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Minutes

Committee Hearing, March 8, 2006

Philadelphia City Council Committee HearingsMar 8, 2006

People mentioned

Names our system found in this transcript. Automatically extracted, so it can include anyone named in the record, not only officials or parties.

Organizations mentioned

Councilman Nutter

Okay. Well, I guess maybe what I'm trying to understand is, Dr. Evans was here earlier and there was discussion about minority-run or community-based 400 3/8/06 - WHOLE - BILL 060001, ETC. organizations or minority providers. So I guess I'm trying to understand, what is a minority provider? COMMISSIONER RANSOM-GARNER: Well, we are really working to increase our business with ethnic minorities, because you can also, under MBEC, you can be a majority but be a female and that's considered a minority contract. We're really looking at increasing business with ethnic minorities, and we're working to --

Councilman Nutter

What exactly does that mean? COMMISSIONER RANSOM-GARNER: Well, often some of the community-based providers complain about not being able to do business with the City and that many of the contracts go to large providers that are established and that are not minority.

Councilman Nutter

What's a minority provider? COMMISSIONER RANSOM-GARNER: A 401 3/8/06 - WHOLE - BILL 060001, ETC. minority provider, according to MBEC or the Executive Order, it's a woman owned or ethnic minority, minority being having 51 percent of the ownership, woman owned or minority. Also you can be disabled, and that's --

Councilman Nutter

Are we talking about for-profit businesses in terms of the ownership or are we talking about non-profits in terms of Board seats? Aren't most of our providers non-profits? COMMISSIONER RANSOM-GARNER: This all has to do with for-profits. There was a time a few years ago where there was an affidavit process for non-profit organizations. They had to meet three criteria. One was having a Board that was 51 percent minority. They had to serve minorities and they had to be established in a minority community. We surveyed our providers and got them to sign affidavits, and we were able to count their participation towards our 402 3/8/06 - WHOLE - BILL 060001, ETC. goals. That practice is no longer in place.

Councilman Nutter

So let's go back to the earlier discussion. I thought you indicated based on a question by either from Councilman Rizzo or from Councilwoman Tasco that these two organizations, Second Chance and Progressive Life Center, were both minority providers. COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

Is that correct? They are? COMMISSIONER RANSOM-GARNER: Yes, they are.

Councilman Nutter

Are they for-profits? COMMISSIONER RANSOM-GARNER: They're non-profits.

Councilman Nutter

Okay. If they're non-profits, then how are they minority providers? Based on what? COMMISSIONER RANSOM-GARNER: 403 3/8/06 - WHOLE - BILL 060001, ETC. They're ethnic minorities. They're African-American-owned companies.

Councilman Nutter

But they're a non-profit. COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

Doesn't that indicate a 501(c)(3) status? How do you own a non-profit? COMMISSIONER RANSOM-GARNER: They are run and operated by ethnic minorities.

Councilman Nutter

Okay. COMMISSIONER RANSOM-GARNER: Yes, they have Boards of Directors.

Councilman Nutter

Which makes them a minority provider? If an organization is run by an ethnic minority, you are a minority provider? Is that the criteria? COMMISSIONER RANSOM-GARNER: Well, it's usually based on having at least 51 plus percent of your Boards being minority. 404 3/8/06 - WHOLE - BILL 060001, ETC.

Councilman Nutter

So I guess, hypothetically, if a person had a non-profit organization that served a particular population and all of their Board members were non-minorities, they, of course, by definition would not be a minority provider. COMMISSIONER RANSOM-GARNER: I believe by definition of MBEC. You have ethnic minorities that are founders of their particular organization. They're President, they're founders of that particular organization.

Councilman Nutter

Right. COMMISSIONER RANSOM-GARNER: I would say that is a minority-run organization or minority -- we don't want to use the word "ownership." That organization is headed by a minority founder or a minority President.

