COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON LAW AND GOVERNMENT - - - Room 696, City Hall Philadelphia, Pennsylvania Wednesday, March 12, 2003 5:10 p.m. - - - RESOLUTION 030117 - Resolution authorizing the City Council Committee on Law and Government to hold hearings to investigate the failure of the Philadelphia Housing Authority and four union locals, AFSCME District Council 47, Locals 2186 and 2187, AFSCME District Council 33 Local 934 and the Fraternal Order of Housing Police to negotiate new contracts and authorizing the Chairperson of the Committee in furtherance of such investigation to issue subpoenas or other process as the Chairperson deems necessary or appropriate to compel the attendance of witnesses and the production of documents to the full extent authorized under Section 2-401 of the Home Rule Charter. - - - PRESENT: COUNCILMAN DAVID COHEN COUNCILMAN ANGEL ORTIZ COUNCILMAN MICHAEL NUTTER COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK RIZZO - - - V A R A L L O, INCORPORATED Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 (215) 561-2220 I N D E X RESOLUTION 030117 PAGE THOMAS CRONIN, AFSCME District Council 47 .. CATHY SCOTT, AFSCME Local 2187 ............. 20 MIKE WALSH, AFSCME Local 2186 .............. 24 MR. JORDAN, Fraternal Order of Housing Police 27 MATTHEW WHITEHORN, ESQ., DC 47 ............. 34 3 3/12/03 - LAW AND GOVT. - RES. 030117
The Committee on Law and Government of the City Council of the City of Philadelphia is now in Session. I am David Cohen, Councilman-at-Large, Chairman of the Committee. To my left, as usual, is Councilman Angel Ortiz. And on my right, as usual, is Councilman Frank Rizzo. There may be other Councilmembers who will come in during the course of the hearing because this is an unusual time for a Council hearing. Usually Councilmembers plan schedules months in advance, calling upon themselves to be all over the City beginning about 4 o'clock in the afternoon and spending until maybe 10 o'clock at night or until midnight. So some have had long, tense schedules that they could not change for this hearing. But this hearing was necessitated at this time because of reports this Committee received concerning intimidation aspects if people ask time off during the day. I'm very concerned about the kind of intimidation tactics that have allegedly been used to make it difficult to bring this hearing together to make it difficult for all people who are interested in the issues that are going to be heard to be here at the time. So I want to thank 4 3/12/03 - LAW AND GOVT. - RES. 030117 everybody for having the courage to attend and to tell you that this Committee wants to have any signals of any effort to intimidate anybody. We're not going to tolerate that kind of action in the City of Philadelphia. (Applause.)
And so please feel free. My office is -- I'll give everybody the phone number. It's 215-686-3446. You can call the union directly if there's any intimidation or you can call my office or you can do them both. We're not going to have any of that happen here. Because that's prejudicial to the rights of labor and we demand that in Philadelphia, laborers' rights be respected. The working people have the right to be treated with dignity, with care and with respect. And they have a right to have their concerns considered as major concerns of the City government and that's what this hearing is about. At this point, I want to note, in addition to the presence of the two Councilmembers, Tim Kearney to my right, is my Legislative Director and he will at this point read the title of the Resolution which provides us with the information as 5 3/12/03 - LAW AND GOVT. - RES. 030117 to what the hearing is going to cover today. Tim, would you read the title of the Resolution?
Resolution 030117, authorizing the City Council Committee on Law and Government to hold hearings to investigate the failure of the Philadelphia Housing Authority and four union locals, AFSCME District Council 47, Locals 2186 and 2187, AFSCME District Council 33 Local 934 and the Fraternal Order of Housing Police to negotiate new contracts and authorizing the Chairperson of the Committee in furtherance of such investigation to issue subpoenas or other process as the Chairperson deems necessary or appropriate to compel the attendance of witnesses and the production of documents to the full extent authorized under Section 2-401 of the Home Rule Charter.
Now, this is the first of what may be a series of hearings. Somebody asked me at the outset how many hearings will there be, and my answer was, I don't know, but there will be as many hearings as necessary to bring Philadelphia in compliance with the laws of the 6 3/12/03 - LAW AND GOVT. - RES. 030117 land, which is to treat laborers fairly and justly, and we intend to achieve that result no matter how long. Now, fairness is a two-sided weapon. And to make sure that the other side, because I assume I'm going to hear stories about action that working people think are injurious to their interests. Therefore, I felt it important to invite Carl Green, the Director of PHA, and each board member. There seems to be some uncertainty as to the powers of Carl Green or the board members or the Mayor of the City, but everybody was invited and they were told that following the statements made, if any of them wanted to be heard, they would have the opportunity not only to hear the statements directly and not have to depend on somebody else's reports, but they would have an opportunity to give a reply. The only replies we've heard so far were requests for postponement of these hearings. That began a couple of days ago when we were told the attorney for the PHA -- I think his name is Mr. Jarin, Kenneth Jarin. I know the name. I think he's listed as one of the major fund-raisers of the Democratic Party in the City of Philadelphia. 7 3/12/03 - LAW AND GOVT. - RES. 030117 That's the way I know him. I wouldn't know him to see him, but I know him by reputation. Requests came in for postponement of the hearing because he's out of town today. I sent word back that I thought the most important business he could have would be attendance here today and I denied his request. I then heard from a member of the five-person board speaking for Mr. Jarin again making the request yesterday, and again I turned that down, saying that it appeared to me from what I hear, that no day would be a day that PHA or the board members apparently would want to testify; they'd always seek to delay. Any company anywhere that has delayed about a year in signing a contract is hardly in a position to ask for more delays. I think they've had more than enough. (Applause.)
