And went13 to the MMO, which -- it's one of the14 things that's better for the City but not15 as good for the Pension Fund.16
Right. We'd be17 paying about 160 million more this year18 under the (inaudible).19
Right. We20 would be somewhere in the mid-50s, or21 close to the mid-50s, if we had stayed22 with the City funding plan?23
I think I25 218 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 saw it as 53 or 54, but it could be as2 high as 55.3
Okay, but6 it would be significantly higher than the7 47.8
Yeah. We have9 projections that show if we did the10 funding policy going forward but not if11 we had done it historically. So we'd12 have to get back to you on that.13
You don't14 have it going back to when we started15 with the MMO?16
No. The17 projections that we have from the actuary18 show if we started doing the funding19 policy now --20
-- what our funding22 percents would look like, not what they23 would look like if we had been doing them24 --25 219 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
Okay. And2 so, you have that if we start with the3 City plan today -- I would like to have4 that, by the way.5
Right. I mean, the9 other thing we've changed is the earnings10 assumption.11
We've taken that13 down -- the funding policy was at 914 percent.15
So that kind of19 accounted that we'd be paying about 6520 million more a year if we left the21 earnings assumption higher.22 So there have been a series of23 changes.24 So in terms of asking the25 220 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 actuary to go to the funding policy, we2 also kind of have to do other series of3 assumptions.4
Right.5 What I'm trying to get at, Rob, and maybe6 I can get there more quickly. What I'm7 trying to see if is we -- you mentioned8 approximately 2030 when we would start9 being at sort of that arguably healthy10 level, mid 70s.11
If we used13 the City plan instead of the MMO, does it14 get us there faster?15
-- the22 investment return assumption being the23 same.24
Right. That is25 221 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 done -- this is the top one, right?2
We would get into4 the 75 percent at about 2022, so it would5 push it up by about eight years.6
And that assumes9 the 8.1 -- that's all the other10 assumptions we have right now.11
And let's12 assume that right now, we're -- with the13 City plan, we'd be around 53. I'm not14 sure when I've read we'd be at 53. We15 were then at 45 or we already moved up to16 the 47. So it's somewhere 53 plus, I17 believe, where we would be right now18 under the City funding plan. Now follow19 me on this.20
So that is23 somewhere around 6 to 8 points difference24 --25 222 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
-- right3 now as to where we are.4 What I would like to see,5 instead of 2022, if we're playing6 catch-up -- in other words, we had been7 doing the City plan all along so we have8 to find a way to, over a period of years,9 get back to the City plan both currently10 and retroactively by taking pieces of it11 each year.12
Where does14 the 2022 bring us? In other words, where15 does that bring us below the 2022?16
If we had stayed17 with the funding policy back in 2003 or18 '4 --19
Right. And I22 assume that when do that for each year,23 we would use whatever assumptions had24 been in place in that year.25 223 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 COUNCILMAN O'NEILL:2 Absolutely. I want the same assumptions3 for the --4 (Indiscernible; parties talking5 over each other.)6
So the earning7 assumption would have been, if we were8 assuming in three quarters for some of9 those years, that's what we would ask the10 actuary to use for the --11
2030,15 2022, and some number that's probably at16 least a little bit lower than 2022.17
Thank you,23 Councilman.24 Any other questions of these25 224 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 witnesses from members of the committee?2 (No further questions.)3
Next up, we7 have the City Treasurer.8 (Witness comes forward.)9 CITY TREASURER WINKLER: Good10 afternoon --11
13 CITY TREASURER WINKLER: --14 Councilmember Clarke and members of City15 Council. I'm Nancy Winkler, City16 Treasurer of the City of Philadelphia. 10 The City's Treasurer's Office11 is focused on efficiencies and the12 distribution of payments as well as13 efficiencies in the deposit of revenues14 into City bank accounts. Direct deposit15 for City workers and pensioners is16 encouraged, and we have seen a steady17 increase in participation, from 7018 percent in Fiscal 2004 to 81 percent as19 of March 2011. 14 The Treasurer's Office issues15 an annual request for information to be16 reviewed each year by the authorized17 depositories on June 30th, in which they18 must state their community reinvestment19 goals, respond to the annual lending20 study, and address any disparities in21 lending22 The Fiscal 2011 appropriations23 supports five Treasurer's Office24 contracts. 11 COMMITTEE OF THE WHOLE - Bill 1101371 eConsult Corporation and MFR Consultants,2 MFR is its minority -- actually MBE/WBE-3 certified subconsultant. 5 In Fiscal 2011, the Office had6 a total of 21 percent MBE and WBE7 participation. 11 The Office also has a12 longstanding practice of hiring13 cofinancial advisors and cobond counsels14 on bond transactions. )3