Councilman Nutter

And for your calculation purposes, does that factual piece of information then make that organization a minority provider? 405 3/8/06 - WHOLE - BILL 060001, ETC. COMMISSIONER RANSOM-GARNER: I would say yes.

Councilman Nutter

I mean, is this your opinion or is this something that's laid out in a regulation or a statute? I'm just trying to understand. Since this conversation started, I've been trying to figure out -- COMMISSIONER RANSOM-GARNER: My understanding is that under MBEC, there are established criteria for what is defined as a minority firm and how you're certified as a minority firm. That's clear under MBEC.

Councilman Nutter

Right. COMMISSIONER RANSOM-GARNER: For non-profits, it's not as clear. As I stated before, we utilize the --

Councilman Nutter

I at least appreciate you recognizing that, it does not appear to be that clear. Go ahead. COMMISSIONER RANSOM-GARNER: So for non-profits, as I said, it's not as clear. We did use the affidavit process, 406 3/8/06 - WHOLE - BILL 060001, ETC. but that's no longer being used.

Councilman Nutter

So how do you decide now? COMMISSIONER RANSOM-GARNER: In terms of being able to count the minority participation against our goals, we're not able to do that, however we define the minority firm, but when we say we are trying to increase contractors doing business with minority, it's usually a minority organization that's headed by an ethnic minority, a founder, a CEO, the person that heads the organization.

Councilman Nutter

All right. My last point on this, I guess, is, in a hypothetical situation, if an organization had been founded by a non-minority male and operated for however long it operated, served whatever population it served, and five years later an ethnic minority took over the organization or became the new CEO, are you saying based on that event the firm status changes from a non-minority firm 407 3/8/06 - WHOLE - BILL 060001, ETC. to a minority firm? COMMISSIONER RANSOM-GARNER: I think you have to look at the things that MBEC looks at, what is the Board composition, where is the firm operating, is it serving minorities, is it working in a minority community, does it have majority of -- what is the complement of the employees.

Councilman Nutter

Okay. All right. If you could just kind of complete the record on this Second Chance and the Progressive Life Center. When did Second Chance first start providing service to the City? COMMISSIONER RANSOM-GARNER: I believe in September of '05, the conversations began around that time or the summer of '05.

Councilman Nutter

And that was before this whole issue came up with PSI? COMMISSIONER RANSOM-GARNER: This recent issue with PSI just came up 408 3/8/06 - WHOLE - BILL 060001, ETC. in February of '06.

Councilman Nutter

So did Second Chance start providing services in September of '05? COMMISSIONER RANSOM-GARNER: No. The conversations began the summer around September. The actual effective date of the contract I believe is -- I want to say October, November. I would have to check that for you.

Councilman Nutter

For conversation purposes, let's say November. So a new provider? COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

Brand new to the system? COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

And Progressive Life Center? COMMISSIONER RANSOM-GARNER: They're in their second year with the Department. 409 3/8/06 - WHOLE - BILL 060001, ETC.

Councilman Nutter

Now, do these entities get evaluated or they get a certification? I mean, who decides that they can do what they can do outside of the Department for any of the providers? COMMISSIONER RANSOM-GARNER: Well, it depends. If we do an RFQ or an RFP, there's certain kinds of credentials and requirements that come with responding to that document. For example, Progressive Life responded to an RFQ to provide treatment foster care services, and based on meeting all of the requirements of the RFQ, they were deemed top a capable appropriate provider.

Councilman Nutter

Is there an entity that either certifies or validates or gives some kind of third-party stamp of approval to any of these providers? COMMISSIONER RANSOM-GARNER: Our providers are licensed by the state and they must provide a program description and go through the licensing 410 3/8/06 - WHOLE - BILL 060001, ETC. process with the State Department of Public Welfare. So they really can't approach the Department without having the appropriate license.

Councilman Nutter

I understand that, but does somebody at some point in time in an organization's history make a determination -- is it just you get your license and you're good forever? COMMISSIONER RANSOM-GARNER: No. You're evaluated every year, and the Department also has an evaluation unit and we do evaluations every year as well in addition to the state doing evaluations.

