DAS proposes budget with $2 million cut to CBO contracts as IHSS costs drive growth; commission approves submission

San Francisco — The San Francisco Department of Disability and Aging Services (DAS) told the department's commission on Feb. 5 that a sharp rise in costs for In-Home Supportive Services (IHSS) will drive nearly all of the department's projected $39 million increase next fiscal year and asked the commission to approve submitting a budget that includes up to $2 million in cuts to community-based organization (CBO) contracts.

The commission voted unanimously to approve the department's recommended budget submission to the mayor's office, which also calls for the Human Services Agency to absorb the balance of agency-wide reduction targets. Deputy Director of Finance and Administration Dan Kaplan said the overall citywide funding gap requires DAS, DBFS and HSA administration to find $8.2 million in general-fund reductions and that DAS's share is approximately $2 million, largely from CBO contracting. "We are reducing general fund spending by $8,200,000," Kaplan said during the meeting.

Why it matters: IHSS — which provides paid caregivers for eligible older adults and adults with disabilities — accounts for the largest portion of DAS aid payments and is the single largest driver of the department's spending growth. Department officials told the commission that IHSS-related costs include statutory maintenance-of-effort (MOE) increases, expanding enrollment in health and dental benefits for providers, and growth in a "contract mode" program delivered by Homebridge.

What the commission heard: Genevieve Herrera, a senior budget analyst supporting DAS, reported a net increase of $6,778 in Older Americans Act area-plan funding (a $602,000 increase offset by a $595,000 reduction in nutrition services) and said the funds will be used for one-time activities. Kaplan walked commissioners through two-year forecasts showing a first-year biennial deficit driven mainly by slower revenue growth and a larger second-year gap tied to negotiated labor and benefit cost increases.

Executive Director Kelly Dearman said the department is planning for the likely scenario that the Dignity Fund's customary $3 million annual growth allocation will not occur under the current city revenue forecast, though she said the March forecast could change that. "We are assuming that there will be no $3,000,000 Dignity Fund growth allocation this year," Dearman said, noting that if growth is available it would be directed toward nutrition, wellness, self-care and safety programs identified in the department's four-year plan.

Commissioners pressed staff on contingency planning for federal funding risks after a recent federal action created uncertainty for some providers. Dearman said the department is monitoring litigation and state-level coordination and that the precise scope of federal impacts remains unclear. "It's a risk but we don't know what form it's gonna take yet," she said.

On program changes and efficiencies, Jill Nielsen, DAS deputy director of programs, described a pending telehealth waiver for IHSS reassessments that the state obtained federal approval to pilot. Nielsen said the policy will permit telephonic or remote reassessments only for clients who meet stability criteria and after an initial in-person intake and one in-person reassessment. "All IHSS consumers will maintain the ability to request an in-service reassessment if they prefer," Nielsen said, adding the tool could be available by July and is not expected to replace in-person work broadly.

Budget details and clarifying numbers presented to the commission: - Proposed DAS general-fund reduction target: approximately $2,000,000 (to be taken largely from CBO contracting). - Agency-wide reduction target (DAS + DBFS + HSA admin): $8,200,000. - DAS projected budget growth (~current year to next): $39,000,000, nearly all in IHSS (MOE, health/dental, and contract mode). - IHSS wage schedule discussed: $22.00 current; July increase to $22.50; later increases toward $25.00 as part of a multi-year agreement; additional January increase funded in part by state minimum wage growth. - HomeSafe one-time pandemic-related funding ending, which reduces APS COVID allocations.

Votes and next steps: The commission approved the department's request to submit a budget on Feb. 21 with the $2 million (or slightly less) CBO reduction parameter and to continue negotiations with the mayor's office. DAS staff said they will return to the commission with specifics on which contracts and programs will be reduced once internal analysis and mayoral discussions are complete.

Votes at a glance (formal actions recorded during this meeting): - Approve minutes (Jan. 8, 2025 DOS Commission meeting): approved unanimously. - Approve consent calendar (Item 11): approved unanimously. - Approve submission of the FY 2025-27 DAS budget within the parameters presented (Item 12B): approved unanimously. - Authorize grant modification with Little Brothers, Friends of the Elderly for a Volunteer Visitor Program (Item 12C): approved unanimously (see "Votes at a glance" details below). - Authorize nutrition grant modifications across four partners to add $1,081,771 and a 10% contingency (Item 12D): approved unanimously. - Authorize extension of Jump Technology Services contract for LEAPS data system (Item 12E): approved unanimously.

Ending note: DAS staff emphasized continued uncertainty over federal funding and said they are coordinating with the city attorney, the state, and coalition partners. The commission asked staff to return with firm contract and CBO reduction proposals after further review and after the March city revenue forecast is released.