I look forward to that, and I appreciate it. The other thing is something that came up last year, and I think it's a significant amount of money that could be generated. We discussed it at length. It has to do with waiving -- employees who are in a position to waive their health benefits because of coverage that they could be covered by either with a second job, more than likely a spouse's job. And spouses weigh these things many different ways in terms of who should waive or should either waive. Sometimes you just want to bundle for extra protection. It's not worth it and you bundle your policies and figure, I just got another level of protection if I need it, because there's not enough incentive to waive it. I can guarantee you there's no 23 incentive, no real incentive, for a City employee to waive $12,000 worth of coverage for less than a thousand dollars 51 3/24/10 - WHOLE - BILL 100117, etc. that's going to be taxed. And there aren't too many other spouse policies that are going to have that ratio, that imbalanced ratio, where the benefit if you waive is almost all to the employer. And I believe the number that we have, I forget if it's 750 or a thousand.
But it's a number that goes back when these weren't even a cost that were discussed at budget hearings. The health benefits back in the '70s or 60's, these numbers have not changed. There's no model on how many people might change their behavior. I do know there's an awful lot of City employees whose spouses have benefits, and they make a decision -- and I'm told just on a case-by-case basis when I ask somebody, Well, it's really not worth waiving the City's because there's not enough cost savings there. 52 3/24/10 - WHOLE - BILL 100117, etc. And we actually could incentivize, because often times while the savings might be higher on the spouse, the cost of the policy may be lower, because a lot of private-sector policies are much less expensive than ours because they don't have as much benefit. But there's still a higher waiver allowance because that private-sector employer, that other employer, could be a union that has their own health and welfare program, they have calculated that it pays them to give some decent percentage back to the employee of the savings if they don't have to pay for that policy. So we discussed it during the budget last year. All kind of guesstimates came out of some discussions here as to what might be our increase and what the impact of that is, and it can get into the millions of dollars if it's significant that the number goes up for people that waive. Can you tell me what's been done? I know from last 53 3/24/10 - WHOLE - BILL 100117, etc. budget to the end of the calendar year when people had to make this choice, nothing changed.
I know there was an analysis that was done. I'll have to go back and dig it out and get it to you.
Obviously the analysis was that we might as well leave it at the same place, because --
It was, and I forget what the reasoning was, but let me find out.
I just think intuitively you don't need an analysis to know that if you're keeping over 90 percent of the savings for the employer, that there's an imbalance in this decision, that people aren't going to do it unless there's absolutely no 21 other option. If you told me it was 3,000 against 12, I'd say, percent, 23 that sounds pretty low, could you go 24 higher. We're under ten percent of the 25 cost of the policy. 54 3/24/10 - WHOLE - BILL 100117, etc. So I'd love to see the analysis.
Maybe at the same time we get that other information, we can get that?
Thanks, Madam President. Real quick, just a couple quick questions. You may have answered this in earlier conversations. I just wanted to get some clarity on this increase in the indemnities fund.
The seven and a half million dollars? It really relates to one --
Did we do one transfer ordinance in this current fiscal year? 55 3/24/10 - WHOLE - BILL 100117, etc.
Well, there are two. There's been an increase in the number of cases and in the cost per case. So that's driven up overall indemnities costs. But in 2011, there's a specific increase of an additional seven and a half million dollars for one case that involved paramedics and their schedules. They were -- I think they had 42-hour schedules instead of 40-hour schedules. So they were concerning overtime. The seven and a half million is basically making that overtime payment as an indemnity payment.
So that's hopefully the last spike, because last year --
Last year's transfer was to cover just general cases that we lost? 56 3/24/10 - WHOLE - BILL 100117, etc.
Right. And so we've increased the base, and we think that we'll probably, unfortunately, stay at that higher base, but the seven and a half million is on top of that. So that should go away.
Okay. Is there anything that's going on with respect to our cases that we could adjust? I mean, if we're going to have this continuing increase -- I understand the paramedics.
Right. The Budget Office and Law Department have been looking at that and kind of working through the details, seeing what's driving it to try to figure out how we can manage it better.
I think some of it -- I think most of this is done in-house, but I'm not sure.
Is it less 57 3/24/10 - WHOLE - BILL 100117, etc. expensive to do in-house?
All right. You're right. I shouldn't ask you the question. I just saw the dollar signs and I obviously asked you the question. Mr. Dubow, do you believe that the City of Philadelphia has a structural deficit generally?
Actually, I think we had a couple of years where we did, and you see first our fund balance getting low and then our deficit getting larger. What you see in '10 for the first time in a couple of years is that fund balance actually gets a little better. So structurally we're actually -- our revenues are exceeding our expenditures in '10. And then we're projecting that again in '11 and again in '12. So we may have actually turned the corner on the structural problem. 58 3/24/10 - WHOLE - BILL 100117, etc.
Okay. So the thought is that we've reduced basically the workforce, which is the highest cost of our --
To the point where structurally -- and hopefully we've leveled off in terms of our reduction in revenues, because I think hopefully all the jobs that we were going to lose we've already lost and we won't lose any more.
Whoever decided to stay here, they said they're just going to tough it out and stay here, or they can't leave, right?
