Yeah. I think that if were we to consult with one of the drafters of the Charter, we would probably find that in the past, prior to the passage of the 1951 Charter, that there had been problems with the City's making payments. I'm not certain of that, but my guess is that there were question like: Are the funds there, has the City properly appropriated them, will the bond payments be made, can the markets be sure that the City will pay? And as I mentioned, obviously, now, almost 50 years later, you know, clearly, the City has been diligent in making the payments to which it's legally obligated. And, therefore, I don't think it's fair to quite say that they're honorary. And the reason I used the word "ministerial" is that there is an oversight requirement. I mean, there is a due diligence that the Finance Director or the Controller and this outside person who actually serves as the Chair have to perform to make sure we really are meeting our legal obligations. But there's no 302 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 great risk of that at this point.
Has there ever been a default by the City since its days of the Home Rule Charter?
You're welcome. Any other questions from members of the committee? (No further questions at this time.)
The Board of Pensions and Retirement is next. (Joe Herkness comes forward.)
/Budget Hearings/Bill 990023 President. Long time no see, right? Good morning, Council President Verna and Council President's Committee of the Whole. I'm Joe Herkness, Executive Director of the Municipal Pension Fund, and I'm present to deliver testimony on behalf of the Director of Finance, Ben Hayllar, in his capacity as Chairman of the Pension Fund's board of trustees. With me is Mark Bonavitacola, who is the acting Chief Investment Officer of the Pension Fund. As you know, one of the largest problems that face the pension system was its unfunded liability. And in last year's testimony, the Director of Finance said that he was investigating the possibility of a pension obligation bond. 2 billion in assets have been deposited into the Municipal Pension Fund. /Budget Hearings/Bill 990023 of -- it will be officially as of Thursday morning, when we receive the report from our actuary. I believe that this is a historic issue for the Pension Fund, and all parties involved deserve a lot of credit for the efforts that went behind this successful endeavor. We've submitted a couple pages of written testimony. I'll try to point out some of the more important points that we have -- activities that the Pension Board has been engaged in in the last year or so. There was a recodification project that was completed early in FY '99. With Council's approval, the legislation was signed by the Mayor in early January. The recode reorganized the Pension Ordinance into a much more manageable document, while providing new opportunities for employees to purchase additional governmental service outside of the service with the Commonwealth of Pennsylvania. /Budget Hearings/Bill 990023 retirement option plan. An additional and very important benefit in that ordinance is that that ordinance 5 is now a part of the City Code, which means that it will automatically be updated annually, and it will be reprinted every four or five years. So that it won't be necessary to track, as the ordinances that affect the system are passed. We won't have this hodgepodge of many different ordinances and a difficulty in managing it from the Pension Board. Last fall, the Board also updated and delivered to all active employees a new Summary Plan Description. The booklets will also be delivered to all re-employed or new employees with their regular rehire letter that they receive upon employment or reemployment. Those booklets -- or the project identifies that those booklets also will be updated every four years, and a new booklet delivered to all employees. By the way, the old booklet, the last time we could determine, was updated sometime in the '80s, we think around 1983 or so. /Budget Hearings/Bill 990023 in the fall. The Pension Board has a policy of attempting to use minority firms and local managers wherever possible for managing its investment portfolio. At the end of December 1998, fully percent of all funds under 8 managements were managed by minority-owned firms, 9 and 48 percent of the funds under management were 10 managed by firms located in or around Philadelphia. 3 percent of the funds under management were held by minority firms, and only 31 percent of the funds under management were handled by Philadelphia-area firms. So we've significantly increased that level of participation, and we are constantly trying to make efforts to include local and minority firms wherever possible. In the area of Pension Payroll, the Board's direct-deposit process has been continuing, and our goal of 75 percent direct deposit remains at target. /Budget Hearings/Bill 990023 direct-deposit receipt of their monthly pension benefits. Our target is 75 percent at the end of FY 2000. We think that's an ambitious goal, but we continue to arm-twist and cajole and do whatever we can for people to go on direct deposit. Some people just want to just continue to walk to their bank, and, you know, that's their right, but we think it's a doable -- it's a reachable goal.
A comment on the City's Deferred Compensation Plan. As you know, the Plan has been -- the Board of Pensions have oversight responsibilities for that Plan for about two and a half years now. The administrative fees have been reduced, saving the Plan itself approximately $300,000 annually. We expect to continue to make efforts to reduce the administrative fees even more. Presently, the Fund has about $280 million in it. /Budget Hearings/Bill 990023 increased. They continue to use it as a supplemental retirement benefit. And we've also launched an educational program directed at the members of that Fund in 1999, and we think that will be successful. It's being well-received. Administrative costs. The administrative costs of the Pension Fund are borne by the Fund itself, with no direct appropriation from the General Fund. 4 million, and we will have 61 budgeted positions for investment counseling, technical, health and welfare, and active services for the Pension Fund. Myself and Mr. Bonavitacola are available for any questions or additional information.
Thank you. The Chair recognizes Councilman Cohen.
Mr. Herkness, why was the figure of -- is it $1.2 billion? Why was that figure used as the figure for the bond? Why wasn't the figure of a half billion or 2 billion used? 309 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 In other words, what was magical about the 1.2 billion figure? Why didn't we clear up the unfunded liability? Why did we make it a hundred percent full?
As I understood the testimony at various times was that we were actually going to make money out of it -- that's why it had to be a taxable bond. It's the first taxable bond that I've ever known the City to issue. I don't know whether that's accurate or not but it's the only one I'm aware of, and that was highly unusual and it was explained to me that we had to do it because we don't have a right to earn money on tax-free bonds. And since this was going to be a matter of earning money, we had to protect ourselves legally; and, therefore, it was issued as a taxable bond, just as if a government was not involved. And so I've been wondering, why did we pick that figure? If we're making money on it, why didn't we make more money and issue a larger 310 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 bond? And why didn't we seek to eliminate totally the unfunded liability?
My name is Ben Hayllar. As Director of Finance, I serve as Chairman of the Pension Board. And if I may, let me try to answer that question for you, Councilman Cohen. The liability was approximately $2.5 billion. We filled about half of it with a pension bond. We initially has proposed that the pension bond be $1 billion. It was at the suggestion, to some extent, Council's staff that we increase it to a basically and a quarter. We couldn't go much higher than that because it's just simply the marketability of the bonds. A $1.25 billion pension bond, the Philadelphia pension obligation bonds are today the largest bond issue issued by a municipality in the history of Pennsylvania. The second largest, by the way, is a Water Revenue bond that was done a couple years ago. There was a question of how much the market would absorb when we sold them. And our goal was to keep interest rates as low as possible, and we achieved that with a 6.5 true 311 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 interest cost. So if we had sold more, the fear was that the interest rate would have been higher, and that would have increased our market risk. So that was the number that was chosen. We had initially been a little more timid than we ended up being. The product sold very well, and our interest rate was quite low -- much lower than Alameda County, which was done a couple weeks later. In the future, Council and future administrations may wish to do another one to fill up the gap. But at that point, we felt it was what the market would absorb when we sold the issue.