We expect to be fair and I'm asking at this time -- there's a five-person board of PHA. I met them the day you had a demonstration and Councilman Ortiz and I were at your hearing, at your meeting when they finally deigned to let you come in -- or did you have to force your way in? I don't remember which it was. 8 3/12/03 - LAW AND GOVT. - RES. 030117 It was probably a combination, but I know you were waiting for some hours because I was down there. Councilman Ortiz was down there a couple times. You were waiting patiently. I thought that was insulting to you and totally opposite of the kind of practice the City of Philadelphia ought to be engaged in. Is there any member here who's on the five-person board? (No response.)
There's nobody here. All right. If they come in, they will have an opportunity to be heard, but never let them be in position to say they didn't have full opportunity to hear the grievances and to have an opportunity to be heard. Is Mr. Carl Green present? (No response.)
I see nobody in answer to those questions. It may be that we're going to be involved in other tests because when you heard the Clerk of the Committee, Mr. Kearney, read the title, you heard a lot of legal language talking about subpoenas and authorizing the Chairman of the 9 3/12/03 - LAW AND GOVT. - RES. 030117 Committee, who happens to be me, to subpoena witnesses if they fail to appear. So we'll probably have at least one more hearing at which the board members and Mr. Green will be subpoenaed to come. And if they don't come then, we'll be in court to see whether or not Council has the power to compel their attendance. But we tried to be polite. We tried to invite them to come and protect their interests, but they have apparently forfeited that right and from now on will probably be dealing fully at arms length. The first witness today will be Tom Cronin, President of District Council 47. Mr. Cronin, for the record, introduce yourself so that the recorder of the Committee can get the full information, and you may proceed with an opening statement and then we'll ask you, and anybody else who testifies, to be subject to questions.
Thank you, Chairman Cohen and Members of the Committee on Law and Government. Just before I begin my testimony, let me just introduce on my right, Mat Whitehorn, who is our pension expert with the Willig Law Firm, and 10 3/12/03 - LAW AND GOVT. - RES. 030117 also to my right is Cathy Scott, President of Local 2187 who is also prepared to testify, as well as Mike Walsh, the President of Local 2186 Supervisory Unit. So if I can get started?
Chairman Cohen and Members of the Committee on Law and Government, my name is Thomas Paine Cronin and I'm the President of AFSCME District Council 47, which represents the supervisory and white collar employees at the Philadelphia Housing Authority, PHA. AFSCME District Council 47 very much appreciates these hearings by the Committee on Law and Government to review key aspects of the Draconian proposals made by PHA. These issues primarily concern pension, health and welfare benefits, and pay increase. Let's start with the pension decreases, which PHA is asking employees to accept. I want to do something novel, something that the employees have had very little opportunity to hear. I want to set forth in plain English just how PHA is going to take money out of the pocket of every future PHA retiree. 11 3/12/03 - LAW AND GOVT. - RES. 030117 PHA pension benefits are determined on the basis of a formula. Under the major component of this formula, you multiply, number one, the average pay -- those are important words, average pay -- by two, the number of years of employment for which you receive pension credit, and then number three, take 2.5 percent of the total. That's how you figure out a portion of the pension to be received by a long service employee.
Mr. Cronin, may I interrupt you for a moment? With apologies to Councilman Rizzo and Councilman Ortiz, do either of you have an opening statement that you wish to make?
Since 1996, "average pay" has meant an average of the amount earned in the three years prior to retirement. These years, I might note, are generally an employee's highest earning years. The PHA's policy for the last seven 12 3/12/03 - LAW AND GOVT. - RES. 030117 years was to have an "automatic roll up" of these three years in the final pension calculation, meaning that the average moved up by one year each year to reflect pay increases as the period of service lengthened. You don't have to be Einstein to figure out that an employer can lower the benefits that must be paid if it makes sure that the "average pay"doesn't increase. If average pay, which forms the basis of the benefit accrual formula is held stagnant, the benefits that are payable don't increase. Ingeniously, this is just what PHA has done. PHA wants to base the vast portion of future retirees' annuities, not on the three years prior to retirement, but instead, on a three year compensation average ending in 2002. In other words, an employee who retires 10 years from now would have his pension calculated on the basis of what he is earning today, instead of what he will be earning 10 years from now. In PHA's proposal there is a modest additional annual benefit accrual for the years after 2002, but not nearly enough to make up for the difference in formula.
Mr. Cronin, can you 13 3/12/03 - LAW AND GOVT. - RES. 030117 let me announce that Councilman Nutter and Councilwoman Blackwell are here. Councilwoman Blackwell is also a member of the board. We welcome both of them to come and participate. Mr. Cronin has just started his opening statement. Would you be good enough repeat that last sentence?