Okay. Are4 you finished?5 CITY TREASURER WINKLER: No6 questions?7
All right.10 Thanks. I understand you were distracted11 somewhat by the -- whatever is going on12 in the hallway; I was too.13 So thank you very much for your14 testimony.15 Any questions of this witness16 by members of the committee?17 I have one quick question, not18 that I have a concern about it. Why19 exactly was the transfer of this20 responsibility as it relates to debt from21 Finance to the Treasurer's Office?22 CITY TREASURER WINKLER: I23 believe --24
I'm sorry.25 231 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 The debt management portion of it.2 CITY TREASURER WINKLER: I3 believe --4
Any5 particular reason or --6 CITY TREASURER WINKLER: I7 believe a few years ago, there had been a8 decision to move all of the activities9 out of the Treasurer's Office, all of the10 activities related to debt.11 And then, over the past several12 years, all of these activities have been13 moved back into the Treasurer's Office.14
So that15 something that was done in prior years,16 and now we're going back to the --17
At the beginning of18 the Administration, actually, we hired19 Rebecca Rhynhart to be the debt manager,20 and she was in Finance. About a year in,21 she became the City Treasurer, and we22 merged both functions -- cash management23 and debt management.24 And so, this is just following25 232 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 what we did functionally.2
Oh, okay.3 One quick question. If you can provide4 for us a list of categories of debt. I5 may have asked this question earlier in6 some other capacity or to some other7 member of the Administration.8 Debt that is, I guess, not9 recurring debt such as a GO bond, which10 we pretty much borrow every year for11 capital projects, but like a one-time12 sort of an NTI debt, I guess debt for the13 Municipal Services Building, things of14 that nature, one time, can you provide a15 list of those categories of debt?16 CITY TREASURER WINKLER: Yes.17
And if you18 can, obviously list the amount of the19 debt and the interest rate and the term20 of that debt as it relates to the21 repayment of the bond, that would be22 helpful to me for another issue.23 CITY TREASURER WINKLER: (Nods24 head.)25 233 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
All right?2 Thank you.3 CITY TREASURER WINKLER: So you4 want to know the nonrecurring-type debt,5 special project debt, and the interest6 rates associated with that debt.7
And the8 term of the debt.9 CITY TREASURER WINKLER: And10 the final maturity of the bonds?11
Right, and12 in addition to whether or not there's a13 penalty on the early payments as it14 relates to that debt.15 CITY TREASURER WINKLER: Okay.16
My17 understanding is some of those may have a18 penalty of payment upon the debt, all19 right?20 CITY TREASURER WINKLER: Okay,21 thank you.22
Okay, thank23 you.24 If there are no other25 234 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 questions, thank you so much for your2 testimony.3 CITY TREASURER WINKLER: You're4 welcome.5
Thank you6 very much. We will now have theArt7 Museum.8 (Witnesses come forward.)9
Thank you and good16 afternoon. My name is Timothy Rub,17 Director and Chief Executive officer of18 the Philadelphia Museum of Art19 Philadelphia Museum of Art. 23 Today, the Museum is bustling24 with activity. 4 It welcomes many hundreds of5 thousands visitors each year. 11 COMMITTEE OF THE WHOLE - Bill 1101371 nationally. 18 In our age of ever-evolving and19 increasingly important information and20 communication technologies,21 Philadelphia's vibrant, growing community22 of artists, bloggers, and other creative23 people has nurtured and supported these24 exhibitions. S. 13 The Museum's collection is14 indeed an inexhaustible resource and one15 of the City's most significant cultural16 assets. 11 COMMITTEE OF THE WHOLE - Bill 1101371 in its reach and profile and an anchor2 organization that is devoted to its3 mission to serve the community, offering4 educational opportunities and to serve5 the intrinsic human need for inspiration6 and uplift7 The Museum does its part in8 bringing the world to Philadelphia and9 Philadelphia to the world. 11 COMMITTEE OF THE WHOLE - Bill 1101371 essential key to Philadelphia's2 renaissance -- a renaissance slowed, but3 certainly not stopped, by recent setbacks4 in national and international markets5 The Philadelphia Museum of Art6 has nurtured creativity, self-expression,7 and the quest for knowledge among8 generations of Philadelphians and9 Pennsylvanians. 16
