In other23 words: Should future workers pay more to24 protect the vested and non-vested workers25 49 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 and particularly pensioners? Should2 non-vested workers pay more to protect3 vested workers and retirees?4 Does that make sense?5
You're talking about6 the amount of contribution that people7 make?8
Yes, but I'm9 also talking about rather than just10 looking in terms of protecting the Fund,11 looking at protecting who the Fund is12 supposed benefit and who's contributed13 the most to the Fund.14 And, obviously, retirees have15 contributed the most to the Fund; then16 vested workers contribute more to the17 Fund than non-vested workers; and, of18 course, current workers contribute more19 than future workers.20
I think that the21 amount that people contribute depends on22 what plan they're in, not -- not how many23 years they've been working.24
I'm talking25 50 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 about collectively, I'm talking about2 classifications.3
I'm not6 trying to get into anything that's going7 to be a matter of contract negotiations,8 though I understand there may be9 proposals within contract negotiations.10 But, more importantly, I'm11 talking about, as we look at the health12 of the Fund, it's already been determined13 here today that legislation that's been14 introduced in Council will, in fact,15 perhaps protect the Fund more but not16 protect some of the Fund's potential17 beneficiaries, particularly retirees.18
Well, I'll say that19 a little differently. I think it will20 protect their -- it will protect them if21 it protects the Fund, but it would mean22 that they wouldn't be getting the23 additional COLA payment, but their24 payment would be protected if the Fund25 51 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 were healthier.2
Just as if3 you have certain classifications of4 future workers and non-vested workers5 moving forward pay more to protect vested6 workers and retirees.7
And again -- I mean,8 I'll go back. There are vested workers9 and non-vested workers who are in10 different plans now, who pay different11 amounts.12
I understand13 that. And I'm not asking a question of14 how the system works; I'm asking how you15 believe the system should work in the16 future, 'cause there are proposals the17 Administration is putting on the table.18
There are20 other proposals that could be put on the21 table. As part of this discussion, I'm22 asking that in terms of potential ideas,23 not in terms of how the system works now.24
And, I mean, you're4 kind of getting us into kind of where the5 negotiations would go, and I'm not real6 comfortable doing that, you know, in a7 public forum.8
Well, at the9 same time, we're going to be asked to10 vote on legislation that would impact11 retirees. That's why I pose the12 question.13
So we can16 separate contract negotiations from the17 budget as much as we have to.18
But in some20 ways we can't when we're being asked to21 consider legislation at the same time22 we're considering the budget.23 (Timer bell rings.)24
I mean, I understand25 53 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 what you're saying. I just think it kind2 of goes too far over to the negotiations3 side here.4 I do understand that if there's5 specific legislation that we have in6 front of you, that while we're discussing7 that legislation, we'd need to talk about8 the components of it.9
Thank you,12 Madam President.13 COUNCIL PRESIDENT VERNA:14 Mr. Dubow, following Councilman Kenney's15 question, I think it would be extremely16 helpful if the actuary would brief17 members of Council. So if you could make18 those arrangements, I think it would19 basically very good.20
Thank23 you.24 The Chair recognizes Councilman25 54 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 Jones.2
Thank you,3 Madam President.4 I want to go back to the5 pension-adjusted fund. What is the6 national average for the ratio of funds7 like this? What's the national average?8
I don't have that9 information. We do not take a survey.10 But there are different types of11 plans. Some of them give cost-of-living12 increases. This is not -- this is a13 bonus payment, a one-time bonus payment.14 So I have not polled other plans to see15 what they're paying.16
What was the17 average payment to the retiree based on18 the Pension Adjustment Fund? What was19 the average payment to the retiree?20
Okay. I can get that24 for you. I don't have it with me.25 55 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1
Okay, because2 these are people on fixed income. This3 is a one-time payment. It is based on4 the performance of the Fund.5 And those people retired with an6 expectation -- and almost a contract, if7 you would -- that they would receive8 this. Is that correct?9
The bonus payment10 is -- is only paid, as we said before,11 based on the availability of funds and if12 the criteria is met. And so --13
-- at the17 point they made the contribution into the18 Fund.19