In PHA proposal there is a modest additional annual benefit accrual for the years after 2002, but not nearly enough to make up for the difference in formula. I assume that everyone in this room who intends to keep working productively, reasonably anticipates that in 2010 they will be making more in 2010 than they are making today. If you are continuing to work, continuing to provide your employer with your services, making the special contribution that only experienced employees can make, do you really deserve the insult decreasing the value of those years of service? Is it really sound public policy to tell experienced employees that they are not valued in the workplace? We are not talking about some small difference in retiree benefits before and after the 14 3/12/03 - LAW AND GOVT. - RES. 030117 elimination of an automatic roll-up. Let's turn to Exhibit A, and I've given you copies of Exhibit A. I'm just going to keep reading. These figures were prepared by PHA's own actuary. It shows, for example, that a long-service employee like employee X with over 30 years of service at retirement will have his annual benefits cut by $7,613 per year. Let me repeat that. Will have his annual benefits cut by $7,613 per year. Is there anyone in this room who anticipates that the cost of food, clothing, mortgages and rents and, most importantly, health insurance and prescription benefits will go down in these coming years? Look at employee Y on exhibit A. With 1/4 years of service at 16 retirement, he or she is facing a reduction of his 17 or her annuity of $6,548 per year if the automatic 18 roll-up is permanently frozen. 19 We all know that these costs are going 20 to go up and to go up substantially. PHA, however, 21 is planning on paying only decreased retirement 22 benefits. This cut is particularly cruel in light 23 of the fact that thousands of dollars that PHA is 24 not going to pay in the example I cited probably 25 don't even cover the cost of decent medical 15 3/12/03 - LAW AND GOVT. - RES. 030117 insurance and prescriptions for the married couple. Benefits for which retirees must purchase on their own because PHA doesn't offer any retiree benefits. But let's go back to the bargaining proposals and PHA's position on the outright elimination of the automatic roll up. PHA says that it offers these proposals because of its own dire financial situation and the dire financial situation of its pension fund. We are all aware that the stock market has been down for three years in a row and this has affected all aspects of the financial picture. But every pension fund's financial picture is different. The economy and performance of the stock market may well improve over the next three years. Why then rush to a freeze of the automatic roll-up and an amendment of the plan? We want to work with PHA, but despite our repeated requests for information, we haven't gotten certain information central to our inquiries. We have asked for information that would show where the pension fund is now, how it got there, and where it is headed. PHA has refused to comply with several simple information requests. It is difficult, shall we say, to evaluate PHA's claims 16 3/12/03 - LAW AND GOVT. - RES. 030117 without key financial information that it alone possesses. More over, every prudent pension fiduciary plans over the long horizon, not for the short term. That is why we have been surprised by PHA's outright elimination of the automatic roll-up. At a minimum, it would seem that PHA would, at most, temporarily suspend the automatic roll-up, pending better economic times in the future and then reinstate it. Isn't that consistent both with sound public policy and with prudent financial management? The PHA has offered a short-term grandfathering of certain employees retiring up to 2005, but no prescribed relief from the cut-back after that date.
Moreover, PHA's purported offer to a one-time roll-up in 2005 is a farce because the conditions must be satisfied for the 2005 roll-up to occur remains solely in the control of PHA and its actuary. The PHA bargaining strategy has been to give with one hand and take away with the other. PHA is giving a wage increase with one hand and taking away real dollars with the other through increased health insurance premium, cost sharing and 17 3/12/03 - LAW AND GOVT. - RES. 030117 pension benefit reductions. This is not how the employees of PHA, particularly its longest service employees, deserve to be treated. Thank you.
Thank you, Mr. Cronin. Let me ask you, would the people sitting at the desk prefer to all be heard first before questions? Because I know there are going to be many questions about this pension. I've never heard of such a proposal and it seems to me far more threatening than just to the Housing employees. I would be deeply concerned that this may be an effort by the current City Administration to use PHA as a testing ground to eliminate current roll-up, as you call it, throughout the entire City. (Applause.)
Yes, we would prefer to give our testimony and then take questions.
In the interest of the economy, it's definitely the hope of the Chairman that this first Session will conclude no 22 later than 6:30 tonight because I know everybody is being held up for dinner and I don't want to add the problem of handling divorces to the problem of the Committee. So go ahead. Who's going to testify 18 3/12/03 - LAW AND GOVT. - RES. 030117 next, Mr. Whitehorn or Ms. Scott?
Go ahead. Give your name and go ahead with your testimony. And if you have your statements, would you give it to the Council staff member to distribute to the Members of the Committee? We just received, Ms. Scott, a letter from Carl Green, which the staff director, Tim Kearney, will read.
Yes. The letter is dated March 12th and it's addressed to the Honorable David Cohen, Councilman-at-Large. "Dear Councilman Cohen, thank you for your invitation to appear at this afternoon's Council hearing. Unfortunately, the Philadelphia Housing Authority's designated labor representatives are not available this evening. If requested, the Authority would be happy to appear at a later date. "In an effort to assist the Committee with its inquiry, we wanted to note that the following unions have already agreed to, and their memberships have ratified, the terms of employment comparable to those presented to AFSCME District 19 3/12/03 - LAW AND GOVT. - RES. 030117 Council 47, Locals 2186 and 2187 and the Fraternal Order of Housing Police. Building and Construction Trades Council of Philadelphia and Vicinity, Pat Gillespie, Business Manager; Labors International Local 332, Sam Staten, Senior, Business Manager; Painter's District Council 21, Joseph T. Ashdale, Assistant Business Manager, Secretary Treasurer; Firemen and Oilers Union Local 473, Ron Kirschner (ph); united Brotherhood of Carpenters Metropolitan Regional Council of Philadelphia and Vicinity, Edward C. Coryell, Executive Secretary Treasurer, Business Manager; AFSCME District Council 33, Local 934, Pete Matthews, President; AFSCME District Council 33, Jenny B. Taylor, President; AFSCME Local 934. "We trust that this information is helpful. "Respectfully, Carl R. Green, Executive Director." With a carbon copy to Honorable Jannie L. Blackwell.
Thank you. We just wanted everybody to have all the information as soon as the Committee gets it, so that if any person here or any representative wishes to address the contents 20 3/12/03 - LAW AND GOVT. - RES. 030117 of that letter, feel free to do so. Ms. Scott, please proceed.