Sounds like a reasonable answer, and I assume the Finance Department will be looking at it continually to see if a similar bond or some additional bond would make sense. Secondly, would this be the place for me to renew the question, how do your counselors advise people of what benefits they're going to get? Do you have a chart that outlines benefits for each particular plan? 312 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023
Yes, sir. At the retirement interview, there's a health-and-welfare phase of that interview. The benefits that the employees will receive, that issue is taken up. Now, the employees that are represented by labor organizations, the contracts basically send X-amount of dollars each month on behalf of each member. The benefits are administered by those labor organizations. So as you -- they maintain that contact with the labor organizations. We simply say, You're eligible for your health-and-welfare benefits, you have to contact the labor organization to maintain that as a retiree. For all of those who are not members of the labor organizations, the Board of Pension administers their benefits. They give them the level, and we basically -- 99 percent of the people maintain the level that they bring the day before retirement to the day after. But they don't have to; they can change -- they can make some selections there. But 99 percent of 'em just continue the benefit that they had as an active employee, they continue as retiree. 313 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 There is one difference. There is no 3 dental benefit as a retiree.
That's what the plan is. That's what the plan is that has been negotiated with the carriers. I'm not part of that. That's the City Administration. We administer it; the City pays for it, the City's General Fund pays for the --
You mean the City makes the decision as to what the benefits should be for those not represented by a union?
For example, union members might get dental benefits if their plan provides that. Would you know that, or would one have to go to each union?
I think you could ask an employee who is a member of a labor organization if they receive dental benefits. I think they do as employees. But the precise level of benefits as retirees, I don't know, but I think some of them do receive some level of dental benefit as retirees. 314 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023
Well, do the unions have to identify the nature of the benefits they provide for their membership? I mean, would the City Administration have that information?
I really don't know. I do know that the Personnel Director sits on the board of trustees of the Health and Welfare Funds of the labor organizations, so there certainly would be some evidence there. You would have to speak with her to determine the exact level of the benefit.
Do you know with respect to the City plan, how long do those health benefits continue?
We offer the retiree what we call -- that's called "City credit." It's the period the City is taking care of the credit. And then it becomes non-City credit. 315 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 We make an offer for them at the end of that four-year period, about two months before we send them a letter. We give them the cost, and they can continue paying through pension payroll deduction.
Could you give me a figure of the average costs to a retiree? What kind of letters go out, what do they tell the people?
They will give them the cost of the benefit once the City credit stops. They will say, Your benefit -- for the sake of argument, if they select, they have the Rite-Aid prescription and let's say they select an HMO, the benefit -- the cost could be, depending on how many -- if they have a spouse, they have a one-and-one, what we call a "one-and-one," an employee and a spouse. That benefit could be $400 per month, the cost. We would say, This is what the benefit is. They would then sign off and say whether they would want us to take it out of their pension check, whether they wanted us to maintain it.
To your knowledge, 316 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 do any of the unions provide longer than four-year benefits to the membership?
I wouldn't know, Councilman. I think the -- what I'm aware of is that there is a payment each month, City credit, that go to the labor organizations from the City based on the individual agreements. We then certify the number of retirees that would receive that payment. Finance then forwards the payments. For instance, we might that there's a hundred policemen. Well, then Finance forwards whatever the labor agreement per month charge is for health and welfare. They forward that to the joint interest at the Fraternal Order of Police. I think the Labor Relations could really fill you in on the process exactly.
Is the labor relations group that you were referring to under the Personnel Department, or is it a separate group?
No, that's a separate 317 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 group that works out of the Mayor's Office. Bill 3 Grab is the Labor Relations Director. They're involved in setting the contract.
Well, why I'm troubled is we had a lots of discussions. It seems to me that often at the end of four years, when inflation has already begun eating heavily into the pension, there's suddenly a real in-depth destruction of the pension benefit by the cost of the Health and Welfare fund. I would imagine that for old-time employees, it may literally wipe out their pension payment if they want to maintain any kind of health insurance.
That's a financial planning issue for all City retirees, Councilman. When they retire, they basically concern themselves with the termination of the health benefit four years out. Each one handles it differently, but there is definitely a drop in benefit because the retiree benefit lasts only four years.
Well, I think it's easy to say they handle it, but I think at an enormous price, but that's not that -- you're 318 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 saying that these benefits, the length of the benefits, is either left to the unions, that's their responsibility for their membership; and as to all others, it's the responsibility of the City?
Now, recently, there was an increase from three to four years.
And who made that decision? Was that what they call "the Administrative Board?"
The Finance Director 319 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 and, I believe, either the City Solicitor or the Managing Director. I'm not sure.
Are there any other questions from members of the committee? (No further questions at this time.)
The Revenue Department. (Nancy Kammerdeiner and Denise Garrett come forward.)
Good morning. COMMISSIONER KAMMERDEINER: Good morning, Council President Verna and members of City Council. My name is Nancy Kammerdeiner, the Revenue Commissioner for the City of Philadelphia. With me this morning is Denise Garrett, Chief of the Water Revenue Bureau.
Good morning. /Budget Hearings/Bill 990023 Year 2000 Operating Budget for the Department of Revenue and the Water Revenue Bureau. I will first highlight some of the key features of the Operating Budget request and some of the recent activities on the tax side of the Department. And then Denise Garrett will follow with some testimony about the Water Revenue Bureau and its Fiscal 2000 request. Then we will both be available for any questions you may have. The Fiscal 2000 General Fund appropriation request for the Department of Revenue tax side is $17,365,470. This provides $12,955,837 for personal services, and funds 330 full-time divisions. In Class 200, we are requesting $3,197,168. This is an increase of 100,000 over the Fiscal '99 estimated obligations and provides for the creation of an electronic filing program for business use and occupancy tax that should result in improved collects and cash flow, and also for enhanced training for our revenue examiners to increase the efficiency and effectiveness of tax audits. /Budget Hearings/Bill 990023 done in conjunction with a redesign in government initiative that's currently underway with District Council 47 and is designed to improve procedures for audits conducted outside of the Philadelphia region. But in the course of that project, we've identified some training needs that this funding will help us to resolve. We are also requesting funds from the Grants Revenue Fund, and appropriation that provides for payments to collection agencies and for school tax enforcement activities. The total amount requested in this fund is $2,344,319. We are also requesting a Water Fund appropriation for payment-processing that totals $1,508,393. Let me just briefly note a few things in reference to the Department. Since 1994, the Department of Revenue has invested more than $9 million in computer systems. 5 million in additional revenue for the City. /Budget Hearings/Bill 990023 increased revenue and reduced costs will be generated during the life of the productivity bank projects that funded most of these computer system changes. Our technological changes haven't been limited to tax systems, however. 5 million to update its payment-processing systems by acquiring payment-processing equipment and imaging technology. This new equipment is going operational this month, and we're really proud of the changes that we're making there. We continue to work on improving customer service, and I'd just like to remind you that we have produced a booklet that provides simple, straightforward information about our City taxes. " We have shared copies of this with Councilmembers in the past, and I would just like to remind you that these re available, and we're about to go into our third printing of the booklet. And should you have a need for more copies of this, we'd be happy to provide them. /Budget Hearings/Bill 990023 that broadens the definition of businesses that are taxable for the receipts portion of the business privilege tax. The City now considers as taxable any firm with ongoing activity in Philadelphia. As a result of this change, the competitive position of City firms will improve since their tax liability will not be affected and other firms that hadn't been paying before will now be required to pay. Revenue has developed forms and regulations to implement this change to an active present standard. I will turn now to Denise Garrett and ask her to review any opportunities of the Water Revenue Bureau that she would like to bring to your attention, and also to discuss the Water Revenue Bureau request for Fiscal 2000.
