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The growing disparity in wage rates between comparable nonprofit and City human service employees leads to difficulty in recruiting and retaining nonprofit staff, threatening service quality. Inadequate cost-of-living-adjustments (COLAs) in City contracts with nonprofits represent an "invisible" budget cut, as nonprofits need to reduce services to account for salary increases and rising operational expenses. HSN members seek wage parity for nonprofit staff with city employees performing similar work - if not in actual pay levels, at least in the percentage of their COLA, as well as reimbursement for rising overhead costs.

HSN's efforts have led to small cost-of-living-adjustments (COLAs). In 2001 and 2002, the Mayor's proposed budget did not include a COLA for nonprofit contractors. HSN's advocacy efforts led the Board of Supervisors to add a small salary COLA to the final version (of 1% in 2001 and 2% in 2002). While these increases were of great assistance to contracted agencies, they were not enough to cover ever-increasing operational and personnel costs in San Francisco.

Though the troubled economy shifted our focus from a debate about the magnitude of COLAs to one of budget cuts, HSN has not abandoned this longterm goal. In its final report, the City Nonprofit Contracting Task Force recommends that nonprofit contract employees should receive annual COLAs equivalent to that of City workers, that COLAs should apply to the entire contract amount to address other business cost increases, and that the Board should develop a longer term plan to address wage disparity. The Mayor and most supervisors express support for COLAs, and some are willing to consider legislation to institutionalize some form of parity.

In May 2005, Mayor Gavin Newsom addressed HSN at our monthly member meeting and announced a 2% increase to general fund nonprofit contracts. This is the first time the City has ever given nonprofits an increase on the entire contract amount, recognizing skyrocketing costs of health insurance, workers comp, rent and other expenses. The Mayor budgeted about $6.5 million for nonprofit business and salary increases. We hope that the Mayor will continue this policy in the FY 06-07 budget, including an explicit instruction to city departments to survey and document actual nonprofit cost increases.

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