Good afternoon, Councilman Cohen and other Members of the Committee. My name is Cathy Scott, President of AFSCME Local 2187. Our Local represents a variety of job classifications at the Philadelphia Housing Authority. Some of those titles are administration technicians, communications operators, contract control specialists, housing rehabilitation specialists, landlord tenant compliance officers, purchasing specialists, quality control technicians and inspectors, assistant housing managers, as well as a variety of day care, head start, nutrition, and senior program staff. These employees earn anywhere from $6.42 per hour as the lowest salary, to $23.80 per hour as the highest salary. My Local has been attempting to negotiate a collective bargaining agreement with Philadelphia Housing Authority management since early in 2002. This has been a very difficult and frustrating process. I think some background information would be helpful for you to be able to appreciate the situation in which we find ourselves. 21 3/12/03 - LAW AND GOVT. - RES. 030117 Since November 1999, the Philadelphia Housing Authority has had no consistent nor viable labor relations function with my Local. In November 1999, we stopped receiving basic membership information, such as home addresses and work locations. Even in the face of a subpoena from an arbitrator issued February 15, 2003, we have not received the home address information that we received from the formation of our Local at PHA. All attempts to address problems, issues and grievances have been met with a revolving door management. Most times the same manager does not attend follow-up meetings nor implement agreements reached because the management has either quit, been fired or been reassigned to another responsibility. Without a viable labor relations representative, problems which could be resolved in an efficient manner become more difficult to resolve, leading to a growing number of cases involved in an arbitration process. This is a very costly process for both PHA and our union, both financially, as well as resulting in decreased productivity and poor employee morale. Many months of negotiation time were 22 3/12/03 - LAW AND GOVT. - RES. 030117 wasted because there was no Philadelphia Housing Authority management representative attending the negotiation sessions. The only management representatives were contracted attorneys who knew nothing about the PHA operation. Our non-economic issues have yet to be addressed. Basic requests for information were unheeded. Agreements were made to have subcommittees work on contract proposals and were then ignored by PHA. Basic requests for information concerning their proposals, such as what the sick leave usage of our members was and a census of each person's years of service, were agreed to and then never provided. Since last April, we have had less than a dozen times meeting with PHA. Some sessions have been for less than one hour, but never more than two hours at a time. They are not negotiating. Their answers to our proposals have been no to every proposal and that they will get back to us. And when they get back to us they say, no. This is not bargaining. The situation at PHA is unacceptable and needs to be addressed. I want to thank you very much for the opportunity to present this testimony.
Thank you very much. 23 3/12/03 - LAW AND GOVT. - RES. 030117 (Applause.)
Before questions come in, let me say I'm going to be asking for copies of all these contracts because, frankly, I cannot believe that labor organizations would agree to any proposal such as that outlined by Mr. Cronin as been requested of your union. I grew up in the labor movement, in fact, very active in it for more than 60 years, and I would question the integrity of union officers that would agree to that kind of a curtailment of pension rights. And I wonder whether they're doing their union business or doing some other business, if they ever agree to that kind of a contract. (Applause.)
Therefore, I suspect that there must be certain provisions in the contracts that are referred to, which more than make up for any losses that the unions may suffer. But in any event, let's get to the facts and that makes only outstanding the contribution of the unions that are present here today and makes more intelligible the understanding as to what Governor Rendell meant in his statement yesterday, I believe it was, when 24 3/12/03 - LAW AND GOVT. - RES. 030117 he said, "If the state legislature wants me to play hard ball, I want them to know I know how to do it. Ask Tom Cronin and Jimmy Sutton about that". Well, I want everybody to know that Jimmy Sutton is not here today, but Tom Cronin is sitting down and stands tall in the fight. (Applause.)
Because I cannot see how any labor organization could be representing its membership and agree to that kind of a curtailment of pension rights. Are you going to be testifying before the questions?
Yes, sir. Mr. Chairman, thank you for the opportunity to testify before the Committee today. My name is Mike Walsh, and I am the president of AFSCME Local 2186, which proudly represents 60 building superintendents at Philadelphia Housing Authority. They perform the important work of supervising maintenance activities at the various developments through the City and also numerous rehab projects at PHA properties. The average member there has worked for over 20 years. They 25 3/12/03 - LAW AND GOVT. - RES. 030117 have made PHA their career choice and they have made a commitment to the residents. I am here today to provide you an update on our labor negotiations at PHA. I use the term "negotiations" loosely, for management has not acted in good faith. We have requested information and have been denied needed information. But the important points are three. First, PHA management is attempting to reduce significantly the members' pension. They mislead by saying that the reduction is three percent. But that's not the case. Ask their consultants. If you judge the reduction based on their contract offer alone, then the result is three percent reduction. But the important fact is the elimination of the automatic roll-up provision to the pension plan. After 2005, the reduction will increase at an alarming rate. In 2010, any member who retires will have their pension reduced by 17 percent. Mr. Cronin has mentioned that it's $7,600. For some of those people that I represent, it will even be higher. This compounds the problem in my second point. PHA provides no retirement healthcare 3/12/03 - LAW AND GOVT. - RES. 030117 benefits. When you retire, your healthcare stops. No five years of healthcare similar to the City employees. No sick leave conversion for additional retirement healthcare like the uniformed City employees. Healthcare ends. PHA is the only government agency in Philadelphia that denies its retirees. Why? We have not received an answer. We have asked for labor management committees to explore this issue. Management's response is no. 11 That leads to my third point. The state of labor relations at PHA is best exemplified by managements's refusal to provide due process protection to career, hard-working employees. There is no arbitration provision to protect against wrongful discharge. Why is this so objectionable? They've never given us an answer. It is a problem that needs to be addressed. The membership would appreciate your assistance helping us achieve due process rights. Thank you for your assistance in bringing these issues to the forefront. In summary, our issues are everyone's. Pension benefits, healthcare, due process rights. Thank you for your support. 27 3/12/03 - LAW AND GOVT. - RES. 030117 (Applause.)
Before Mr. Whitehorn gives a statement, may I ask you about how long it would take you, because Councilman Nutter has a few questions to ask and has other commitments that require him to leave very soon? So if it's going to more than three or four minutes, I would ask Councilman Nutter to go ahead now with his questions.
Chairman Cohen, if Mat Whitehorn is not ready to give his statement, he'll respond to questions, technical questions, but if you would, I would appreciate if Mr. Jordan from the Police could be recognized and then the questions. Is that possible, sir?