Good morning, Council President Verna and members of City Council.
I am Denise Garrett, Assistant Finance Director and Chief of the Water Revenue Bureau. Thank you for this opportunity to present testimony on the Water Revenue Bureau Fiscal Year 2000 request. /Budget Hearings/Bill 990023 The Water Revenue Bureau continues to operate under the direction of the Director of Finance while maintaining a liaison relationship with the Revenue and Water Commissioners. This relationship has served to ensure the smooth and continuous operation of the Bureau. The Bureau is requesting a Water Fund allocation of $16,934,005 in its Fiscal Year 2000 Operating Budget request. The request includes $9,163,005 for personal services, $7,053,500 for the purchase of service, and $717,500 for materials, supplies, equipment, and contributions/ awards. The Water Revenue Bureau Fiscal Year 2000 Budget request is a reduction of $782,027 from our Fiscal Year 1999 appropriation due to operational savings as a result of the automatic meter reading (AMR) project. We expect to continue a trend of reducing the cost of doing business as we make improvements to our operations. /Budget Hearings/Bill 990023 revenues due the Water Department and being responsive to the needs of our water-and-sewer customers. Focussing on our mission. The Water Revenue Bureau has undertaken many initiatives, resulting in numerous achievements in the past seven years. Most notable in recent achievements include enhancements and automation to improve accuracy, quality and collections. In September 1997, in conjunction with the Water Department, we began the installation of more than 460,000 automatic meter readers (AMR) in all residential homes in the City. The project, aggressively projected for completion in two years, is ahead of schedule and highly successful. To date, we have already installed over 325,000 meters. This change is having a dramatic effect on customer service and accounting, and will help to reduce future complaints, disputes, and constant challenges to our ability to collect revenues. As of January 1999, we are now able to read greater than 80 percent of all customers, with a 99 percent success rate of the automatic meter reader. /Budget Hearings/Bill 990023 In addition to reading data, AMR provides tamper data to assist in our efforts to detect theft of services. In Fiscal Year 1998, the reinspection shut-off rate, the rate at which illegally-restored accounts are re-shut off, was percent. The rate to date, Fiscal Year '99, is 8 down to 22 percent, representing a steady deadline 9 from Fiscal Year '97, which was a rate of 33 10 percent. 11 In 1995, the Bureau began an early 12 notification program directed toward customers 13 with past-due accounts. We expanded this 14 initiative to include customers facing shut-off of 15 services due to delinquent bills. In Fiscal Year 16 '98, we contacted over 124,000 customers. Fiscal 17 Year '99 date, we have made contact with 18 approximately 86,926 customers. As we near the 19 end of the moratorium, we will increase 20 notifications to provide customers with an 21 additional opportunity to avoid shut-off for 22 nonpayment. /Budget Hearings/Bill 990023 low-income customer, the elderly customer on a fixed income, and the customer with extenuating and long-term medical hardship. Safety nets, such as grant assistance outreach and the moratorium are designed to protect these customers from the loss of water services. In Fiscal Year '98, we serviced 10,400 customers with low-income agreements, bill credit and grant assistance totaling $1,169,764. We have expanded our outreach by actively participating in the Energy Coordinating Agency (ECA) project, Team Reach. The ECA project focuses on a wholistic approach to helping the customers solve their long-term utility affordability, income, and budgetary management problems on one-on-one counseling.
We are expanding our Water Revenue Assistance Program data base to give us the capability to better identify customers with an inability to pay due to hardship. This will allow us a more efficient and effective year-round collection effort from those customers with the ability to pay. " The success of these programs is measured in the revenues they generate. 4 million. 4 million, while our Fiscal Year 2000 revenues are projected to be $12 million. Customer billing data information system changes are underway. That's the system that maintains our customer data base. In Fiscal Year 1997, the Bureau and the Water Department completed a detailed analysis of its outdated customers billing information system. As a result of the analysis, we initiated and completed a system redesign and reconfiguration for Fiscal Year 2000 compliance. The focus is now on implementation of the new customer data information system redesign, with a Phase I delivery date by the end of 1999. /Budget Hearings/Bill 990023 The new "CDIS," as it's termed, in conjunction with major changes underway and the recently combined Water Revenue Bureau and Water Department Call Centers is the cornerstone of our customer focus approach. Through the efforts of a team consisting of Water Department and the Water Department, we successfully developed a virtual call center that allows customers to call one number and reach all services of both agencies. This eliminates the need for representatives of either agency to refer calls to another number for inquiries about water-and-sewer services. Cross training of customer service staff is underway, with the goal to reduce customer wait time, improve response rates, and reduce abandoned calls. Training in customer sensitivity completed in early Fiscal Year '99 included all customer contact personnel and their supervisors. Retraining by Water Revenue Bureau and operational content is also underway, as is the development of a database of rules and procedures to which representatives can refer for consistency in responding to inquiries. /Budget Hearings/Bill 990023 this effort by the end of Fiscal Year '99. The compliment to improve customer service is among our highest priorities. In Fiscal Year 2000, our goal continues to be improving collections by improving the delivery of services so that customers feel they are receiving value for the rate they pay. We intend to establish excellence-in- performance standards and measures that hold each employee responsible and accountable for the delivery of efficient and quality service to the water-and-sewer customers of the Philadelphia Water Department. I thank you for this opportunity to present testimony, and am available for your questions.
Thank you. The Chair recognizes Councilman Kenney.
Good morning. Good morning, Nancy. 331 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 How many customers -- how many water customers do we have for both commercial and residential?
We approximately 550,000 customers, but about 467,000 of them are active.
Okay. Of those 460-500,000 customers, how many at a given time are delinquent?
Of those 20 13 percent, based on your expanded and your 14 continually expanding computer system through the 15 WRAP Program, of those 20 percent, how many are 16 deemed to be truly in need, elderly, frail 17 unemployed, that truly needy group? Do you have a 18 general idea of what that is? 19
We have a general idea of 20 approximately 20,000. And that's based on the number of customers who come in and out of those programs.
And let me go back. The 20 percent represent how many?
The 20 percent represent 332 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 approximately 120,000 customers.
And about 20,000 of those are chronic, elderly, with the inability to pay?
Well, all elderly do not have an inability to pay; they tend to manage their finances a lot better. So we figure there are percent that are truly in need of our 13 direct services. 14
Of the remainder of 15 that group, what percentage in general are 16 commercial, and what percentage are residential? 17 Do you have that broken down? 18
I don't have an exact 19 number broken down, but I would say that at least 20 50 percent of them are commercial if you term rental properties, apartment buildings, single-family homes and combined residential and commercial.