Thank you,17 Timothy. 11 COMMITTEE OF THE WHOLE - Bill 1101371 life that Philadelphians all2 neighborhoods enjoy. 11 COMMITTEE OF THE WHOLE - Bill 1101371 renovations of the Rodin Museum by June2 of this year. 12 With the Barnes Foundation13 scheduled to reopen on the Benjamin14 Franklin Parkway in spring 2012, tourists15 from the around the world will have the16 opportunity to see the Rodin Museum as17 never before. 9 The Museum is proud to state10 that the percentage of contracts awarded11 to minority- and women-owned firms was 4212 percent in Fiscal 2007, exceeding the13 City's 25 percent goal. We are committed14 to leveling the playing field. In this15 regard, we continue to work with the16 Urban Affairs Coalition of Philadelphia,17 who is providing oversight for the18 Museum's economic opportunity plan. 23 A committee meets monthly to24 monitor the ranges and goals. 12
13 Education and lifelong learning14 has always been incidental to the15 Museum's mission. 11 COMMITTEE OF THE WHOLE - Bill 1101371 throughout the year, and we welcome teen2 volunteer3 Six City public middle schools4 send students to the Museum for weekly5 after-school arts clubs. 11 Through partnerships with12 adult-care facilities, we bring adults13 with developmental disabilities to the14 Museum for art workshops15 Finally, we take a special16 interest in the training of teachers and17 in helping them to incorporate art into18 their general classroom studies. )11
Thank you12 for your testimony.13 I'm going to go straight to14 Councilman Goode.15
Thank you,16 Mr. Chairman.17 Good afternoon.18 Mr. Rub, at the end of your19 testimony, you say, "The Museum has20 depended on annual operating support from21 the City to pay for the fundamental22 operating cost of security and building23 maintenance since it opened the doors of24 our magnificent museum in 1928. Until25 256 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 the mid-1990s, the City funded a hundred2 percent of security and maintenance costs3 on an annual basis. This public-private4 partnership has been critical to the5 Museum's success."6 Can you explain what you mean7 by "public-private partnership"?8
In the past -- and9 this continues to be true today -- the10 City has received contributions from many11 different sources, both public and12 private. The City has certainly made a13 contribution and continues to make14 contributions to the Museum's operations15 and its capital maintenance.16 So too has the State in the17 past. And from time to time,18 particularly for programs, we receive19 funding from programs from federal20 government -- the National Endowment for21 the Art and the National Endowment for22 the Humanities.23 Now, all of these sources of24 income are very important for the25 257 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Museum's operations, programs, and2 capital improvement, but they are3 overshadowed in real dollar terms by the4 amount of funding that we have received5 in the past and we continued to receive6 from other sources, particularly7 foundations and private individuals.8 I cannot cite to you now, but I9 can get you this figure in terms of the10 ratio between the two.11 But in the past -- and this12 continues to be true today -- the fact is13 that most of our operating support and14 support for acquisitions and the likes15 comes from -- contributed support, I16 should say, comes from contributions from17 individuals and foundations.18
Well, my19 question, I guess, was really meant to20 question what you believe the21 relationship actually is.22 Is it just a financial23 relationship? Or what is the nature of24 the relationship between the City and the25 258 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Museum?2
Well, I could answer3 that in a lot of different ways.4 I think the best way to start5 would be to say, we are the Philadelphia6 Museum of Art founded in the City,7 founded by citizens in Philadelphia in8 1876, for the benefit of the citizens of9 Philadelphia and the education of people10 here. And that continues to be central11 to our mission.12
The question13 is: What is the relationship between the14 Museum of Art and the City government15 itself beyond financial?16
We operate -- or the17 City built the building; we operate in a18 City-owned facility. So that's an19 important part of that relationship.20
And up until24 the mid-'90s, covered a hundred percent25 259 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 of the cost of security and maintenance.2 At the point that those costs3 were covered at the level of a hundred4 percent, were the security and/or5 maintenance workers City employees?6
And do you8 know what their wage rate was at that9 point?10
I do not know.11 COUNCILMAN GOODE:12 Miss Harrity, do you know what the wage13 rate was at that point?14
They were City18 employees, and I'd have to get back to19 you because it predates my tenure at the20 Museum.21
Why the work was24 --25 260 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371
I think it was4 the City's initiative, is my5 understanding, in '93 and '94 to6 privatize the --7