Councilman Nutter

Have both of these organizations been evaluated? COMMISSIONER RANSOM-GARNER: Progressive Life, yes, has been evaluated. Second Chance has not been with the Department for a year, so they have not been evaluated.

Councilman Nutter

So let's 411 3/8/06 - WHOLE - BILL 060001, ETC. for a moment at least go back to where Councilman Rizzo was. Why would you decide to establish or make the -- I don't want to call it a referral, but I guess a reallocation? COMMISSIONER RANSOM-GARNER: The assignment?

Councilman Nutter

The assignment. Reassignment to an organization that you've not had a chance to evaluate versus any one of other 13 organizations, which I assume you have? 14 COMMISSIONER RANSOM-GARNER: 15 Well, we decided to have conversations 16 with the provider based on the good work 17 they were doing specifically with kinship 18 care families. 19

Councilman Nutter

That was 20 Second Chance? COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

From November of last year up through now? Because they just started working with 412 3/8/06 - WHOLE - BILL 060001, ETC. us, right? COMMISSIONER RANSOM-GARNER: Yes, but we checked out their credentials in terms of where they came from, their references, who they worked with, what kind of services they provided, their performance with other child welfare agencies.

Councilman Nutter

I assume the goal here is not to have a tremendous amount of turnover, that with certain permanence or permanency to replacement is an issue or kind of the revolving door, what in another system we might call recidivism or something like that. I mean, are all of those factors in this evaluation? COMMISSIONER RANSOM-GARNER: Yes. One is, in a situation like this, you would not want to remove children from homes and place them in other homes. You would really want the children to stay intact in that particular foster home or kinship home. In this case, it 413 3/8/06 - WHOLE - BILL 060001, ETC. was rather abrupt, almost 200 children, staff, and I was looking for the most transparent way to make a seamless transition so that children and foster parents and staff, if possible, would not feel the brunt of this abrupt decision.

Councilman Nutter

Right. I understand, and I'll move on in a second, but I think you'd at least have to agree that even under that set of circumstances, to make a move with an entity that at least in one case you've only done business with for a couple months, you've not made an evaluation yourself, while you might be relying on the evaluation of others, and you have kind of live, functioning, already evaluated providers in the system, can we at least agree that to an outside observer that might seem a little strange? COMMISSIONER RANSOM-GARNER: Well, opposed to taking approximately 200 children and trying to determine where 414 3/8/06 - WHOLE - BILL 060001, ETC. these 200 children would go among providers, I was looking for a solution that was seamless, a provider that would take the staff, the children, the foster homes intact. That could be really risky in itself in terms of what kind of organization was PSI, did they have financial difficulty, what really caused this abrupt decision.

Councilman Nutter

Okay. Two 12 last questions, and if you could provide 13 to the Chair the information you have on 14 both organizations with regard to -- I 15 know there are technical terms that go 16 with this, but certainly permanency and 17 stability, if not recidivism, if there 18 are other technical terms that you use as 19 a part of your system. If you could get 20 us some information on that as compared 21 to the others in the network. 22 Is there a specific policy with 23 regard to if a contract like this kind of blows up in midstream that the entity gets to, in essence, make a referral? 415 3/8/06 - WHOLE - BILL 060001, ETC. COMMISSIONER RANSOM-GARNER: There is an assignment clause in the City of Philadelphia contracts, and that's basically -- I consulted with the Law Department.

Councilman Nutter

But you must have some discretion in that? COMMISSIONER RANSOM-GARNER: Yes. Yes.

Councilman Nutter

I mean, so it's not if I were a provider and I said, well, I don't want to do this anymore and I want you to give it to my friend -- COMMISSIONER RANSOM-GARNER: Yes. I can certainly deny the request for assignment.