And at what point -- at what level of arrearage are they eligible 333 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 for shut-off?
We recently changed that parameter. It was previously $150 for all customers, and we've since -- for residential customers, we've reduced that to $75; and for commercial customers, it's $0 tolerance.
Is there any legal impediment or any other type of agreement through litigation that would prohibit us from shutting off all of those non-needy, unwilling to pay?
The only impediment we have at this time is, we have the right to continued service (USTRA), which we're utilizing for apartment buildings. For our commercial properties, we have no impediment; we are shutting them off year-round. Residential properties, however, that are deemed owner-occupied, the impediment we have now is the moratorium, and we cannot shut off residential properties year-round at this time.
Is that an issue of -- what is the issue relative to? I understand on gas service the issue of heat in the winter, but what's the moratorium issue for water? 334 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023
The historical basis that I'm aware of, which actually was determined before I became the Bureau Chief, is the hot water heating system.
Even with those who are willing to pay, I assume that's the reason.
Other than that, I can't think of any legal reason why they shouldn't have service terminations year-round.
One of my concerns is taking out those 20,000 or so chronically needy dependent people who can't pay.
Is that the rest of that universe, basically all of the other people are paying for them, as you know. And it just seems generally unfair for middle-class working-class families who struggle to pay their bills to have to bear the burden of that 8,000 or so who just won't pay. And how do we step up this shut-off 335 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 issue so that people know we're serious? And I'll interrupt you with one more.
I look at utilities like PECO and recognize that when you don't participate in the needy program, you're unwilling to pay, they just come out and shut you off. Whenever we're dealing with properties that may be nuisance properties or problem businesses, they are usually in arrears for both the Gas Works and the Water Department for substantial sums of money, but they never owe PECO a dime. And I think that's as a result of the fact that they know that PECO's serious and that perhaps we're not. I just urge this department, and I know you have, within the parameters of what you're able to do, to really start seriously shutting these people off so that they know the rest of the community is tired of carrying their weight.
I agree with you, Councilman, and thank you for that observation. What we have done is identified that of the needy customers, that need is a year-round 336 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 basis; it is not specifically geared toward winter months should. Other customers who have the ability to pay should, in fact, pay us year-round. What we've determined in our statistics is that as we approach the moratorium, those customers who are chronically delinquent, with the ability to pay, stop paying us and do not pay us again until we pursue them -- expensively -- after the moratorium. We've limited our agreement program to two. That has not served to eliminate that problem. We've noticed a decline in our collection rates during that time, drops of almost ten basis points, that we never fully regain as we come out of the moratorium. So, yes, I agree that there should be an effort.
What is the issue? Why is the moratorium in place? Was there some agreement? Was there some type of an ordinance or a --
There's a-- it is presently a customer-service regulation that was promulgated in 1988 as a result of a resolution 337 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 that was proposed in this Council, and we adopted the regulation in lieu of the resolution being adopted.
I would be interested if you could provide information on what it would take to untie your hands so that -- COMMISSIONER KAMMERDEINER: We appreciate your support on that because that is an issue we have been talking about, and would like very much to be able to address the moratorium while protecting those who are truly needy; and yet have a better enforcement tool for those who are just avoiding payment. And so we would be happy to provide that kind of information and gain your support and the support of other members of Council in changing those regulations.
Well, basically, the moratorium that you're dealing with is a result of Council action.
Okay, thank you. Thank you, Madame Chair. 338 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023
Thank you. The Chair recognizes Councilman Cohen.
If I recollect accurately, the moratorium was put in to protect those who were unable to pay. And the Water Department, in meetings that we held, was never able to show any procedure they used to determine whether or not the people affected were needy or not. For example, questions were raised, when you shut off the water, what did you do? Well, we had sent a letter out -- in some instances, two letters out -- and we weren't able to reach anybody. Then we asked, What happens if there is a single parent with a couple of youngsters in the house who may not be able to speak English? How did you determined that that person was able to pay or unable to pay? Because there was no 21 communication in the information you provide. Now, we're not anxious to protect people who can and who choose not to pay -- nobody's interested in that. But we have to have some system which indicates that there is an 339 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 ability by the Water Department to make such a determination. Because frequently what happens is, when the water's turned off, the people leave the house, and we add to the abandoned-house problem in the City. And the savings -- the alleged savings from the water are overrun many times by the loss to the City generally. The only way to prevent that from happening is by the Water Department having some systemic system of determining what the situation is when they choose to shut off. I think everyone in the Council will support the notion that people who can't pay and choose not to ought not to receive any kind of service -- that's not the group that we're seeking to protect by the moratorium. But the Water Department or the Water Revenue -- I don't know which one would do it -- has to establish that there is, in fact, an ability to pay but a willful refusal to pay. We raised questions at that time, Did notices go out? If the person was an immigrant who did not know how to read English, what was done to verify those facts? 340 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 So I would just suggest that when you send that information to Council that you indicate how you determine whether there is any ability to pay as against a willful refusal to pay.
I'd just like to make one suggestion rather than reinvent the wheel 'cause this is not a new issue. The utilities throughout the United States have moratorium and collection practices and processes. I suggest that maybe you guys get together with PECO Energy and PGW to review, because they have just currently overhauled that entire way they do business. And I'm not suggesting that it will mirror exactly what your needs are, but it would save you a lot of time and effort to get together with those folks, because it's been working very well. And, as you know, there's some oversight from the PUC on it. 341 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023
But I think it works well and I think it would be helpful and save you a lot of time and effort.
We have spoken with both utilities, Councilman. And we've also spoken to other utilities in the northeastern region who are affected by the climatic issues surrounding this moratorium.
Because sone of the problems is, we confuse our customers. They have one set of rules for the electric and gas.
They have a different set of rules for the -- if everyone could possibly get together and try to have a consist policy, I think it would be to our benefit. Thank you.
Members of Council, I am 342 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 Dominic Cermele, Deputy Finance Director, Executive Director of the Office of Administrative Review. The Tax Review Board no longer has a separate budget line. It is part of the Office of the Director of Finance, and our particular section of Office of Administrative Review begins on Section 8-75.