So if it was12 the City's decision to privatize, to13 contract it out, and decide what it could14 or will cover, could the City decide not15 to privatize and/or decide how it wants16 to contract out those services now?17
I think that's a18 City decision. I'm not familiar with --19
So the City20 can choose to cover the cost of security21 and maintenance however we see fit.22
The City -- there23 is a contract between the Museum and the24 City which calls for the City to fund a25 261 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 hundred percent of the maintenance and2 security costs of the City-owned3 building.4 But this -- the City, like many5 cities across the country, first in the6 mid-'90s and now more recently, have come7 into, you know, difficult financial8 straits. And as a result, I think9 roughly -- you know, it's a much smaller10 percentage at this point of covering the11 cost.12
So it's less13 money, but the extent to which there is a14 contract between the City and the Museum15 of Art and to the extent to which you16 want the City to cover as much of the17 security and maintenance costs as18 possible, to some extent, shouldn't it be19 the City's decision in terms of how much20 it can fund and what it will fund?21
It calls for24 speculation. I guess it would be. If25 262 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 the City providing funding, it could2 stipulate that it wanted security3 employees at the Museum to be City4 employees rather than employees of the5 contractor.6
And/or that7 the City may want to set certain contract8 requirements.9
Again, it calls for10 speculation. Yes, if the City stipulated11 that security officers should be City12 employees, then it could set the terms.13
Okay. Just14 lastly, and I'll leave it here for now.15 So the if the City decided to16 fund security and maintenance costs17 differently, there would be room for a18 new conversation.19 (No verbal response.)20
Thank you,23 Councilman.24 Can I ask the City to come25 263 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 forward just a moment. I just want a2 quick follow-up on that line of3 questioning.4 (Rebecca Rhynhart comes5 forward.)6
Were you10 listening to the Councilman's line of11 questioning with respects to the12 contractual relationship between the City13 and the Art Museum?14
Yes. It was15 about, could the City change the rules16 regarding the security -- conditions17 around the security guards.18
All right.19 And since you're the only one here from20 the City that I can see, do you have a21 perspective on that, to what degree the22 City can influence or mandate with23 respects to a contract from a24 quasi-private agency with another private25 264 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 agency?2
I'm not3 specifically familiar with this contract,4 so I could just comment on the level of5 funding that we have to the Art Museum.6 But it would seem to me that if it's a7 signed contract, that that would be8 binding the way it is.9 But, again, I don't -- I'm not10 familiar with it, so I would need to11 probably have Law look into it.12
All right.13 I mean, this issue has been going on for14 a little while, and I'm not laying blame15 on one side or the other. But at some16 point, the issue needs to go away with17 some sort of a solution.18 I understand that earlier on,19 it was an issue with respects to the20 rights to bargain and the right to21 unionize. And now there's an issue22 centering around payment.23
And I don't25 265 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 know Mr. Rub. Who's Mr. Rub? That's2 you. Okay, then. I didn't know you as3 Mr. Rub.4 There's this issue about5 payment and the whole nine yards. And I6 just think that, you know, we as a city7 and, I think, everybody in here will8 concur that the Art Museum is a9 significant asset to the City of10 Philadelphia, both for the people come to11 visit and those of us who are citizens12 and the people that work there.13 And I don't know the specifics14 of the issue, but at some point, we15 really need to make this issue go away in16 terms of getting a resolution.17 (Applause.)18
So, you19 know, I don't know -- I know Councilman20 Goode and Councilman Greenlee and21 Councilwoman Sanchez in particular have22 been very, very involved in this issue.23 I happen to represent the Art Museum.24 I really want to see this issue25 266 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 go away. So at the appropriate time,2 with the permission of the Council3 President, 'cause I'm only occupying this4 seat for a moment, you know, we really5 need figure out how to make this issue go6 away 'cause I don't know what the math7 is. I see certain signs up --8 (Applause.)9
And I10 understand there has been some sort of11 movement on the issue with some of the12 members involved and conversations, and I13 would like to see us, at the appropriate14 time, sit down and talk about this issue,15 you know, 'cause it -- every year, you16 know, we'll be here next year, and I17 really don't want us to have this kind of18 conversation about -- it might be issues19 as it relates to the City's fiscal20 situation, but can we --21