And so, there21 is a reasonable expectation that if you22 pay for something, you should at least23 anticipate it in your golden years as you24 make your financial plans, that maybe,25 56 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 just maybe, there might be some type of2 adjustment given to them one time in3 their lifetime to sustain them in their4 retirement, and that's what they put into5 the Fund, with that expectation.6 So if we change the terms of7 that particular covenant within the8 contract, you know, I don't know if we9 are fulfilling what the expectation was10 at the time of the contribution.11
At the time of12 contribution, in most cases, they would13 have not been eligible for the bonus14 because we did not meet the -- we didn't15 -- we weren't at the funded ratio that16 was required. The funded ratio17 requirement was just recently removed.18 So based on the expectation,19 they would not have gotten the bonus20 payment previous to very recently, when21 that was lifted, because it was required22 that the funded ratio be approximately23 72 percent.24
Okay, all25 57 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 right. Thank you.2
Thank you,5 Madam Chair.6 So I'm looking at the budget7 detail summary by class, summary of8 positions. And I see in FY '08, actual9 at the end of year, there were 67 people.10 Fiscal '09, original appropriations had11 79 people. Estimated 2009 obligations12 right now is 65, and you're requesting13 74.14
There were some15 recent retirements in the office.16 Actually, for this month alone, we have17 three requirements. We've had several18 over the last couple of months, so we're19 filling those positions, so there are20 some vacancies. Actually, we filled one21 clerk position this week.22 So we're -- there were positions23 that weren't filled. It was pending24 getting a certification from civil25 58 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 service and waiting through the process2 and --3
Active Services is a6 unit within the Department that, if you7 are a new hire, you will be mailed a8 letter telling you if that you have any9 previous qualified time, which is10 government time, municipal time, military11 service, previous SETA time, or previous12 City employment, that you could -- if you13 took a withdrawal of those contributions14 that you could buy that time back.15 They also handle -- for the16 court reporters who are now eligible to17 purchase mandamus fees, they calculate18 the cost of those buybacks.19 And, you know, you have a20 certain period of time that. And you can21 also do it on installment.22
And they do23 those letters and calculations by hand?24
They -- just25 59 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 recently, it's been automated. So2 there's a program they can use to3 calculate the cost.4
So it looks8 like they've been running at five people.9 And now they're going -- and the Fiscal10 2009 budgeted was eight.11
You've put in13 automation and you're actually trying to14 increase it by --15
Well, there's still a16 backlog, because with recent legislation,17 a large group of people are now eligible18 for buyback, so there is a backlog of two19 to three months.20 There is a tremendous amount of21 people that are taking leave to go into22 military service now and for people that23 are closer to retirement, that want to --24 you know, I guess people don't think of25 60 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 purchasing their time until it becomes2 time close to retirement, when their3 retirement benefit would increase.4 So there is a large demand for5 these types of calculations.6
So why aren't11 we seeing efficiencies from that12 automation?13
Some of the positions14 that we're hiring now are not for people15 that calculate; they're more typing,16 clerk typists.17
Once the18 backlog is finished with, will you need19 all of these people that you're hiring?20
Yes. Actually, some21 of the -- one of the positions eliminated22 was within that unit.23
Well, you've24 actually gone up since 2009 budgeted25 61 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 positions.2
Well, we're filling3 positions that were vacated. You have to4 realize that we've expended a lot of5 overtime to keep up, so that's where the6 cost savings will show.7
Okay. Well,8 if that's the case, how come overtime is9 expected to be the same as it was last10 year?11
It was difficult for12 us to know when the positions would be13 filled. And at the current rate, it was14 probably safer for us to leave the15 overtime there.16 The other thing we can17 anticipate are special projects. We had18 to do a lot of overtime for the Pension19 Adjustment Fund.20 We have to do overtime when21 there are any changes in labor22 negotiations, most recently with health23 and welfare changes on the table.24 So it's hard for us to predict25 62 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 how much overtime would be needed, and we2 left it at the same level.3