That agency resulted from the merger of the Bureau of Administrative Adjudication and the Tax Review Board. This year's budget request is for $1,731,104 from the General Fund, and an additional $66,357 from the Grants Revenue Fund. This is a budgetary request of $161,733 more than FY '99's estimated obligations. The bulk of this increase is to support 343 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 our false burglar alarm reduction program. And as we spend those funds, we anticipate an increase of revenue in the amount of $640,000 from that source. I would just note that in FY '98, in terms of parking-ticket fines, those have increased since we started in FY '90 from 21.7 million to 34.3 million in FY '98, despite the fact that the number of tickets being issued annually had been reduced in that period of time from 1.6 million down to 1.45 million in 1998. More importantly, the average ticket collected, which is a better measure, has increased from $15.59 per ticket in FY '90 to $23.21 in this fiscal year. Our Code Violation Department, which works with Streets, Police, Fire, and L&I, continues to perform its duties -- although the number of code-violation ticket being issued has reduced over recent years due to the Streets Department's shift in policy from enforcement to education. However, we have picked up some of that slack in our handling of the enforcement of violations for the City's Tobacco Ordinance for 344 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 young people. Our Code Violation Department now spends most of its time in our project of reducing the excess number of false burglar alarms that occur in the City of Philadelphia. In FY '98, there were 35,000 alarm systems, and fines were issued for 71,000 false alarms that occurred after the first three false alarms, which are allowed under the ordinance each year. We believe that in actuality, there are 66,000 alarm systems out there to be registered and considerably more fines to be issued. Hence, our new system that this year's budget increase will take care of will result in both an increased amount of revenue into the General Fund -- but more importantly, a greater reduction in the amount of time that police officers have to spend responding to false alarms. At the Tax Review Board, we continue to do special projects. We assisted the Revenue Department in collecting more than a quarter of a million dollars in outstanding business taxes last year through a project that we started for offering settlement conferences for non-filers in 345 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 the area of use and occupancy. As you know, I am the appointed ombudsman for the tax lien sale, and we continue to respond, although the number of calls have dropped off dramatically in the last year, but we continue to receive some calls from individuals concerning interaction that they're having with the third-party collection agencies that are servicing those accounts. And, finally, we continue to hold hearings for those persons who are denied residential handicapped-persons reserved spaces in front of their homes. The project that we started a couple of years ago in terms of reducing the number of spaces in residential areas that are reserved for individuals are now down -- was at a high of near 10,000. It is now down to less than 7,000 reserved spaces throughout the City. I'm happy to answer any questions the members may have.
How many handicapped signs are allowed on one block?
Thank you. 346 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 The Chair recognizes Councilman Kenney.
Thank you, Madame Chair. Mr. Cermele, one of the pressing problems in many neighborhoods in the city from my perspective, and one of the things that may seem like a minor issue, but it does create overall problems in the neighborhood -- and that is the issue of trash that is put out before trash day in a haphazard manner generally from the result of the conversion of single-family residences into multifamily residences, without the appropriate space being provided for trash storage and other types of things. So a lot of these apartment buildings and the dwellers of the apartment units put the trash out every day. And if you ride up and down the streets in South Philadelphia or in other areas in the City, you will see, the day after trash day, piles of trash that wind up, because of the way its put out in bags, winds up at some point in time all over the neighborhood. I have tried, through the Streets Department and through the Police Department, to 347 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 get some enforcement of these violations. And I am being told that the issue of the collection of those fines is the reason why -- the difficulty in the collection of those fines is the reason why the Streets Department and/or the Police Department are reluctant to really step up the writing of tickets. You said in your testimony that there has been a shift from violations to education. Could you expound on that a little bit?
Yes. I would tell you that as regards the Streets Department and the Police Department, we have, through intra-agency cooperative agreements, we have assumed full responsibility for the processing of any violations that they issue. We process, we collect, and we handle all disputes. I'm a little unclear as to why the Streets Department would be concerned about the collection of those items. The collection of those items are not on a percentage basis as high as some of our other collection efforts -- i.e., the collection of parking tickets where the overall closure rate now is close to 80 percent. 348 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 But even so, those number are about 50 percent that we collect. But we do it all in a computerized milieu and we do it all with a very small staff and request no resources from either the Police Department or the Streets Department to do those duties.
Are you aware of any policy reasons for the shift from violations to education, and were you involved in any of those discussions?
But from your perspective and your testimony, you see no reason why you'd have any more difficulty collecting these as you would any others?
Thank you. Any other questions from members of the committee? (No further questions at this time.) 349 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023
Thank you very much. The Board of Revision of Taxes will testify next. (Revision of Taxes panel members come forward.)
Good morning, Madame President, nice to see you this morning. My name is David Glancey, and I'm the Chairman of the Board of Revision of Taxes. And with me this morning is Robert Nix, the Secretary of the Board; and Rick Foglia, our Executive Director. Being informed that Council is heavily into summary this morning, I'm going to summarize my summary, quite frankly. And if you just turn to of our testimony concerning the Board's own budget, we are requesting an increase of about $329,000 for Fiscal Year 2000. And $179,100 of that is in Class 100, and it's basically for the 4 percent salary increase from the last negotiations. /Budget Hearings/Bill 990023 $150,000 for our Office Automation Project. 6 million. 6 to the School District. And I would note that that's the largest single source of tax revenue for the School District. On , we have some management initiatives that I will just highlight very quickly. " It speaks about the appeal process. And it also lets folks know how the assessment on their property got there. In conjunction with that, we've instituted a web site in 1998 which, again, has more of a point of contact information for the taxpayer. /Budget Hearings/Bill 990023 we also have some other information that will hopefully help taxpayers answer some questions about their assessments. We hope by the second quarter of 1999 to have our entire assessment records on the web site so that folks who can use a computer can get on line and find out what their market and assessed values are. As you know, we put in a market overview generally during our testimony, and I would simply highlight a couple of things with that. On , our residential segment of the market, we know that there's been a small uptake in the residential market for the first time in the last several years, so it is uptaking slightly from the stable market analysis that we have seen in the past. And there is a chart on which those that the last three years' history of the amount of sales that take place in three separate segments of the residential market -- the row homes, the twin homes, and the detached homes. And I might just simply note that there seems to be the most dramatic increase in the detached homes. /Budget Hearings/Bill 990023 was up about $5,000 from last year. And again, as we can see in all of those segments, an increase in the amount of sales has taken place, and I think that's very optimistic. On , we note the amount of hotel construction that is undergoing in Philadelphia. Again, I won't bore you with the details, but it looks like in the next months, with those 10 properties that are currently under construction 11 and those that are proposed to be under 12 construction, we'll have somewhere in excess of 13 5,000 new hotel rooms. 14 Probably the most important thing about 15 our hotel market is the increase in the average 16 daily room rate. And also, I believe, in 1998, we 17 had about a 74 percent occupancy rate, and the 18 average daily room rate was in excess of $125 a room. So it's a very healthy market right now. On , we have the short analysis of Tax Increment Financing Districts. I certainly don't have to tell City Council what a TIF District is, but we just noted for you the projects that we have noted underway. /Budget Hearings/Bill 990023 literally means that ground has been broken. And where we say it is proposed, I believe Council has passed those districts. But construction, as far as we could tell as of yesterday, had not yet begun. And, finally, on the abatement and exemption session -- I'm sorry, there is also the apartment area. The page behind lists the ten-year abatement applications that have been filed as of the weekend in our office. There's about that have been filed. 13 It was very interesting. Council 14 passed that legislation in July of 1997, and 15 you'll note that the first three applications were 16 from 1997, and they weren't huge projects. There 17 was one there that was somewhat substantial.
But 18 in 1998, there have been 16 filings that have 19 taken place, so I think it does not beg the question to say that that legislation has certainly encouraged the kinds of conversion that we hoped that legislation would encourage. /Budget Hearings/Bill 990023 to monitor and the abatements that have been passed by City Council. There are about 620-and-some properties that are currently enjoying an abatement. And our chart lists the market value of the abated properties and the assessed value of the abated properties. But I think it's interesting to note, because when folks talk about abatements, they always think, Well, that's tax-free. Well, it really isn't where it comes to real property abatement. If you look at the footnote on that particular chart, it indicates that even with the abatements, the City is still collecting approximately $7,200,000 in real estate taxes just for those abated property. So again, in conclusion, I would like to thank City Council for the support they have given us in the past, and we would be happy to answer any questions that you might have.