Councilman Nutter

Last question. Obviously this is a very cost-intensive government supported, which, parentheses, always means we're not often the greatest payers over time in terms of funding all these services that we so desperately want and children and their families need. Can you give us 416 3/8/06 - WHOLE - BILL 060001, ETC. a little bit of information on the cost increases to the providers for the services that they provide? Have there been any over the past few years? COMMISSIONER RANSOM-GARNER: There have not been, and fortunately, consistent rate increases based on our budget allocation. We have not been able to -- I believe the last increase to the majority of the providers was January of 2004. However, the providers under performance-based contracting, many of them have done well with that model. That model works better and funds better than the traditional per diem model.

Councilman Nutter

Why? COMMISSIONER RANSOM-GARNER: Pardon me?

Councilman Nutter

Why? COMMISSIONER RANSOM-GARNER: First of all, it's a predictable reimbursement system. It starts with an established caseload, and that caseload is predictable throughout the course of 417 3/8/06 - WHOLE - BILL 060001, ETC. the year. That administrative rate is predictable based on a certain number of children. If, for example, the Department does not have the referrals that were established at the beginning of the year, the provider continues to get that administrative rate.

Councilman Nutter

I guess we all have technology. It generally costs today a little more to provide something, a service or a good, than it did a year or so ago, and we're actually two years now. COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

And I'm going to assume that on the government side, we've probably provided some increases to government personnel over the past couple of years, right? COMMISSIONER RANSOM-GARNER: Under union contracts, and I believe there have been -- are you talking about salaries, personnel? 418 3/8/06 - WHOLE - BILL 060001, ETC.

Councilman Nutter

Yes. COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

Well, union or non-union, for that matter, right? COMMISSIONER RANSOM-GARNER: Yes.

Councilman Nutter

Okay. So who makes the decision on whether there are, you call them, rate increases or increase for providing services? How does that get decided? COMMISSIONER RANSOM-GARNER: Normally it depends on the funding allocation that we get to the state and what our priorities are, what our mandates are, and if there's enough money for rate increase. The state will often say, We've approved, for example, a two percent COLA for the providers. However, it's in the pot with everything else, it's not singled out as a separate line item, and the Department gets its number and everything is included. The state 419 3/8/06 - WHOLE - BILL 060001, ETC. decides -- for example, our budget for this year, our meeting will be tomorrow with the state to really find out what was approved and what was not approved, and those programs that were funded, how much are they funding them for.

Councilman Nutter

Am I misunderstanding possibly that you're saying that sometimes the state does provide for a cost of living adjustment that goes in the same pot and then doesn't come back out the other end? COMMISSIONER RANSOM-GARNER: Well, we ask for a COLA increase every year. We believe the providers should get it. We can ask for it. However, when the state decides on our final allocation, when you add everything up, it's not reflected in those dollars. They will say that --

Councilman Nutter

So what happens with the COLA that they -- COMMISSIONER RANSOM-GARNER: There's not enough money to do everything 420 3/8/06 - WHOLE - BILL 060001, ETC. the Department needs to do and also fund the COLA.

Councilman Nutter

But if it's provided by the state, you're not required to give it? COMMISSIONER RANSOM-GARNER: No, because --

Councilman Nutter

The Department does have access to other resources, right? COMMISSIONER RANSOM-GARNER: The Department has access to other resources?

Councilman Nutter

The entire DHS does not run on state funds, right? COMMISSIONER RANSOM-GARNER: State and federal and a small percent, 6.8 percent, City funds.

Councilman Nutter

Right. So if the state says that they're providing a COLA, it goes in the pot, you're saying that the overall cost of providing services from the Department's side don't allow for it. In essence, the COLA gets 421 3/8/06 - WHOLE - BILL 060001, ETC. absorbed? COMMISSIONER RANSOM-GARNER: Yes. There may be mandated services we need to provide. For example, our '06 budget was very bare bones and we were not able to -- and when we talk rate increase, we're speaking about a large provider system.

Councilman Nutter

Okay.

