cal 1115 Waiver
The Waiver provides $150M in hospital funding and up to $25M in funding for Healthy San
Francisco. It expires on September 1, 2010. Details of the new waiver are undefined at this
time.
Hospital Fee
The State has submitted a plan amendment to the CMS for a hospital “fee” that would be
used to increase Medi-Cal payments and would be matched with federal matching payments
at an enhanced FMAP rate of 61.59%. Assuming the amendment is approved, we may see
an increase in funding for the current and budget year. The “fee” is set to expire 12/ 31/10,
but could be extended until 6/30/11 if enhanced FMAP is also extended. However at this
time, absent approval of the plan amendment, we cannot include this in our budget.
Extension of FMAP
Finally, we are monitoring the status of federal legislation to extend enhanced FMAP at the
current 61.59% level for an additional six months through June 30. While the baseline
budget includes this revenue through December 31, we cannot budget an increase until
legislation is passed and signed.
Increased Revenues
Following are the initiatives identified at this time:
Baseline Revenue – SFGH (A1)
$10,375,425
Baseline Revenue – LHH (A2)
5,295,355
Acute medical revenue – LHH (A3)
Primary Care Outpatient Revenue - LHH (A4)
Total Revenues
949,493
42,213
$ 16,662,485
Inflationary Increases
For the 2010-11 fiscal year, we are anticipating the expected increase in costs of
pharmaceuticals, rents and leases and costs of the UCSF contract.
Following are the initiatives identified at this time.
Pharmacy Inflation – Dept Wide (B1)
Direct Access to Housing Master Lease and
operating costs– DAH (B2)
UCSF Defined Benefit Retirement Plan
Contribution– SFGH (B3)
Total Inflationary
$1,138,608
345,953
$2,592,296
$4,076,857
Revenue Neutral Programs
One fortuitous aspect of our ability to generate revenue is that in a few cases
we are able to create new services, which are funded entirely through
revenues linked to the services.
Expenditure
Revenue
$1,819,448
$1,846,093
$26,645
Emergency Medicine Residency
Program - SFGH (C2)
244,972
244,972
0
Emergency Department Information
System – SFGH (C3)
853,955
853,955
0
Primary Care Expansion and Medicare
Professional Fee Billing– SFGH (C1)
General Fund
Revenue Neutral Programs
Expenditure
Intern Resident Common Payroll –
SFGH (C4)
Expansion of Children’s Health Center
– SFGH (C5)
Pharmacy Business Manager - SFGH
(C6)
Environmental Health Services Fees
EH (C7)
Automated Point of Sale Device
Inspection – EH (C8)
Mental Health Services Act (MHSA)
Expansion– CBHS (C9)
Revenue
General Fund
0
0
0
92,580
92,580
0
174,311
174,311
0
(212,558)
(212,558)
0
437,777
437,777
0
2,223,300
2,223,300
0
Revenue Neutral Programs
Expenditure
Revenue
General Fund
EPSDT Expansion to comply with
SB785 – CBHS (C10)
400,000
400,000
0
Drug Medi-Cal – CBHS (C11)
600,000
600,000
0
Short Doyle Medi-Cal increase to
contractors – CBHS (C12)
200,000
200,000
0
0
0
0
490,388
490,388
0
(110,925)
(110,925)
0
$7,213,248
$7,239,893
$26,645
Backfill AIM Higher Grant with
ESPDT – CBHS (C13)
Expand SB163 wraparound services for
Youth Residential – CBHS (C14)
Family Mosaic Project – CBHS (C15)
Total Revenue Neutral
Regulatory Issues
The Healthcare industry is among the most heavily regulated sectors of the
economy. Federal, and State agencies, and licensing agencies such as JCAHO
increasingly require our institutions and other public health services to incur
additional costs.
Following are the issues identified at this time:
Pharmacy Staffing – SFGH (D1)
$572,068
DPH Enterprise Regulatory Compliant Medical
Image System– SFGH (D2)
Nurse Advise Line – PC (D3)
0
1,126,531
Total Regulatory
1,698,599
Emerging Needs
Certain new spending needs are identified that are unavoidable and require
additional positions and spending authority. These differ from many of our
structural needs in that specific funding and or position authority is needed to
incur these necessary expenses. Following are the items we are bringing forward
at this time which represent the more significant emerging needs.
LHH New Building Needs– LHH (E1)
Ambulatory Electronic Medical Record – SFGH
and Primary Care (E2)
Total Emerging Needs
$1,591,329
850,000
$2,441,329
Summary
Revenue Increases
$ 16,662,486
Revenue Neutral
26,645
Total Revenue
16,689,131
Inflationary
(4,076,857)
Regulatory
(1,698,599)
Emerging Needs
(2,441,329)
Total Regulatory, Inflationary, and Emerging Needs
($8,216,785)
Grand Total Revenue, Revenue Neutral, Regulatory,
Inflationary, and Emerging Needs
$8,472,345
General Fund Base and Contingency Reduction Target
102,182,089
Total General Fund Reduction remaining
$93,709,744
Next Steps
We are working hard to bring the budget into balance.
Given the uncertainty of what our revenues will be, we cannot articulate
the best plan for the Health Department. We need additional time to
develop a thoughtful proposal should we be required to propose cuts to
services. We will bring a full budget presentation to the Health
Commission as soon as we can.
.