Thank you. I think I only have one question. The City's Five-Year Financial Plan contains various assumptions with regards to assessment growth for residential, commercial, and 355 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 industrial properties over the Plan period. Is the Board in agreement with those projections?
Yes, Madame President. We discussed some of those assumptions with the Budget Director, and we think they're fairly conservative, actually.
Thank you. Any other questions from members of the committee? (No further questions at this time.)
I'm Ben Hayllar, Director of Finance. I would like to introduce the new City Treasurer, Whitney Reid. Some of you met him last week; others were either suffering from the flu or were out of their offices. Mr. Reid comes to us after a career as a captain in the U.S. Army, has been in public financial management in the last year, and has managed the fixed-income portfolio of the Pension Fund. He replaces Thomas Queenan, who has gone 356 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 into the private sector. Mr. Reid.
How do you do. Good morning. Please proceed with your testimony.
Thank you. Good morning, Madame President, members of City Council. My name is Whitney Reid, City Treasurer. With me this morning is Doug Smith, Deputy City Treasurer. I have prepared written testimony that I've submitted. What I'd like to do is simply summarize that in essence of time.
I appreciate this opportunity to testify you about FY 2000 Budget request for the City Treasurer's Office. The City Treasurer's Office is requesting a total of 357 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 $941,619 in FY 2000. And this represents an increase of $19,810 over estimated FY '99 obligations. The increase, which is in Class 100, is to fund the negotiated wage increase for employees in FY '2000. The City Treasurer's Office manages the development and administration of the City's debt policies and that of its related agencies. It also manages the City's cash resources to maximize the limited resources that are available to the municipal government to serve the citizens of Philadelphia. In FY '99, the Treasurer's Office had participated in financings for various City agencies, totaling almost $1 billion. The Treasurer's Office anticipates that it will participate in seven financings in the remainder of FY '99, totaling over $1.9 billion. Furthermore, in FY '99, the Treasurer's Office will disburse over 900,000 payments to 30,000 employees, 31,000 pensioners, 17,500 vendors, 9,000 election workers, and hundreds of foster parents. We will also process approximately 358 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 600,000 wire transfers in automated clearing house payment and monitor over 40 portfolios and account for over 3500 investments. We anticipate the same level of activity for FY 2000. The highlight of the Treasurer's Office's work in the debt management/issuance arena was the upgrade of the City's long-term credit rating. In November 1998, Fitch IBCA upgraded the City's long-term general obligation bond rating from BBB to BBB+. Fitch credited their upgrade to Philadelphia's continuing positive financial operation and demonstration of its ability to maintain fiscal balance. The City's short-term ratings have also improved significantly since 1995. In 1998, the City's Tax and Revenue Anticipation Notes received a forth consecutive investment grade rating of MIG-1 for Moody's and a second consecutive investment rage rating of SP-1+ from Standard & Poor's. Among the improvements cited by both agencies were the City's strong management controls, satisfactory year-end fund balances, and early segregation of funds for note repayment. The investment grade ratings make 359 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 Philadelphia's notes more appealing to investors, which, in turn, lowers the City's borrowing costs. The reduced borrowing cost allows the City to devote more money to pay for basic services. Pursuant to our responsibilities, the City's Treasurer's Office continues to coordinate information regarding the City's financial condition with the rating agencies, bond insurance providers, and investors in municipal securities. In summary, the Treasurer's Office's proposed FY 2000 Budget includes employees with 13 FY '99 staffing levels. More than 84 percent of 14 our budget -- $791,933 -- is devoted to Class 100 15 personnel expenditures. 16 That concludes my remarks. If you have 17 any questions. . .
Thank you. Are there any questions from members of the committee? (No questions.)
The Procurement Department is next. 360 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 (Commissioner Louis Applebaum comes forward. )
Good morning, commissioner. Please identify yourself for the record. COMMISSIONER APPLEBAUM: Good morning, Madame President and members of City Council. I am Louis Applebaum, the Procurement Commissioner of the City of Philadelphia. With me today are Deputy Commissioners Marla Mason and Harry Hillock; our Administrative Services Director Debbie Beatrice; and our MIS Director, Adam Silverman. Shortly, I hope Jim Roundtree, who is the Director of the Minority Business Enterprise Council will join us. You have our full testimony, and I will briefly summarize the highlights. The Procurement Department is requesting a total appropriation level for all funds of $5 million in the Fiscal Year 2000 Budget. 4 million last year. /Budget Hearings/Bill 990023 of 77 employees and includes funding for increments, longevities, promotions, and a 4 percent salary increase effective March 15th in the year 2000. The mission of the Procurement Department is to obtain quality, cost-effective goods, services, and construction in a timely and a professional manner through a competitive, fair, and socially responsible process in accordance with the law. The Fiscal Year 2000 General Fund Budget request will provide the resources necessary to accomplish this mission. Our major accomplishments this past year have included increased levels of automation. ADPICS, the City's electronic system for managing the City's purchasing, was modified to process locked blanket purchase orders. This modification allows operating departments to prepare their own purchase orders against certain established requirements contracts without Procurement review. This reduces the processing time of these purchase orders to an average of four and one-half days. /Budget Hearings/Bill 990023 implemented in the Public Works Division. The Department has continued to make improvements to SPEED. Contract documents previously prepared by the Law Department are now prepared electronically in SPEED and mailed directly to the vendors for signature. By the end of Fiscal Year '99, the final module on SPEED will be deployed. This will place information from SPEED on the City's "intranet" for reference by the various departments that manage construction projects for the City. In the second quarter of Fiscal '98, the Department raised the ceiling for its Master Bid and Performance Security Program for $250,000 to $500,000 for vendors bidding on service, equipment, and supply contracts. This covers the vendors in the event of a contract default for any additional costs incurred by the City. Previously, the City purchased insurance for the vendors, but the change to self-insurance saves the City $200,000 annually in premiums. /Budget Hearings/Bill 990023 Public Works and will be implemented for service, supply, and equipment bids by the by the end of Fiscal '99. Procurement is developing an automated Class 400 Personal Property Database, which will improve the tracking of all items and provide better reporting capability. Those databases will have real time and on-line access for update, inquiry, and reports, and will Procurement's current punch-card input. When the database is completed during the second half of Fiscal '99,, City departments will have inquiry and reporting capabilities and will be able to electronically record the transfer of items between locations. In addition, a list of all surplus equipment, which is available for reissue, will be viewed on-line. This will probably be the last time I will be testifying on the Procurement Department's budget. I would like to take a moment to thank the members of City Council for their support and cooperation in allowing me to develop and create a truly professional operation that should benefit the City of Philadelphia for many years to come. /Budget Hearings/Bill 990023 My experiences and opportunities these last seven years have been exciting and rewarding.