Thank you for the opportunity to speak and represent the Fraternal Order of Housing Police. Mr. Cronin, Ms. Scott, and Mike, they pretty much covered the situation at PHA. They made assertions in reference to labor relations, which are really nonexistent. It is a revolving door. It is very frustrating. In the 28 3/12/03 - LAW AND GOVT. - RES. 030117 last two and a half years, I can say that they've had at least eight or nine managers in charge of human resources. There's no consistency. As far as contract negotiations, there are no negotiations. There seems to be a prevalence in the society now, that if you're in charge or if you're running the show, that you're either down with their program or you're not down at all. They haven't looked at any of our proposals. We tried our negotiations in 2001. We tried to start them up in November of 2001 knowing that the contract was going to come to an end, knowing how PHA usually conducts business, where we all could have contracts if they take that unconscionable pension off the table. It needs to be removed totally and we do need to find out some information as to if they assert that the pension is in trouble, we need to know why, how it got like that. We receive no information on pension. I've been there close to 13 years and a couple of months and we've only received information on the pension once since I've been there. They refuse to let us have members on the pension board so at least we'll have somebody there that can disseminate the information back to our membership. They told us 29 3/12/03 - LAW AND GOVT. - RES. 030117 that they had lost to percent of the pension. When our experts look at the figures, that was a falsehood. Whatever help that the board could give all of our Locals, we would greatly appreciate it. It's no sense in pushing it any further. They covered pretty much what's going on at PHA. There are a lot of other issues that could come in, but I believe that the main function of this board is to look into what's going on with the contract negotiations. But there are a lot more issues, especially coming from the Police Department's venue. Thank you. (Applause.)
Thank you, Mr. 16 Jordan. 17 I used to tell people I'm a partisan 18 democrat because democrats speak for working people, 19 but I'm beginning to learn from Governor Dean of 20 Vermont that I have to say I'm from the democratic wing of the Democratic Party because so many -- it's just a shame that the Governor of the State of Pennsylvania and the Mayor of the City of Philadelphia seem to feel that breaking down laborers' rights is part of Democratic Party policy. 30 3/12/03 - LAW AND GOVT. - RES. 030117 They have to learn that it's not and that people out in the communities know what the Democratic Party stand for, and that's respect for workers' rights and we're going to show the way. And I want to congratulate all of you for your willingness to fight this issue out to the end. You're going to get lots of support from well-meaning people throughout the City of Philadelphia, whom I believe comprise a strong majority of the people of Philadelphia. Philadelphia has got to be a labor town, meaning respect for the rights of working people, rather than having a Governor posing as a democratic saying, "I can play tough." With whom? Not with the legislature that's playing tough with him, but with labor. A democrat would be normally expelled from the party for taking that kind of position. Maybe the Governor no longer regards himself as a democrat. Thank you for the clarity. I'm going to ask Councilman Nutter if he has any questions to please proceed. Councilman Nutter.
Thank you, Mr. Chairman, and I appreciate the accommodation. And I 31 3/12/03 - LAW AND GOVT. - RES. 030117 apologize that I may have to leave a little early. Mr. Chairman, quite honestly, given how baffling and perplexing this situation is, it's hard to know who to ask these questions of, but I certainly would like to have them on the record. If any of the witnesses at the table are able to respond, I'd greatly appreciate it. Otherwise, Mr. Chairman, I would ask that these questions be forwarded to Mr. Green or his representatives at the Housing Authority. First, actually, Mr. Chairman, I'm intrigued by the March 12th, 2003 letter. Because I know that you know how to take care of putting a hearing together. I will assume that the request to participate in these hearings was given sometime ago. And while I understand that the labor representatives may not have been available this evening, was there ever an offer by Mr. Green or any of his executive management staff put forward to participate in these hearings?
Only to the extent that is included in Mr. Green's letter. Yesterday -- as I mentioned earlier, Councilwoman Blackwell, who is a member of this Committee as well as a 32 3/12/03 - LAW AND GOVT. - RES. 030117 member of the board, forwarded to me the request by Kenneth Jarin for a postponement. And it seemed to me that the arrangements having been made and nobody was under subpoena. The only appropriate thing was to move ahead with the hearing. The PHA is not a small agency. It has many people. I believe the most important and pressing business that PHA has before it is a resolution of these questions. I cannot conceive of any bigger issue that it has. I regard it as insulting, Mr. Jarin's request that this be held, because PHA's been holding it up. And, again, you have a generalized letter from Mr. Green concerning about a willingness to come at some future time. It is my belief that whatever time we set, that PHA will probably find some reason to seek to postpone it, unless he's assured that the meeting will take place at such time that very few representatives of the labor organization can attend. It's unusual that we would be compelled to hold this meeting at 5:00. And we're doing it in the interest of the employees because of the improper actions of an intimidatory nature practiced by PHA so that employees there are 33 3/12/03 - LAW AND GOVT. - RES. 030117 fearful of asking for time off in order to come to the hearings during their regular day. That's the reason for the hearing today at 5:00. In my long history in City Council this is only the second time that's it's been necessary for Council to hold a hearing at the end of the working day because of intimidatory tactics by the City Administration. And that's the reason. We will invite them to come and we're going to be ready to subpoena them.
Thank you, Mr. Chairman. I actually thought that the 5:00 hearing notice on my schedule was a typographical error.
It was made necessary by the fact that efforts to hold it at a regular time --
Until, actually, I saw a couple people earlier today and they said, "No, it's at 5:00." I said, "Fine. I'll be here." Let me ask a couple questions to the witnesses at the table just for informational purposes. First, are there any materials from PHA that indicate what the official reason is for 34 3/12/03 - LAW AND GOVT. - RES. 030117 seeking this elimination of the roll-up provision? What is the explanation?
I'm Matthew Whitehorn. I'm an attorney with Willig, Williams & Davidson. We represent District Council 47. The last thing we received that was sort of semi-official from the Housing Authority was a copy of a plan valuation for the 2001 plan year. It's stamped, "Draft." It's not a final version of the valuation for the year. That was the last thing that was provided to us. We have asked for the final version of it.
