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SFHSS financial update: trust balance projected near $123.4M; city budget guidance offers two‑year surplus then structural shortfalls
Summary
CFO Larry Lew reported a projected FY‑end trust balance of about $123.4 million and noted a projected $2.5 million decrease for the trust; the mayor's budget instructions show a two‑year city surplus of about $108 million but caution about later structural shortfalls. The board approved actuarial IBNR and contingency reserve amounts as presented by Aon.
San Francisco Health Service System Chief Financial Officer Larry Lew presented financial results through Nov. 30, 2021 and outlined implications of the mayor's budget instructions for SFHSS.
Lew said the trust is projecting a fiscal‑year‑end decrease of about $2.5 million, leaving an estimated net trust balance near $123.4 million. He reported projected decreases of about $377,000 for flex and self‑funded plans, and noted the budget assumes $8.7 million in pharmacy rebates (about half already received year‑to‑date) and $21,000 received in performance guarantees. He also said the administrative budget was showing a temporary surplus of $592,000 that staff manage toward a net‑neutral position.
On the citywide fiscal picture, Lew said the mayor's office released budget instructions (Dec. 15) projecting a two‑year surplus of about $108 million before expected structural shortfalls in later years. The instructions include no mandatory reductions this cycle and no targeted enhancements, with direction to focus on filling budgeted vacancies and prioritizing core services.
Later in the meeting, Aon consultant Mike Clark presented the incurred‑but‑not‑reported (IBNR) and contingency reserve calculations as of June 30, 2021 for the system's self‑funded and flex‑funded plans. Clark said total IBNR increased roughly $1.08 million (4%) from the prior measurement date as plan utilization moved back toward typical levels after 2020 pandemic suppression effects. The contingency reserve total was largely flat versus 06/30/2020, though individual plans showed variability. A commissioner moved to approve the recommended IBNR and contingency reserve amounts; the motion was seconded and passed unanimously.