My association with you these years and the positive results of this Administration has given me great personal satisfaction. I look forward to the conclusion of this term and my continuing relations with all of the City Councilmembers. I can assure you that the Procurement Department is well-organized and ready to enter the next millennium. Madame President, this concludes my testimony. I will now turn the floor over to Jim Roundtree, Director of the Minority Business Enterprise Council. We will then both be glad to answer any questions you or other members of City Council may have regarding our testimony.
Thank you very much. COMMISSIONER APPLEBAUM: Thank you.
Good afternoon, Madame President. As Commissioner Applebaum said, I'm 365 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 James Roundtree, and I'm the Deputy Finance Director and Executive Director of the Minority Business Enterprise Council. The MBEC's FY '99 Operating Budget is $852,270, which is an increase over its FY '98 Operating Budget of $827,920. This increase for the MBEC Operating Budget is a result of a 3 percent wage increase. MBEC is the agency charged with the task of administering the City of Philadelphia's anti-discrimination and affirmative action purchasing policies under Executive Law 193, and formerly under Chapter 17-500 of the Philadelphia Code. On December 31, 1997, the founding legislation of the MBEC Chapter 17-500 expired. Although the sunrise has set on 17-500, we continue to operate under the Mayor's Executive Order. In contrast to Chapter 17-500 with the Executive Order 193 is established to provide equal access and opportunity to all businesses in the City of Philadelphia under the contracting program. It ensures City fundings are not used directly or indirectly to promote, reinforce or perpetrate discrimination in contracting 366 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 practices. With the expiration of Chapter 17-500, the MBEC drafted a revision to Executive Order 193, which was submitted to City Council for review and approval. The revision included updates of MBEC's current name and providing services including MBE, WBE, and DSB certification standards, personal and professional services contracts, and extending and monitoring economic development as well as clarifying the agency's policies for joint venture procedures with DBE firms. You have my total testimony. So at this point, I would just like to offer our vision of the future in turning our networking and outreach and compliance monitoring into real opportunities for the City and the region's disadvantaged business community as well as central service agencies, we're an intricate part of contracting process, and it is critical that we continue to be a presence in the cooperation of the early stages of project development through to project completion. Council President, that kind of 367 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 concludes my testimony, unless you have any specific questions.
Thank you. Mr. Roundtree, when do you expect to have the Business Utilization Study completed? Can you tell us who is doing that study?
Right now, our first draft has been completed and we're in the process of identifying an economist that can help us review the formulas that were used to sample our data. And we're hoping to conclude that before June of this year.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madame President. My question is to Commissioner Applebaum. Commissioner, I think since I've -- I can't remember how long back I've heard employees of the operating departments complain about the inability to get equipment, computers, supplies. And I know that they constantly think that it's the Procurement Department's fault, and I know that that's not necessarily the case, that people 368 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 have to request supplies, computers and equipment. But specifically in the Police Department, I have captains -- and I don't want to cause any of them problems here today -- telling me that they don't have desks, they don't have chairs, they don't have computers, they don't have the basic supplies to run a police district. Can you tell me why that is occurring? Is it because there are problems in the Procurement end? Is the Police Department not asking for computers? I can't imagine how we can run a police district without a fax machine, without a computer, without all the basics. One captain told me he had to go out and buy one at a flea market to operate the Philadelphia Police Department. Now, I know it's difficult to run a procurement operation like the private sector, but are we getting close? COMMISSIONER APPLEBAUM: Absolutely. Councilman, let me respond to your questions. The Procurement Department's responsibility is to develop and put in place what 369 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 we call "requirements contracts," and we have a full array of requirements contracts for computers, for personal computers. We have a long-standing requirements contract for furniture, office furniture, office heating, office files. We have in place every item that you just mentioned in accordance with the requirements contract. In order for a department to request a product -- be it a PC or a desk or a chair or whatever -- it is a process that they go through. And now with ADPICS, they can go right at their terminals on-line, enter a requisition, and that is automatically generated through our department. And you will find the departments within a reasonable amount of time will receive their products. We are getting what I consider rave reviews from many departments. Now, why the Police Department is having particular problems in certain areas, I cannot answer that. But I have a very close relationship with Deputy Tom Nestel, and he has not once ever indicated to me a problem in the Police Department in receiving anything -- 370 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 whether it's helicopters, supplies for the helicopters, office furniture, PC's. It goes on and on. So I don't know what that particular problem is.
Commissioner, if you talk to some of the commanders of the districts, it would probably be easier to get a helicopter than a fax machine. COMMISSIONER APPLEBAUM: Well, I cannot understand why.
This is no 14 indictment of the Procurement Department. I thought I made it very clear. But what I'm wondering is, and 'cause the Police Department's coming, I've got a list of requests that commanding officers have made to the Police Department, and I just want to be assured that the problems isn't here. And since you're here today because I want to ask the Police Department when they get here why I constantly, when I visit various police districts, hear the fact that we can't get chairs. So you're telling me that if they ask, 371 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 the money's in the budget to deal with some of these requirements that they claim -- COMMISSIONER APPLEBAUM: Absolutely. I mean, as far as furniture, we just accommodated the Police Department, I think, six months ago. And you were at the open house for the new 911 system. They all have brand-new equipment, brand-new chairs, chairs that were bought off of a specific requirements contract.
I understand. COMMISSIONER APPLEBAUM: The problem, I believe, could be -- and also, the Police Department is well represented in what we call "Procurement Council." They come to the meetings, they're fully informed, they understand the process. I unequivocally say that it is not a problem in the Procurement Department.
Computers. Computers are available for -- COMMISSIONER APPLEBAUM: We have in place a requirements contract, and we issue this particular contract every 90 days to receive the lowest price for that 90-day period on what we 372 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 call vanilla-style PCs. Right now, the contract is with Compaq. Six months ago, the contract was with Dell. And once an order is placed with the manufacturer as it as goes through our system, they must deliver the PC within days. And 8 that's been happening. 9
Wasn't there just a 10 problem with computers where a vendor wasn't able 11 to perform and you had to scrap and start all over 12 again? 13 COMMISSIONER APPLEBAUM: There was a 14 problem with the Water Department. The computers 15 that they were supplying did not meet the 16 requirements to the full satisfaction of the Water 17 Department. Those computers were withdrawn and 18 returned to the vendor and were replaced by 19 another vendor's product. 20
But there wasn't a 21 problem beyond the Water Department with 22 computers? 23 COMMISSIONER APPLEBAUM: Not that I know of.
If a person in 373 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 Finance needed a computer, there wasn't the answer coming back that we can't get you a computer because the vendor wasn't able to provide the -- COMMISSIONER APPLEBAUM: Absolutely not, absolutely not. What we have done, in conjunction with the Mayor's Office of Information Services, we have identified five brands of computer that are called "tier-one computers" as rated by the Gardner Group. And every three months, we put a bid out to these five manufacturers -- IBM, Compaq, Dell, Gateway, and the fifth? I'm not sure of the fifth name. But there's five tier-one computer manufacturers that receive a bid from the City of Philadelphia every 90 days. They respond. We make awards. And at any moment, if you wanted a computer now, if you had money in your fund. In your budget, you could go to your current procurement person in your department or for City Council, and enter a request for a computer. That would go through. It would take or days to be issued, and 23 days maximum from now. You'd have it at your desk. 374 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023
Well, then, what I'm what hearing is then possibly we have some internal problems in some of the operating departments that don't understand what you just described because I've got people basically frustrated that they're trying to do their jobs and can't get the support. COMMISSIONER APPLEBAUM: Well, if you would personally call me and give me most those names, I'll be glad to call them and help them solve their problems.
