San Francisco’s Department of Public Health says it may be able to make it through the upcoming fiscal year without making cuts to core services — like treatment programs for mental health and drug addiction — despite the 10% budget reduction it had to propose to Mayor London Breed this week.
But if the economy continues spiraling downward amid the coronavirus pandemic, Greg Wagner, the department’s chief financial officer, said public health officials likely will have to make some “hard choices.”
“We want to do everything in our power to not reduce service levels for vulnerable populations,” Wagner told The Chronicle on Wednesday. But “there are a lot of unknowns.”
San Francisco is staring down an anticipated $1.7 billion budget deficit over the next two fiscal years. To help plug the hole, Breed ordered every city department to reduce its budget for the upcoming fiscal year by 10% — with an extra 5% identified if the economy worsens. Cuts will be more extreme in the following fiscal year, with mandatory 15% budget reductions in 2021-22.
“We would rather not be in a position of having to make all of these changes,” Wagner said. But, he added, the ultimate goal of the cuts is to ensure San Francisco can continue funding resources for the ongoing COVID-19 response.
Meanwhile, several city departments are working on a separate budget dedicated to the COVID-19 response — such as testing, contact tracing and hospital surge capacity. It is not clear yet how the public health department’s budget will be impacted by that effort, which Wagner said will require a “significant” investment from the city.
When it comes to cutting 10% of its $2.4 billion budget, Wagner said the department was just barely able to avoid touching its “core services,” which include mental health and drug treatment services for the city’s homeless. Instead, the proposed budget relies heavily on tapping revenue from services provided and from reserves, and making one-time cuts like scaling back planned capital and IT projects.
But the department has not identified what it would cut if it needs to slash its budget by another 5%. It would be hard to achieve that additional cut without impacting the city’s existing services, Wagner said. The department operates San Francisco General Hospital, Laguna Honda Hospital and drug treatment and mental health facilities throughout the city.
Before the pandemic ravaged the local economy, City Hall was intensely focused on reforming San Francisco’s behavioral health care system — an effort lead by Dr. Anton Nigusse Bland, the city’s director of mental health reform.
While the current system serves an estimated 30,000 people a year in some capacity, there are thousands on the streets suffering without the care they need. Breed and the Board of Supervisors agree that the system is in need of deep reforms, and they were preparing to make major investments in increasing capacity and staffing.
The department’s budget also did not include a road map for how the city can implement Mental Health SF, a sweeping plan approved by the mayor and board to overhaul the city’s entire system of care. It was estimated to cost the city an additional $100 million a year.
Now Supervisor Hillary Ronen — who wrote the plan with Supervisor Matt Haney — said she is working with Breed and Dr. Grant Colfax, director of the health department, to figure out how they can implement such a costly and ambitious plan in the current economic environment.
“We all agree what should happen, we just need to decide if we are going to prioritize funding it in this extremely difficult budget,” she said. “It’s not because they (the department) doesn’t have the desire, but it’s because we are facing the worst budget crisis we have ever seen.”
While improving services for the most vulnerable remains a key priority in City Hall, many in the city — from service providers to legislators — worry how those efforts will be hobbled due to the pandemic and the resulting budget cuts.
Breed signed an interim budget this month that preserved existing contracts through the summer. Although some nonprofits that provide mental health and drug treatment services say they are fine for now, they are deeply worried about the future.
“We all know there is a cliff coming, but right now people are just staying the course,” said Steve Fields, CEO of Progress Foundation, which provides mental health services in the city. “We can’t afford to lose beds, no matter the type.”
The mayor and board have proposed revenue streams for the November ballot to help fill the city’s coffers.
Along with a bond measure that would give the city $107 million to spend on mental health and substance-use disorder treatment facilities, the mayor and board are also negotiating an increase to the city’s gross-receipts tax that could be used to address the city’s long-term deficit.
Other proposals include a tax on companies with top executives who earn vastly more money than the rest of their workforce and one on stock compensation.
Regardless, it likely will be difficult for some departments to meet the 10% and 15% cuts without painful layoffs and service reductions.
Supervisor Rafael Mandelman said at a budget committee meeting last month that he was concerned about the future of the city’s ability to serve its most vulnerable.
“The last time we went through this exercise, I was just a protester outside S.F. General,” Mandelman said, referring to decisions made in 2008 to cut mental health treatment beds. “We really need to understand how it’s going to be different this time.”