I have the4 same exact questions about5 administration. You're going from 20 in6 2008 to 22 was budgeted in 2009. The7 increment run, you have 20, and you're8 trying to go to 23.9 Why are you increasing personnel10 there?11
Um... One of the --12 some of the increases are offset in other13 areas. For example, the pension program14 administrator is a new position, but it15 was this person who was a supervisor in16 the office, so you will see that that17 position was eliminated in counseling.18 So --19
Okay. Please24 go back and explain each move in each25 63 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 department versus 2008, which is2 significantly higher essentially, and3 provide this information to the Chair.4 (Timer bell rings.)5
And then also6 tell us exactly what you would do if we7 cut your budget by $500,000.8 Thank you.9
Thank10 you.11 The Chair recognizes Councilman12 Kenney.13
No?16 The Chair recognizes Councilman17 Goode.18
Thank you,19 Madam President.20 Ms. Bell, in your testimony,21 there's a request for roughly22 $3.9 million in Class 200 for Purchase of23 Services. Can you describe what those24 services are?25 64 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1
Class 100 is2 personnel. They're -- those are salaries3 and --4
It's actually8 up from $1.5 million the year before.9 (Ms. Bell looks through10 documents.)11
-- as you15 look for that information.16 In testimony from each and every17 other department so far, we've received18 goals in terms of contracting with19 minority, women, and disabled businesses,20 but your testimony does not include any21 goals.22
Okay. I'm not aware23 of what the other departments are doing,24 but I do know that --25 65 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1
We were told2 that every department was notified, and3 every department has given that4 information.5
Are you aware7 of what level of participation you8 reached last year?9
There are two sides.10 There's contracts that we have, general11 contracts, and then there are investment12 contracts.13 When we issue RFPs for contracts14 on the benefits side, we work closely15 with MBEC to make sure there's minority16 participation. We have meetings with17 them and bring vendors in and explain18 what the --19
Are you aware20 of what level of participation you21 reached in Fiscal Year '08?22
Actually, I25 66 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 have it in front of me.2
It says that4 for the first three quarters, there were5 roughly $1.5 million in contracts. Only6 $540 went to minority, women, and7 disabled businesses, 0.003 percent.8
Not even10 1 percent. So the question again is11 twofold.12 One, in your budget request for13 $3.9 million in Purchase of Services,14 what is that for? And what is your goal15 in terms of contracts with minority,16 women, and disabled businesses?17
You're25 67 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 welcome.2 The Chair recognizes Councilman3 Rizzo.4
Thank you,5 Madam Chair.6 Good morning again. I'm just7 picking up on something that is in your8 testimony. You have 64,000 participants9 in the Pension Plan, right?10
Could you14 tell me, of that number, how many get15 their pension checks deposited16 electronically versus a paper check?17
We only have 5,00018 people that receive paper checks. We're19 very high-level nationally.20
But here's my24 question: Of that 55,000, there are25 68 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 some, I would assume, very senior-in-age2 participants --3
What do you8 do if, in fact, one of those 5,0009 mishandles that check? They're up in10 years, they could be in their nineties,11 they lose it, it doesn't cash; what do12 you do?13
We have a tracking14 system that, after three months, if the15 check isn't cashed, we suspend payment.16 We investigate why the check hasn't been17 cashed. We'll get in touch with the18 person. We'll encourage them to do19 direct deposit.20 But you're certainly right that21 a lot of people want the check in hand,22 but --23
But that's a24 good thing I'm hearing because I just25 69 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 heard of a situation where a company that2 deals with a lot of older folks actually3 sent them a letter and said, you know, we4 sent you a check on a certain date 605 days ago, and it hasn't been cashed.6 So am I hearing that if one of7 our senior retirees would lose,8 mishandle, misplace, not deposit a check,9 we will help with that and make sure that10 that money eventually gets to them? We11 send them a letter saying -- or call that12 they have not deposited that check?13
That's good.20 Government has a little sensitivity.21 Thanks very much.22
Thank you,24 Madam Chair.25 70 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1
You're2 welcome.3 The Chair recognizes Councilman4 Green.5
Thank you,6 Madam Chair.7 I haven't looked at this. Are8 you guys part of the Plan B, Contingency9 Plan B reductions? Do you have anything10 in your budget being taken out if we go11 to Plan B?12