The Housing Authority plan is subject to something in Pennsylvania called Act 205, which is the Distressed Municipality Pension Law. It requires certain valuations be prepared, and this is the valuation I believe that is prepared in accordance with Act 205 by a professional actuarial firm.
And are you saying that either directly or indirectly the Authority's response to that valuation is to put forward this 35 3/12/03 - LAW AND GOVT. - RES. 030117 proposal?
They claim that the plan is in a poor financial situation. If you carefully examine the notes to the draft 2001 valuation, you could observe that it says that much of the financial problems are due to investment losses, which basically every plan has incurred over the last two to three years. And that basically is what we were told. We have a problem. We have to fix what we project as a funding problem in the plan. And the analysis we were given -- I requested in an early meeting, "Can you give me examples of what you're really talking about?" The exhibit we handed up to you today is an exhibit prepared by Milliman USA, which is the actuary for the PHA plan and it shows the effect of these changes on sample employees.
Well, I mean, look, the City of Philadelphia pension plan is under severe financial distress. I believe both the major pension plans of the Commonwealth of Pennsylvania are under severe financial distress. Big battle going on about who gets to audit with the Auditor General and the Treasurers battling back and forth. 36 3/12/03 - LAW AND GOVT. - RES. 030117 The City's response, at least on the City pension, is to, in accordance with another state statute, reduce the City's payment into the pension system to something called the MMO, the Minimum Municipal Obligation. Do you know if PHA has the same opportunity to pursue financial relief in terms of dealing with pension fund problems by pursuing MMO opportunity?
I'm not their counsel or their actuary. This has never been discussed with us, to my knowledge, at any meetings that we've had with them.
I don't understand why this is first, second, last reaction to distress. It's not the only pension fund in the country that's having a problem. And I haven't heard anything anywhere near as crazy as this.
The only proposal we've had is this proposal to really change the basis on which the pension is calculated. And just for comparison sake, the City plans, as you know, base the ultimate benefit on the high three years of compensation, which essentially this formula that's in place now under the plan does essentially the 37 3/12/03 - LAW AND GOVT. - RES. 030117 same thing. It's not exactly the same, but it's very close. What the Housing Authority is asking us to do is take that away, basically, as of November 1, 2002.
Sometimes I do get in trouble for admitting what I don't know. I was not aware that PHA provided no retirement healthcare benefit, which really sounds bizarre. I'm sorry. I can't necessarily keep track of everybody's plan. Quite honestly, it's almost a job just trying to keep track of what my own benefits are with the City. We all have our problems. Is this common practice in housing authorities across the country? Do we know if other housing authorities in other major cities in the United States do not provide healthcare benefits post retirement?
Mr. Chairman, I would ask through our own resources, if we can do it, to conduct our own survey on this particular issue with at least the top 10 largest housing authorities in the country just to get a better 38 3/12/03 - LAW AND GOVT. - RES. 030117 sense of the context of this discussion. Now, maybe we'll find that that's not a housing authority thing anywhere in the United States of the America. I doubt it, but I'd certainly like to know.
You want to refer that question the technical staff of the Council to obtain that information?
Yes. I'm not going to -- yes. We should have our own technical staff deal with that. My last question is, what, if anything, do we know about the post-retirement healthcare benefits and current pension issues with regard to the two other major authorities, large authorities in the City, both the Redevelopment Authority and the Philadelphia Parking Authority, in terms of either healthcare benefits or response to pension problems?
The Parking Authority benefit is the same as the City of Philadelphia workers, five years post-retirement healthcare. I'm not familiar with the OHCD package.
We'll also refer that. 39 3/12/03 - LAW AND GOVT. - RES. 030117
I'm trying to compare authorities up and down the line. And then we have, I guess, the Rolls Royce of government entities, which is probably PGW, which I believe are lifetime?
So we have lifetime at PGW and no time at PHA. (Applause.)
Councilman Nutter, may I note that PGW maintained the lifetime guarantees all during its perilous financial trips when it was facing bankruptcy. (Applause.)
Well, Councilman, I think you're right. Of all of the things that we talked about doing to rescue PGW, I don't ever remember a conversation about the pension fund or healthcare as an option to try to either save money 40 3/12/03 - LAW AND GOVT. - RES. 030117 or turn the ship around. I think they actually came to us a couple years ago, which -- it's kind of like when you run into an old friend of many years ago and they ask you can you lend them $20. I'd actually just tell the person, "I'll give you the $20 because I know you're never going to give it back to me, and then I'll just been pissed with you." The PGW, at the height of their crisis, came over and asked for a mere $45 million, which all of us knew they were never going to pay back, but we gave it to them anyway, and we still never had a discussion about their pension system or health benefits. So obviously there is a tremendous inequity here and we're only going to get to the bottom of this when PHA comes over. But I do think, Mr. Chairman, that getting some of this additional information in terms of research for comparative purpose might further some of this discussion along. I look forward to the next hearing being scheduled. I will be here and also make sure that I can spend as much time as possible asking questions. Thank you, Mr. Chairman. (Applause.) 41 3/12/03 - LAW AND GOVT. - RES. 030117
Councilwoman Blackwell, is there any statement you'd like to make at this time? Because this is election time. We just filed election petitions, and among other things, some Councilmembers have the foolish notion that it would support them to go out and campaign to get reelected. And I think all of them who are serving now are trying very hard to do a good job and deserve that opportunity. So I'm going to ask Councilwoman Blackwell, who is great in many ways and who serves in both capacities -- and I know she's very busy on the campaign trail -- if she has statements she wishes to make at this time.
