In April 2026, more than $200 million in unused funds from the health care mandate fund will be transferred to the general fund to help patch a $1 billion city budget deficit. In 2022, the city’s Health Commission decided unused funds would be transferred to the city’s general fund instead of keeping dormant balances indefinitely. Insiders say Mayor Daniel Lurie and the San Francisco Board of Supervisors, who approved the current two‑year budget last June, intend to use $200-$240 million of those transferred funds to address the ballooning deficit.
The health care mandate fund was intended to cover health care insurance for hourly workers. The fee is charged to San Francisco employers citywide and often appears on restaurant bills as a health care surcharge. Most restaurant customers are unaware they can ask that the “S.F. Employee Mandate” be removed from their final bill. Restaurants have the discretion to list the health mandate fees on their bills as line items; it is not required under San Francisco law.
The Health Care Security Ordinance (HCSO), as it is officially known, requires San Francisco employers with more than 19 employees nationwide to spend a minimum amount per hour on employee health care if they are not already providing qualifying coverage. Many satisfy the requirement by paying into the San Francisco City Option (SFCO), which has grown steadily as hourly rates increased. In 2023–24, 2,003 employers paid $215 million for 79,227 workers, about $2,715 per employee, per year. For a 20‑person business, that’s roughly $4,520 every month, even when employees never use the benefit…