Councilman Clarke,22 since the last time we testified in front23 of Council and today, there's been very,24 very significant progress made on the25 267 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 issues that we covered last year.2
The Museum has been,4 as you know, a third party to this,5 because the negotiations took place6 between the security contractor and the7 newly-formed union.8
Now, I will say that10 all of us had hoped that the discussions11 had progressed more quickly than they12 did. But as of just a few weeks ago,13 there is a collective-bargaining14 agreement that has been signed. And that15 represent, again, major step forward and16 an agreement to which both parties --17 which both parties signed and agreed to,18 obviously.19 It is my understanding that it20 meets the obligations or the commitments21 that we made to City Council last year,22 and we look forward to continuing the23 conversation if need be, but I think the24 impression that things have not moved25 268 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 forward and progress has not been made is2 incorrect.3
All right,4 okay. That was my understanding that5 there had been some movement, and I6 haven't been as closely involved as some7 of the other members, so I don't know if8 that requires a follow-up conversation9 with the pertinent parties to, one, find10 out where we are; and two, what direction11 we will take to ultimately resolve this12 sayings. So the sooner the better that13 we can have such a conversation of the14 people that need to be in the room, that15 will be very helpful.16
I gave no22 indication where I thought we were in23 terms of the situation from last year or24 not. I simply asked the question of, if25 269 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 it is the City's responsibility, meaning2 the executive branch and the legislative3 branch, to fund these costs and the4 extent to which it's a contractual5 requirement for us, to what extent we6 should be involved in it beyond just7 financial terms, in terms of generally8 funding costs.9 And beyond that, regardless of10 whether you have lived up to the letter11 of what you agreed to last year in terms12 of any new collective-bargaining13 agreement or contract, we were not under14 the impression that it was going to take15 this long.16 And there's a cost to that as17 well. And it's not a cost to the City18 per se, although it could be a cost to19 the City in terms of what we decide to do20 if we believe the situation was not still21 rectified in a way that it should have22 been last year and in a timely fashion.23 So the question is not just24 whether you lived up to the letter of25 270 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 what you promised to do; that's part of2 it. The other part of it is whether --3 (Applause.)4
Beyond that,5 we can have a different type of6 conversation about how we fund this,7 where we're at in terms of funding this,8 and what involvement we will have in that9 process, and having a different type of10 discussion than we had last year and11 along the way, leading up to this year.12 This situation to the extent13 that it has been further resolved is not14 completely resolved. To the extent that15 it has been.further resolved, it has16 taken a dramatic turn in terms of the17 type of dialogue that we've had.18 And so, I'm looking for a19 better dialogue and saying, in our living20 up to our contractual requirement in21 terms of funding those costs, to what22 extent the Museum is ready to have a23 dialogue about how Council wants to24 participate in that dialogue to finally25 271 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 resolve this.2
Thank you,6 Councilman.7 Any other -- and I assume we'll8 be talking very shortly 'cause we9 really -- I really like -- you know, this10 like needs to get resolved. And I11 understand there's limitations on all of12 our behalfs, but we need to go to the13 farthest end of this, whatever that14 limitation is, all right?15 All right. Any other questions16 by Councilmembers of these witnesses?17 (No further questions.)18
At this24 time, Council will recess until25 272 4.18.11 COMMITTEE OF THE WHOLE - Bill 1101371 Wednesday, April 20, 2011, 10 a.m.2 Thank you very much.3 (Proceedings end at 4:03 p.m.)4 * * *5 6 7 8 9 10 11 12 13 14 273 C E R T I F IC A T E2 I HEREBY CERTIFY that the4 proceedings of the City of Philadelphia5 Council Committee of the Whole are contained6 fully and accurately in the stenographic notes7 taken by me on Monday, April 18, 2011, and8 that this is a true and correct statement of9 same.10 _________________________________14 JOSEPHINE CARDILLO15 Registered Professional Reporter (The foregoing certification of21 this transcript does not apply to any22 reproduction of the same by any means, unless23 under the direct control and/or supervision of24 the certifying reporter.)25