Budget Committee Hearing on Nonprofit Pay Equity and Small Business Relief – April 28, 2021
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Budget and Appropriations Committee Hearing – April 28, 2021
The Budget and Appropriations Committee, chaired by Supervisor Matt Haney and joined by members President Shamann Walton, Supervisors Hillary Ronen, Ahsha Safaí, and Myrna Melgar, convened remotely on April 28, 2021, to hear two major agenda items. The first and most heavily discussed hearing focused on pay equity and sustainability for nonprofit service providers contracting with the City. The committee received a detailed report from the Budget and Legislative Analyst (BLA), testimony from the Human Services Network (HSN), SEIU 1021, and NUHW, and heard from 20+ public commenters. The second item, concerning direct small business relief and an equity plan for recovery, was continued to the May 5 meeting due to time constraints.
Public Comments & Testimony
- Nonprofit frontline workers and community members from Larkin Street Youth Services, HealthRight 360, Baker Places, Children’s Council, Compass Family Services, Tenderloin Housing Clinic, and others overwhelmingly expressed full support for higher wages, consistent cost-of-doing-business (CODB) increases, and full funding of the Minimum Compensation Ordinance (MCO) including wage compaction and equity. Many callers highlighted that they could not afford to live in San Francisco, experienced high staff turnover, and that clients' care suffers as a result. Several speakers noted that their salaries are below the HUD very-low-income threshold ($39,000 for an individual) and that many workers commute from distant counties. A few callers also urged accountability to ensure new funds reach frontline workers, not management.
- Brett Andrews (PRC/HSN co-chair) and Sherilyn Adams (Larkin Street/HSN co-chair) testified that city contracts are consistently underfunded, inflexible, and fail to cover the true cost of services. They called for * at least a 3% CODB increase every two years, fully funding MCO including compaction, and a higher wage floor closer to parity with city workers. They emphasized that the workforce is disproportionately BIPOC and LGBTQ, making pay equity a racial and cultural equity issue.
- Ramses Nichols, NATO Green (SEIU 1021), and John Avalos (NUHW) described a decade of organizing for wage increases. They argued that the current system amounts to outsourcing city services at the expense of workers, leading to a recruitment/retention crisis. They urged the committee to consider a prevailing wage for nonprofit workers, citing that many unionized nonprofit contractors struggle to fill positions because city and private-sector jobs pay more.
Discussion Items
- BLA Report Presentation (Dan Goncher): The BLA presented its second pre-budget report on nonprofit contractor sustainability. Key findings:
- The MCO, originally $9/hr in 2000, rose to $17.05/hr (FY20‑21) after 2018 amendments; it is now $1.89 above what it would be under routine CPI increases.
- The 2019 nonprofit working group estimated direct MCO wage costs at $1.3M/year, wage compaction costs at $12.9M/year, and wage equity costs at $12.7M/year (city staff dissented, requesting a range).
- Over the past five years, the city's average CODB increase was 2.7%, just below the SF Bay Area CPI of 3.2% (though the last two years met or exceeded CPI).
- The controller’s 2019 application process allocated $6.6M for MCO‑related costs, but it was a one‑time effort and data are now outdated.
- The report offered two policy options: (1) ask the controller and mayor’s budget office to explore setting a regular CODB level that includes anticipated MCO needs; (2) ask the controller to lead a periodic survey (every 3‑5 years) of nonprofit contractors to assess worker status and funding sources.
- Q&A with Supervisors: Supervisor Ronen pressed for automatic 3% CODB increases, asking why the city cannot simply make it a routine budget item. The mayor’s budget director (Ashley Graffenberger) explained that CODB has been subject to annual appropriation, and the city attorney was asked to explore legal mechanisms for a mandated floor. Supervisor Safaí requested more data on the share of nonprofit funding from city vs. other sources; DCYF reported that for its contractors city funds account for about 34% of total program funding. Chair Haney asked each contracting department (DPH, HSA, HSH, DCYF) to describe their CODB methodology; all stated they apply CODB to the bottom line but do not dictate how nonprofits use it, and some exclude direct pass‑through funds or restrict it to general fund dollars.
- Responses to BLA recommendations: HSN and labor unions largely supported the BLA’s recommendations but urged going further – e.g., raising the wage floor above MCO, baselining a multi‑year 3% CODB, and ensuring MCO funding fully covers compaction and equity issues. The controller’s office (Risa Sandler) indicated willingness to conduct periodic surveys if directed.