Councilwoman Blackwell

Thank you very much. The Chair recognizes Councilman Rizzo.

Councilman Rizzo

Thank you. Just to follow up, because I would like to get some information, and if I'm repeating a request that Councilman Nutter already made, I apologize. These two organizations, these non-profits, did you run them by MBEC to be absolutely confident that they qualify as a minority contractor? COMMISSIONER RANSOM-GARNER: Can you explain what you mean? 422 3/8/06 - WHOLE - BILL 060001, ETC.

Councilman Rizzo

In other words, are you confident that this structure in fact is what you believe it is based on Mr. Williams' organization's evaluation? COMMISSIONER RANSOM-GARNER: They're not profit, so they really --

Councilman Rizzo

Well, then why are we hanging our hat on the fact that they're a minority company? COMMISSIONER RANSOM-GARNER: We've said that we need to make more opportunities available for ethnic minorities. We've said that. We've said we'll try to work on that. And for non-profits, the way they participate is their business with for-profits.

Councilman Rizzo

I'm really having trouble with this deal, because you have other non-profits that are minority owned or operated on your list of 24. I really think we're going to have to talk more about this deal -- COMMISSIONER RANSOM-GARNER: 423 3/8/06 - WHOLE - BILL 060001, ETC. Councilman --

Councilman Rizzo

And also could you provide to the Chair the two companies in question, your organization, who owns them, who are part of their Board, et cetera, so we can see what the extreme interest is in these two companies? COMMISSIONER RANSOM-GARNER: Yes. One thing I would like to say is that the decision -- PSI brought these companies to the table. My decision was based on a seamless transition, an organization that would take the children, the homes, the staff.

Councilman Rizzo

But a minute ago you were critical of PSI for walking on us. You said some things that troubled you about PSI. Now you have confidence? Unless I didn't hear you correctly. COMMISSIONER RANSOM-GARNER: No. I said that it was really a shock and it was surprising that PSI did not 424 3/8/06 - WHOLE - BILL 060001, ETC. want to do business with the City.

Councilman Rizzo

If somebody walked on me, they'd be the last people that I would have any value of their input. I wouldn't even take their call on a recommendation. I mean, you have enough resources to pick your own providers without PSI. I mean, they stiffed you and you're valuing their input. Boy, that to me is amazing. Rarely I argue with you, but this is one point that I'm going to stick right to it, because I think this is the tip of the iceberg. COMMISSIONER RANSOM-GARNER: Well, I think the woman that runs the organization really made the decision that she decided she did not want to be in Philadelphia. The people that operate the program --

Councilman Rizzo

I would have said, Good luck, have a good -- the last thing I would have done -- I'm not you, but the last thing I would have done, and 425 3/8/06 - WHOLE - BILL 060001, ETC. I don't want to argue with you here publicly, the last thing I would have done was put any value in any input if they abruptly disrupted your operation. COMMISSIONER RANSOM-GARNER: Well, if I did not know the providers in question, I may have done the same thing.

Councilman Rizzo

Well, all I'm saying is, you're spinning this here today as though this is a very abrupt transaction. Knowing you, I believe it is. But when you start indicating that it's a non-profit and Councilman Nutter got it out of you that in fact they are non-profits and that whole conversation you had a little bit ago, I just don't feel comfortable with what I've heard today, and rarely I feel uncomfortable about what I hear. COMMISSIONER RANSOM-GARNER: I guess I wanted to just clarify that this really wasn't about whether they were non-profit or not. This is about the children, the families and having a 426 3/8/06 - WHOLE - BILL 060001, ETC. smooth transition. It was not about whether they're a non-profit.

Councilman Rizzo

I respect that, but I'm still not comfortable, and I need in my own little way to feel comfortable about any involvement that we have here during this budget process. COMMISSIONER RANSOM-GARNER: We'll provide you with the information.