Okay. So15 provide exactly -- instead of just16 500,000, do it at 250,000 and a 500,00017 reduction in your budget.18
So I just20 want to close a loop on something. The21 Pension Board is no longer calculating22 pensions by hand; is that correct?23
We are still24 calculating pensions by hand.25 71 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 Unfortunately, I have to say that we are,2 for final calculations. We do estimates3 on -- electronically. And we are hopeful4 that -- we have seen demonstrations for5 pension payroll systems, and we are6 hopeful that we will find an Oracle-based7 program that will be able to calculate8 our pensions for us.9
That's --10 basically, last year you said, and I11 quote: "Unfortunately, I have to admit12 that we're still calculating pensions by13 hand. And the programs that we've looked14 at would allow us not to only bring over15 information over from Payroll and16 Personnel to feed into the system but17 would also allow us to do calculations18 and take leaves of absences and credited19 services into consideration."20
We haven't24 implemented it because there was a change25 72 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 of focus from the DOT system. There was2 a new director from DOT that wanted to3 reassess our needs, and we've been put on4 hold.5 And we're -- we didn't get a6 good response when we did the RFP. I7 actually just had one vendor. So8 that's -- we're still asking for requests9 for information.10 The focus was changed from a11 COTS program to an Oracle-based program.12 So it was all technical. The13 requirements were reviewed by the14 Department of Technology, and so we are15 still hoping that we'll see a new system.16
Well, how17 many people are involved in calculating18 pensions by hand?19
There are several20 people. We have a counselor who21 calculates the pension, we have another22 person that checks the calculation, we23 have another person that puts payments24 onto the system.25 73 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 So you're looking at maybe at2 least three people.3
How many4 other cities are you aware of where they5 calculate their pensions by hand?6
I know that some10 systems do have programs. I've spoken to11 some of those cities when we were doing12 reference checks. Some of the large13 cities that did purchase the systems took14 a long time to get them up and running; I15 would say anywhere from 18 months to16 three years. A lot of manual data entry17 had to be done to get those systems18 going.19
As George20 Washington said when he was planning an21 oak tree in front of his house, the22 people said, "But it will be 50 years23 before this is a big, beautiful oak tree24 and providing the shade you're talking25 74 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 about." And he said, "Well, then we'd2 better get it planted."3 It's time to start acting on the4 things that were identified over two5 years ago.6
That can8 bring efficiencies to your department.9 Thank you.10
Thank you.14 Thank you, Madam President.15 Good morning. I just have a16 couple questions.17 Can you walk me through your18 calculations? In your testimony, you19 state that you will be taking a $6,00020 decrease from Fiscal Year 2009. And in21 your operating budget, the original22 appropriation was $10,610. And your23 estimated obligations for Fiscal Year24 2009 is $8,812 -- $12,000 and 177.25 75 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 Why do you use your2 appropriations rather than estimated3 obligations? And I see how you come up4 with the $6,000 decrease in 2009; I just5 don't believe that it's accurate. It's6 more up about a $1.8 million increase7 from Fiscal Year 2009 or a $2.7 million8 increase from Fiscal Year 2008.9
Just how12 you come up with this $6,000 decrease13 and -- because the numbers just don't add14 up.15
Okay. So I'll have16 the person that worked with me on the17 budget. How detailed do you want it? By18 class code? Do you want us to go class19 code?20
Okay. I'll have her22 do that. So we'll get that information23 to you.24
I'm sorry.25 76 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 I didn't hear you.2
Okay.5 Thank you.6 And I have one another question7 here. Is your pension website part of8 MOIS, do you know?9
Yes, yes. We have a10 pension website, and out there, you'll11 find different publications -- the actual12 evaluation, you'll find any legislative13 changes, and it's active, and it's a part14 of MOIS.15 We request -- when we want to16 put something on, we put a request into17 MOIS, yes.18
Okay. And19 is your pension newsletter done in-house20 or --21
It's done in-house,24 and we send the articles to a publisher,25 77 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 and they'll print it for us. They'll2 arrange it and print us for us.3
And how13 does that person get a contract is that14 a--15