Thank you, Councilman. Thank you, Mr. Chairman. Certainly, we know that Councilman Cohen spent his first term here in 1967, so I thought I've got a little time then, but we'll never get to be that good. But certainly we thank him for his leadership over the years and note that we've had our battles here in the City, and still do, with regard to this issue. I fought to be on the PHA board. I'm 42 3/12/03 - LAW AND GOVT. - RES. 030117 proud to be on the PHA board because of my interest, my concern to try to help people in housing issues. Obviously, I've known Tom Cronin forever and all of the union folks. I talk to Rodney Little more often, I guess, than most everybody in this room, especially in recent years. I'm newish to the board. I can't tell you that I know the pension package or that I know the inner workings of what's happening on the contract. I know only -- as you see, I'm cc'ed on the letter, that the other unions have settled, it's your union and the Police Officer's Union that have not. But certainly I pledge -- I think all of you know me well enough to know that I'm with the people. I'm for you. I want to be on the PHA. I want to be useful. I want to be used to do the right thing and for the right reasons, and certainly that I will do my part to certainly talk with Mr. Green and to look into the issue to see how I can be helpful. I thank you, Mr. Chairman, for the opportunity to address the hearing. I thank you. (Applause.)
Please feel free to stay as long as the hearing. We hope that we're 43 3/12/03 - LAW AND GOVT. - RES. 030117 going to be adjourning or recessing today at 6:30. We may recess in order to continue this hearing at a later time. Councilman Ortiz, do you wish to be heard?
Thank you, Mr. Chairman. Yes. Since I was the one that Kenny Jarin called yesterday --
Oh, you were the one. I've been trying to figure out who spoke to me about that.
I spoke to you. I was called by him and, in fact, he had just come out of a meeting with the governor. And he asked for the request that I spoke to you. And I called him, told him very exact words, that we were not going to postpone this hearing. I told him, he's not -- although he's good because he might be able to answer some of the legal questions that are being posed. I think Carl Green should have been here. (Applause.)
I think Carl Green has to pay some respect to this Council. He knew 44 3/12/03 - LAW AND GOVT. - RES. 030117 about this for weeks and weeks. This letter that we get at 5:30 in the afternoon is disrespectful at best. (Applause.)
And I think not only he should have been here, but his whole staff should have been here. If the workers can come and the ir representatives can come, so could they. Because I don't want to have to go over the testimony that the table and the panel has just presented and I believe that they owe an explanation. Mr. Green doesn't need -- unless they're really not talking with a straight tongue. I mean, I don't think he needs an attorney to be able to answer some of our questions as to what the proposals are. And all we want is to question as to the proposal and the fairness of those proposals. People work 25, 30 years and they expect something and they have an objective. The only thing that you're working for is because you know that at end of those 30 years you're going to have that pension. And then when you're reaching that 30-year mark, they come in and try to change the ground rules on you. You know, you started the game 45 3/12/03 - LAW AND GOVT. - RES. 030117 and it was a nine-inning game, three outs per inning. Now it's going to be seven innings and it's going to be two outs. That's not the way the game is played. And we have to be able -- and Jannie is here, so she can take the message back because she's a member of this body, that what he did today was an act of disrespect. We don't like to be disrespected in this Council. (Applause.)
And at least the courtesy that he should have had -- David Cohen is not inaccessible. He can pick up the phone, say, "Councilman, it's Carl Green. I have to talk to you. We have a hearing today." But not even that. Not even that. A letter delivered when the hearing has started is disrespectful. And we are not going to tolerate that. We're not going to tolerate that. (Applause.)
Mr. Chairman, I think that this hearing -- Mr. Green has some to answer, not only about the negotiations, but the way that he has treated and done to this Council. I think he has to answer to that.
What Mr. Green has 46 3/12/03 - LAW AND GOVT. - RES. 030117 done, apparently, is to take the DROP proposal that unions fought for, and said, we're going to give you, not the benefits, but the disadvantages of it. Because part of the DROP Program was to stop the benefits, you know, the retire benefits at a certain level. But the worker then took home some cash in order to start his retirement or her retirement in a way that would be meaningful. So what Mr. Green is doing is taking away the plus in the DROP Program and given you only the detriment of it, taking away all of your benefit rights. And if he thinks you're going to buy it, I don't think he's in a position to manage the agency. (Applause.)
I think this is the beginning of a very serious battle. And as I said earlier, I think all of you are to be commended for not yielding. Apparently others may have. (Applause.)
Before we recess the meeting to another date, there are some questions I'd like to ask Mr. Cronin for the record. I'd like to know how long have the negotiations been ongoing? What was the expiration 47 3/12/03 - LAW AND GOVT. - RES. 030117 date of the contract?
Let me just add one other thing that I need to bring out about the last time that we negotiated, which I think has a bearing in here. District Council 47 has always recognized that governmental bodies at all levels have financial problems. More than three years ago, this union proposed to Mr. Green -- and this is on the record and anybody can check it; I'm not just using rhetoric -- that we would be happy to work with him in using RGI project, Redesigning Government Initiative, labor management so we could save money, so we could economize, so we could deliver a better service. Something that where we both get a little for the benefit of the people that are serviced by PHA and taxpayers, everyone. It was flatly rejected.
We had testimony at hearings during the budgetary process. We've had hearings where agency head after agency head has come in and commended District Council 47 for its 48 3/12/03 - LAW AND GOVT. - RES. 030117 initiative with RGI and have said how well it has worked. It's unforgivable that the management is apparently so backward. We're going to have to find out who runs PHA. Is it the board or is it Mr. Green? Well, we want to know who has the ultimate power. Councilwoman Blackwell, I think it would be very important for the board members -- we know all the board members, and they are fine people individually. But they, I believe, are not being given the power that they actually have under the law because I believe that the board is the ultimate power and not Mr. Green. And if that's the case, I think we're in much better shape than if Mr. Green has the final power, because I believe the board has the power to determine the length of Mr. Green's appointment. (Applause.)
Mr. Green is not a native from Philadelphia. Where he comes from, I'm not certain. And I don't know where he got the ideas he seems to be working on, but they're not Philadelphia ideas. Mr. Cronin, sorry for the interruption. 49 3/12/03 - LAW AND GOVT. - RES. 030117 Please go on.