Councilman Rizzo

You believe that -- well, I've said it already, and you said to me that you didn't think MBEC would be involved in this at all because this is not about minority participation at that level; this is your own in-house effort to do more? COMMISSIONER RANSOM-GARNER: Yes.

Councilman Rizzo

It's a significant deal. What's the value of the deal, the dollar? COMMISSIONER RANSOM-GARNER: This is about a $6 million contract.

Councilman Rizzo

Okay. Thank 427 3/8/06 - WHOLE - BILL 060001, ETC. you. Thank you, Madam Chair.

Councilwoman Blackwell

You're welcome. Councilwoman Reynolds Brown.

Councilwoman Brown

Yes. Commissioner, in making these decisions with regards to who or which agencies will indeed look at the whole child -- when I say the "child," and all of those parts connected to that child, meaning the family, both be it the adoptive family or the foster care family -- are there criteria, standards that you use as, for lack of a better word, a check-off which sort of moves you to the decisions that you make and who ultimately win these contracts? COMMISSIONER RANSOM-GARNER: We are moving more to an RFQ -- couple things. Moving more to a quality measurement system. We're also for new services issuing RFPs and RFQs. And we've even established a schedule of 428 3/8/06 - WHOLE - BILL 060001, ETC. which programs will go in form of reissuing to renew that service to be an RFP and RFQ. We also have continuation proposals where we look at a provider that's doing that current service and ask certain questions, and also look at performance in terms of continuing that service.

Councilwoman Brown

I have to admit as well I don't fully grasp all of the nuances of the discussion around the agency that my colleagues have raised. However, last year there was a lot of criticism that DHS was not doing better with regards to ensuring that those who ultimately win the opportunity, win meaning W-I-N, the opportunity to do business with DHS, that, A, they are local and, B, if we can find qualified, competent minority non-profits or for-profits who meet the goals and expectations of keeping families intact, that they are due that consideration. And what I've heard here today is a year 429 3/8/06 - WHOLE - BILL 060001, ETC. later there's been progress with regards to making sure that people of color and women get opportunity with government. So I guess I would, with all due respect, respectfully disagree with my colleague, Councilman Frank Rizzo, because there are times when, yes, it is about being a minority.

Councilman Rizzo

Point of information.

Councilwoman Brown

And I need to put that on the record, Madam Chair.

Councilwoman Blackwell

Thank you. Councilman Rizzo, point of information.

Councilman Rizzo

I'll address the Chair. You have to remember that the Commissioner indicated that the other companies, there are 24, are also in many cases minorities. COMMISSIONER RANSOM-GARNER: No, no. No, sir.

Councilman Rizzo

You said 430 3/8/06 - WHOLE - BILL 060001, ETC. earlier that -- COMMISSIONER RANSOM-GARNER: I said they were minority, I said there were a few Hispanic, but the majority are non-minority.

Councilman Rizzo

So how many are? COMMISSIONER RANSOM-GARNER: Very few.

Councilman Rizzo

Well, very few. I don't think that's a qualified -- COMMISSIONER RANSOM-GARNER: I could get back to you with the specific information.

Councilman Rizzo

I think when you're making a $6 million decision, "very few" shouldn't be the answer. Either it's two, three, four or seven, and then we can go from there, but you're making it sound like the only two are the two that you gave this deal to. COMMISSIONER RANSOM-GARNER: No. They're not the only two. There are a few, but the majority, I am saying the 431 3/8/06 - WHOLE - BILL 060001, ETC. majority are not minority, and I can get you the specific information.

Councilman Rizzo

I would appreciate that. COMMISSIONER RANSOM-GARNER: Okay.

Councilwoman Blackwell

Thank you very much. Are there more questions? (No response.)

Councilwoman Blackwell

Thank you. Is there anyone else who would like to testify? (No response.)

Councilwoman Blackwell

All right. Then this hearing is recessed until Tuesday, March 14th at 10:00 a.m. Thank you all. (Committee of the Whole adjourned at 5:30 p.m.) - - - 432 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on March 8, 2006, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)