Okay, all19 right.20 And I don't know whether anyone21 asked this question, but I want to ask22 it: Can you explain the difference23 between -- can you explain what and how24 the Deferred Compensation works? And how25 78 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 is that different from DROP? It seems2 like it's a good program.3
The Deferred4 Compensation is a way for an employee to5 save in addition to their pension by6 having contributions taken out of their7 pay on a tax-deferred basis.8 So if you make $50,000 and you9 put 4,000 into deferred comp, your10 taxable income is the 4,000 less. That11 money is not accessible.12 There are certain requirements.13 It's not a savings plan; it's a14 retirement plan. You're not able to take15 that money out till you reach -- until16 you terminate or retire or -- and you may17 borrow on it, but there's certain federal18 restrictions on being able to take that19 money out.20 Now, the DROP Program means that21 you apply to go into the Deferred22 Retirement Option Plan, and whatever23 point you enter, once you're eligible,24 you have to have ten years of service,25 79 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 you must be either over age 55 or 60,2 depending on the plan you're in.3 Your salary for pension4 calculation is frozen a that point and5 it's calculated. And if you are to get a6 thousand dollars a month, that goes into7 a savings for you. It accrues interest.8 And at the end of your four-year period,9 or whenever you leave within the10 four-year period, you're paid a lump sum11 based on the pension calculation based on12 your salary and years of service at the13 time you entered.14 So if you have 20 years of15 service but you enter DROP after 16, the16 pension is calculated using 16 years of17 credited service and the salary at the18 time you enter DROP. But you get a19 lump-sum payment at termination.20 And so it's a different -- it's21 a retirement -- that's a part of a22 regular retirement.23 The deferred comp is a24 supplement to that. It's your only25 80 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 personal savings.2
Okay. And3 you can put -- you can designate as much4 as you want into deferred comp?5
There are caps on6 deferred comp. There are federal7 guidelines that allow you to put funds8 in, but there are caps.9
Okay. How10 does -- how do you know the cap? I mean,11 what is the cap? How do you figure12 out -- how do you calculate the cap on13 deferred DROP -- I mean Deferred14 Compensation?15 MR. McDONOUGH: The cap is16 announced by the IRS on an annual basis,17 and then we communicate that with the18 participants.19 (Timer bell rings.)20 MR. McDONOUGH: I believe the21 cap for this year for regular deferrals22 is $16,000.23
Per year?24 MR. McDONOUGH: Per year.25 81 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1
All right.2 Thank you.3 Thank you, Madam President.4
Thank you,7 Madam President.8 Good morning. I want to follow9 up on questions raised in every single10 hearing with regards to departments, and11 that's MBE/WBE participation.12 How long have you been in your13 capacity there, at the Pension Board?14
I've been -- in July,15 it will be in this position for seven16 years.17
Seven20 years. And what is your understanding21 with regards to MBE/WBE participation22 across City departments?23
We work actively with24 MBEC to have minority participations.25 82 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 And for our general contracts, some of2 them are -- most of them require that the3 vendors subcontract with the minority4 vendor.5
And we have been7 actively involved in that, having8 meetings with MBEC and potential vendors9 to be inclusive of minority10 participation.11
What type12 of documentation and verification do you13 expect of those who subcontract to14 MBE/WBEs? How do you get that15 information to ensure that the16 follow-through is actually happening?17
Okay. Well, we18 worked with the staff from MBEC because19 we don't know what the requirements are.20 We give them our requests for proposals21 or our requests for information, and we22 tell them what the project is, and that's23 posted.24
Point of25 83 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 information.2
Excuse3 me.4 The Chair recognizes Councilman5 Goode for a point of information.6
Ms. Bell,7 you've said at least five or ten times8 you work with MBEC?9
So how close17 are you working with MBEC if they set a18 goal of 20 percent?19
For every request for20 proposal or request for information, we21 do have contact with MBEC, and we provide22 the RFP to them.23
Did you tell24 MBEC that you could not achieve the25 84 4/15/09 - COMMITTEE OF THE WHOLE - FY '10 BUDGET1 20 percent participation rate?2
So if MBEC5 sets a goal for 20 percent this year, do6 you believe you can achieve a 20 percent7 participation rate?8
If MBEC,11 which is now the Office of Economic12 Opportunity, sets a goal of 20 percent,13 do you believe you can achieve a14 20 percent participation rate this year?15