Key Outcomes
- Motion to file the hearing (Item 1) passed 4‑0 (Vice Chair Safaí absent) with ayes from Mar, Ronen, Walton, and Haney. The filing means the hearing is concluded and the report is accepted for consideration, but no binding action was taken.
- Item 2 (small business relief and equity plan) was continued to the May 5, 2021 Budget and Appropriations Committee meeting by a 4‑0 vote (Safaí absent).
- The committee signaled strong intent to prioritize nonprofit pay equity and MCO funding in the upcoming FY21‑22 and FY22‑23 budget process, and to pursue structural reforms such as automatic and predictable CODB increases. The city attorney was requested to report back on the board’s legal authority to require a minimum CODB percentage.
Meeting Transcript
This meeting will come to order. This is April 28th, 2021 Budget and Appropriations Committee meeting. I'm Matt Haney, Chair of the Budget and Appropriations Committee. I'm joined by committee members President Walton, Supervisors Ronan, Safari and Mar. Our clerk is Ms. Linda Wong. I want to thank Colina Mendoza and James Smith from SFGov TV for broadcasting this meeting. Madam Clerk, do you have any announcements? Yes, Mr. Chair, due to the COVID-19 health emergency and to protect more members, city employees, and the public, the Board of Supervisors, Legislative Chamber, and Committee Room are closed. However, members will be participating in the meeting remotely. This precaution is taken pursuant to the various local, state, and federal orders, declarations and directives. Committee members will attend the meeting through a video conference and participate in a meeting to the same extent as if they're physically present. Public comment will be available on each item on this agenda. Channels 267899 and SFGTV.org are streaming the number across the screen. Each speaker will be allowed two minutes to speak. Comments or opportunities to speak during public comment period available via phone call by calling 415-655-0001. Meeting ID 1873 0346, then press pound twice. When connected, you will hear the meeting discussions, but you will be muted and in listening mode only. When your item of interest comes up, dial star three to be added to the speaker line. Best practices are to call from a quiet location, speak clearly and slowly, and turn down your television. Alternatively, you may submit public comment in the following way. Email to myself, the budget and appropriations committee clerk at L-I-N-D-A, Doc W O N G N SF G-O-V Doc O R G. If you submit public comment via email, it will be forwarded to the supervisors and will be included as part of the official file. Mr. Chair, this concludes my announcement. Thank you so much, Madam Clerk. Today we have one item. And so, Madam Clerk, can you please call item one? Yes, item number one hearing to request the budget and legislative analysts to provide a budget and policy analyst and of nonprofit service provider sustainability and related issues of pay equity to provide an overview and analysis of what actions the city has taken to ensure viability and sustainability of nonprofit organization that provide services for the city and an analysis of whether city funding is keeping up with the cost of doing business and city mandates. Members of the public who wish to provide public comment on this item should call 415 655 0001 meeting ID 1873 0346, then press pound twice. If you have not already done so, please style star three to round up to speak. Assistant prompt will indicate you have raised your hand. Please wait until the system indicates you have been unmuted and you may begin your comment. Thank you, Mr. Chair. Thank you so much. Um Madam Clerk. Uh so today um we're going to hear from the budget and legislative analysts uh who's going to present on the report that we requested. Um, second, we'll hear from the uh SF Human Services Network, and third, we will have represent representatives from SEIU 1021 and NUHW. Uh colleagues, I'm going to ask that uh unless it's uh sort of more simple clarifying questions that we wait to hear from all of the presenters and then once the presentations are done, uh then we can ask questions of the presenters or any of the departments that are on standby. Uh the departments that are on standby to answer questions are DPH, HSA, uh HSH, DCYF, OLSE, and the controller's office. Um, I want to appreciate everyone for being here with us. I want to thank the our nonprofit partners, our CBOs, uh, our representative representatives of our labor unions and workers. Uh I think that the reason for this report and this hearing should be obvious. We are uh relying uh increasingly on our uh nonprofit providers, our CPOs, uh, to provide really essential services uh for our city. And yet we hear again and again uh the challenges that they have to keep pace uh with the cost of living increases, uh, to make sure that they're able to fill vacancies, uh, that their workers can survive and thrive here in the city and county of San Francisco. And uh it's critical that as we enter this budget process, um, that we are keeping those questions at the center and that we are having them guide the decisions that we are going to make uh in the coming weeks and months. Um, this is one of the presentations that we requested that I requested from the uh the budget and legislative analysts office because of how important it is to the work that is ahead of us during this budget process. And so I want to thank them in advance for their their hard work on uh this analysis, and uh we look forward to hearing the outcomes and how uh it can guide us uh as we make decisions about our larger budget for 2122 and 2223.
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