Department projects $31.1 million year-end surplus; hospitals drive much of the gain

Chief Financial Officer Greg Wagner presented the departments second-quarter revenue and expenditure report through December and said the department projects a year-end surplus of $31,100,000.

Wagner said Zuckerberg San Francisco General is projecting a $17,400,000 surplus largely driven by the GPP/1115 waiver program and better-than-expected patient service revenue, while Laguna Honda projects a $14,400,000 surplus partly because Medi-Cal per diem rates were higher than budgeted. Wagner also flagged ongoing salary and fringe pressures due to high census at hospitals and lower-than-budgeted capitation revenue in primary care. Behavioral health revenue ramp-up under certain Medi-Cal initiatives has been slower than budgeted and a multi-year retroactive state plan amendment timing created a mismatch with the current-year budget.

The report noted the department's management reserve balance of $80,800,000 and referenced prior recoupment guidance that required repayment of approximately $56,000,000 in federal funds under SB 1128, which the department has planned for in prior years. Wagner said the controllers office includes this department projection in broader citywide general-fund projections and that the department will continue to monitor expenditures closely.

Commissioners commended the finance team for providing clear metrics and asked follow-up questions; the report will be incorporated into the controller's six-month citywide review.