In one embodiment, a method for decoding a video bitstream having a plurality of pictures, the bitstream generated by a video coding system with sample adaptive offset (SAO), is provided, the method comprising the steps of: obtaining processed video data from a video bitstream; partitioning the processed video data into blocks, wherein each of the blocks is equal to or smaller than a picture and each block is comprised of a plurality of pixels; applying a first SAO compensation to each of the pixels in a processed video block; and applying a second SAO compensation to each of the pixels in the processed video block.