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San Francisco Department of Public Health Budget Update FY 2010-2011. Budget Process – Introduction.
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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 needsthat 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.
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. Budget Process – Integration Steering Committee
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) 2008-09 excludes 214 M in bond proceeds and certificates of participation.
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:
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.
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.
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:
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.
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. . Next Steps