I appreciate that, but I think what I'm hearing is the fact that maybe there's some communication problems within some of the operating departments that don't know how to do what you just described -- because, again, being around in government and outside government for the best part of my life, that I've heard "Procurement Department," "Procurement Department," and I'm learning that that's not necessarily the case. The process might be the problem and not the Procurement Department. I think you know that you do get bashed occasionally. Unfortunately, it -- not you. 375 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 COMMISSIONER APPLEBAUM: Unfortunately, we all get --
Not you, the department. And I think it's wrong if what you're telling me is true and the Police Department, Fire Department, etc. aren't doing what they're supposed to do to get the equipment. COMMISSIONER APPLEBAUM: I will be listening intently on my telephone system when the Police Department is here and I will be very interested in hearing what their response is to your questions. But the Police Department is actively represented on Procurement Council, and they come to meetings, so they understand the system, believe me. I'll be listening in.
You're welcome. Are there other questions from members of the committee? 376 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 (No further questions.)
Thank you very much. COMMISSIONER APPLEBAUM: Thank you.
Risk Management is the next department to testify, and then we will have the Law Department, and that will conclude our hearings for this morning.
Good morning, Council President Verna, members of City Council, ladies and gentlemen. My name is Joseph R. Perrello, Deputy Director of Finance for Risk Management. With me today are Jane Lewis, Deputy City Solicitor; Deborah Lawton, Manager of Insurance and Contracts; Barry Scott, Safety and Loss Control Director; Chairman Holloman, our Claims Manager; and Diana Rivera, the Divisional Deputy for Risk Management. We are here today to request your support for Risk Management's Fiscal 2000 budget of $1,693,158. /Budget Hearings/Bill 990023 employee injuries; and to mitigate the financial impact of these events through the application of professional risk Management practices and techniques. The Division is comprised of four separate but interrelated departments: Safety and Loss Control, Insurance and Contracts, Employee Disability, and Claims. Just to give you a highlight of some of the things that we've been doing in the Division, the Safety and Loss Control unit has worked with all of the departments to investigate and evaluate and solve unsafe conditions and hazardous conditions throughout the City, to protect both the employees as well as the public. The Employee Disability unit continues to work with our outside third-party vendor to provide quality medical care to injured City employees, to provide medical case management in both vocational and medical rehabilitation to work with the departments to return these injured employees to work. /Budget Hearings/Bill 990023 of paid days lost, lost-duty cases, and a number of cases going to Worker's Compensation. The cumulative savings to the City since 1994, through the initiation of these programs, is in excess of over $100 million. The Claims unit works with the constituents and with the City Council districts to quickly and fairly compensate claimants for valid claims they have against the City. Where it's appropriate, we'll go out in the neighborhoods and work with the claimants to make it easier for them to solve their problems. We've also initiated an emergency-response situations where we will go out there within hours and 16 help claimants who are needy and need the City's 17 help and assistance. 18 The Insurance and Contracts unit has 19 managed the City's portfolio insurance since 20 1994. 5 million on the 23 insurance portfolio that the City purchases. /Budget Hearings/Bill 990023 such as the Criminal Justice Center, the current Fromhold Correctional Facility as well as the new construction at the airport. Since 1994, we've been able to generate an additional $13 million in savings to the City in properly managing these construction projects. One of the things that we're very happy about with Risk Management's Insurance and Contracts unit is their ability to perform outreach services for the authorities for not-for-profits for community groups and especially for the disadvantaged business enterprises where we actually partnership with the DBEs in the City to create opportunities for them to do business with the City. One of the mainly initiatives we'll be working on for the remainder of this fiscal year is the creation of a minority bonding program, which will help minority contractors to successfully bid on and get construction projects with the cities. We would appreciate your support for our Year 2000 Budget request. And we would be happy to answer any questions that you may have. /Budget Hearings/Bill 990023 Thank you.
Thank you. Your budget request is the same as it was last year?
It's an increase of roughly $200,000, of which 180,000 of that are insurance premiums that were previously paid by other departments, which have now been rolled into the Risk Management Budget, so we'll pay the premiums for the departments.
Thank you. Any questions from members of the committee? (No questions.)
The Law Department is the next department to be heard. (Law Department panelists come forward.)
We do have copies of your testimony and we'll be more than happy to provide the stenographer with a copy of 381 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 your testimony in full so that it can be placed into the record. I understand you're not feeling well. I can empathize with you. You can be as brief as you want to.
Thank you very much, Council President Verna. I appreciate your courtesy. For the record, good afternoon, Council President Verna and members of City Council. I am Stephanie Franklin-Suber, City Solicitor. With me today is Chris Lane, our Director of Administration and Management; First Deputy City Solicitor Amy Wilkinson; and Deputy City Solicitor Jim Zwalick (ph.). I am pleased to have this opportunity to testify with regard to the Law Department's Fiscal Year 2000 Budget request. I will briefly summarize those areas where there are changes from the estimated obligations for the Department in Fiscal Year 1999. As Council President Verna pointed out, the highlights from Fiscal Year 1999, and some of our expectations for Fiscal Year 2000 are 382 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 summarized in the formal testimony. And after I give you a sense of the changes from the estimated obligations for Fiscal Year 1999, I would be happy to respond to any questions. Overall, we are requesting $13,961,511 for Fiscal Year 2000 in the General Fund. This is an increase of $193,434 over our estimated obligations for Fiscal Year 1999. All of this is in Class 100, and the purpose is to fund the 4 percent civil service wage increase, which is effective December 15, 1999. It will also pay -- it will also fund pay plan and merit increments and promotions for our exempt staff. In the Water Fund, we are requesting $2,715,802. This is an increase of $59,247 over our estimated obligations for Fiscal Year 1999. Again, the purpose of this request is to fund the 4 percent civil service wage increase and to fund the pay plan and merit increments for the exempt staff. The Aviation Fund. We are requesting $1,020,470. This is an increase of $70,865 over FY '99. Most of this increase is for a new attorney position which was requested by the 383 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 airport. Also, it goes to fund the percent civil service wage increase as well as pay plan and merit increases for the exempt staff. The FY 2000 Block Grant for Community Development requires that the funding level remain the same. And in terms of the Grant Revenue Fund, the Department is requesting $15,710,972. This is an increase of $75,006 over our estimated obligations for FY '99. And, again, this is to provide funding for civil service and exempt pay adjustments. At this point, I will be happy to respond to any questions.
What is the status of the collection effort on the tax lien sale portfolio? How many properties have been taken to sheriff's sale? Do you have that information? How many properties are in the process of going to sheriff's sale?
Council President Verna, we have actually prepared a letter in response to some questions that have been raised at previous hearings which provides this detail. I can summarize this for you and also give you a 384 2/16/99 WHOLE COMM./Budget Hearings/Bill 990023 copy --