It was simply a gesture on our part, a serious gesture. And he would know this, and I think that he would, I would hope, have the integrity to testify as such when he gets his opportunity, that we have tried to have a relationship with him other than a confrontational relationship, a relationship that would not only be good for management and labor, but the people Philadelphia, the taxpayers. And all I can say -- and we brought this up time and time again, of finding areas of cooperation, every single time -- and again, I want to emphasize this is rhetoric. He has flatly rejected every single attempt to work together in a harmonious fashion.
Let me be a little more specific. Can I ask you, has he been forthcoming with necessary financial data to attempt to prove a case?
No. No. Everything that the other union leaders have said to you in terms of requests and that our attorney Matt Whitehorn has said in terms of request of needed information in labor negotiations has not been forthcoming. That's 50 3/12/03 - LAW AND GOVT. - RES. 030117 one of the reasons in addition to that, as again was testified, you have a circular door where you will go into a negotiation with PHA, and the next time you come back to negotiation you will have different negotiators sitting there. You leave that session and you come back and you have different negotiators sitting there. So you're constantly trying to bring people up to date, you're going around and around. And this isn't, I don't think, an experience that's unique to District Council 47. I think other unions that negotiate, other unions that negotiate, I want to make sure that point is made, have the same experience that we do.
Let me just say this to you. I don't what to -- I think that there is a -- maybe they read it a different way. I don't know what's in their minds or what's in their heads, why they've done certain things. But it is clear to me, whether it is clear to them or not, that there is a lack of labor solidarity in this town. (Applause.)
It is also clear to me 51 3/12/03 - LAW AND GOVT. - RES. 030117 being many, many years in labor negotiations that an employer trick or an employer tactic is to whipsaw unions. Meaning, that if you can get a union to accept a weak contract or a bad contract and you have another union in the same industry, it's easier to whipsaw them; to say "Well, listen, the other unions have accepted this. Yeah, it may be bad, but the other unions have accepted it, now we expect you to accept it," rather than unions taking the first principle of the labor union movement in solidarity. Nobody saw that better than the people that are sitting on this Council when I testified in City Council on the stadium issues. And I said at that time, "I'm not against stadiums. I just think that there's City contracts coming up, there's City needs, needs of education, needs of the homeless, et cetera, et cetera. What was the response in the gallery when we were on the 4th floor to that? I wasn't opposed to new stadiums; I was opposed to the spending formula and who was going to have to pay for it. They wouldn't let me talk, not to mention all kinds of threats inside and outside. I don't consider that solidarity. And obviously, you don't either because you made a statement saying, "Is this 52 3/12/03 - LAW AND GOVT. - RES. 030117 solidarity?" This is what we have in the City of Philadelphia. To me, it's a disgrace because whether it is District Council 47, whether it's the police, whether it's 33, whether it's Sam Staton, no 7 matter who it is, their members have to live. They're just like us no matter what color, what industry, et cetera, et cetera. They have to live. You can't dispute the facts in this. No matter what the union, you can't dispute the facts. So why a union leader, whether it's these negotiations or City negotiations, if somebody says, "I got a 9 I'll give you," and the union leader says, "I'll take a 7," why do they do it? I don't know. All I know is it's done and it's done every day, and it hurts the member. And I'll stand up, you know what, whether it's Governor Rendell, what he said -- and I heard what he said. It's been reported to me ad nauseam now by people. But if it means standing alone, this Council or a couple unions and fighting until the end, win, lose, or draw, then we will stand there to the end because what we are doing is right. (Applause.)
I believe Mr. Cronin 53 3/12/03 - LAW AND GOVT. - RES. 030117 has expressed the feeling, not only of your membership but of the City Council, because the City Council has always held strongly to laborers' rights and we are concerned that by the action of the City Administration when Governor Rendell was Mayor and under the present Mayor. We are concerned that laborers' rights are not being respected, and there has to be a change and we're going to be committed to it. I believe that we ought to follow Councilman Nutter's suggestion, recess the hearing until we get further information. And we will set another hearing at the call of the Chair. It will be prompt and I think we're on our way to an important change in Philadelphia. I think it's important sound democratic politics and to support have sound democratic labor policies. And we ought not to have the Democratic Party, with the capital D, ever be in a position where it's fighting working people. And to that end, I think all of us want to have sound labor policy for the government of the City. I understand there's question from Ms. Scott before we recess. 54 3/12/03 - LAW AND GOVT. - RES. 030117
Well, actually, I had the opportunity to read Mr. Green's letter, and I would like to point out to the Committee that his statement that these other unions have ratified the terms and conditions offered to us is not correct. The building trades, the top unions above District Council 33 accepted and voted on a different package than was presented to District Council 33. And when we asked them specifically at negotiations what they were going to do about this difference, they shrugged their shoulders and didn't have an answer. So I don't know what kind of back door deals are being made here, but clearly, what the building trades agreed to is not the same as what District 33 agreed to and this letter is not correct.
Mr. Chairman, if I may. I think we should write a letter to Mr. Green asking him for the details of what is in the contracts that he alleges have been signed and what are the conditions that these unions have accepted and to send us a copy of that contract before the next hearing. (Applause.)
I think it's an 55 3/12/03 - LAW AND GOVT. - RES. 030117 excellent suggestion by Councilman Ortiz. The Committee will adopt that suggestion and send that letter. And we're going to ask for the contracts. And when the contracts come in, we're going to let you all have copies of them because that's the only way we can learn the truth. Thank you. The Committee hearing will stand in recess until the call of the Chair. Thank you all for coming. (Applause.) (Council adjourned at 6:25 p.m.) 56 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of March 12, 2003, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON LAW AND GOVERNMENT ___________________________ Lisa C. Bradley, RPR and Notary Public