All right. I was just wondering, because -- and the only reason I ask that question is because this is the second year where 59 3/24/10 - WHOLE - BILL 100117, etc. we're hit with a significant --
-- increase in revenues. So at some point, we got to like -- let's just fix this.
Yes. I agree. I mean, there are some real structural problems. We have high level of fixed costs, high level of county costs. So we do have high level of costs, and when the economy weakens like it did, we're particularly exposed to a downturn in revenues, and we saw the results of those.
As anybody is, right. Could you, in a very relatively easy format, lay out the things that we would have to do as it relates to county, municipality costs, some of the things that we believe we should not be responsible for? Could you just lay out a chart for us, not right now but 60 3/24/10 - WHOLE - BILL 100117, etc. somewhere down the line?
Because I think there should be a strategy from all of us to just sit down, come up with a game plan on fixing some of these issues that continue to plague us as it relates to costs we're incurring and, frankly speaking, we shouldn't.
And I'm saying if we're going to increase the indemnities fund, I'd rather have to increase it for something like that if we're going to go after -- you know what I mean?
To the Council President, just a real basic format to lay that out.
You're welcome. The Chair recognizes Councilman Goode.
Thank you, Madam President. Mr. Dubow, I had questions for the Revenue Commissioner and the Treasurer, but I realize they somewhat fall under your jurisdiction and may be more appropriate for you as this whole issue of where some of my initiatives actually fall. They're housed in the Finance Department, but they're economic development initiatives and so where the follow-through takes place. The first is related to the fact that we've been discussing a lot recently about taxes and cuts, but not about economic and job growth, and during the Five Year Plan discussion, it was noted that the City's projections in 62 3/24/10 - WHOLE - BILL 100117, etc. terms of job growth are based upon federal indicators. We now have a new federal Jobs Bill that's been signed into law, and so there is actually a federal exemption on payroll taxes any job creation tax credit. About a year and a half ago or so we had a discussion about our own job creation tax credit based on the fact that the Obama Administration might be moving toward a job creation tax credit, which turns out to be what it is, an exemption in tax credit. The question is, are we looking to market and promote our enhanced job creation tax credit for 2010 and 2011 and putting the context of the fact that there is this federal exemption in the job creation tax credit now, and in the end, who would really be taking the lead on that matter and responsible for that? Would it be Finance or would it be Commerce?
The first answer is, yes, we are, and I think it would be 63 3/24/10 - WHOLE - BILL 100117, etc. a combination of Commerce and Revenue working together on that.
I mean, I guess we can -- as we're developing that strategy -- I mean, the Jobs Bill is relatively new -- we can meet with you. We can keep you in the loop on that.
But our enhanced job creation tax credit was always meant to be a counterpart to the Obama Jobs Bill. Even though we didn't know it was going to be passed, it was just meant to be a counterpart. But I'll move on to the second question. The second question is regarding the issue of fair lending, community reinvestment and the fact that there are a lot of cities and states now aggressively pursuing what requirements they put on their banking relationships, and I guess the question is, while we conduct an annual lending disparity study 64 3/24/10 - WHOLE - BILL 100117, etc. and there are other requirements in terms of submission of community reinvestment goals and fair lending strategic plans based upon the disparity studies, who is actually responsible for reviewing that information and then following up in terms of public policy, who in the Administration? Would that be Finance or would that be Commerce or some combination?
In terms of the banks that we use, it's really in the Treasurer's Office. And, for example, you probably know that Bank of New York didn't even -- didn't respond, so we eliminated them as a bank. So it's really -- that has fallen into the Treasurer's Office. I mean, one of the things that we've been looking at recently is -- we get that report every year. We look at whether people meet their goals and we act based on that. But one of the things that we're going to be more aggressive in 65 3/24/10 - WHOLE - BILL 100117, etc. going forward is looking at those goals and making sure they make sense. So there are banks who are making their goals, but their goals are so low that it's not as meaningful as it could be. So we want to kind of push them to be more aggressive in their goals.
That's why, to some extent, I look at the lending disparity studies as well and look at whether they're meeting pure lending performance. And, for instance, we just received a new lending disparity study.
I've compared some 2007, 2008 data. For 2007, Wachovia Bank, which is our depository bank, did 37.1 percent of its home mortgages in low- and moderate-income -- I'm sorry; in minority census tracts. Then for 2008 it dropped to 8.9 percent, and a drop from 37 percent to less than nine percent in one year is troubling. That's supposed to be addressed through 66 3/24/10 - WHOLE - BILL 100117, etc. their strategic plans that they have to comply with by law, but beyond that, who in the Administration is responsible for -- in between the submission of those plans from year to year and the submission of those goals from year to year, who is actually looking at it other than me?
The lending disparity studies, the strategic plans, not so much whether the banks are just in compliance but whether we need to be developing public policy around this. Who is looking at, and within the Administration, what public policy needs to be developed around this? Because actually there's a recent Associated Press story based on some things that happened with LA City Council saying that 67 3/24/10 - WHOLE - BILL 100117, etc. Philadelphia got it right and that the program is working. And then we turn around and we see this drop, which still may mean the program is working if Wachovia addresses that disparity. But who is responsible for that and who is actually doing that within the Administration?
Okay. I'm just confirming that. Thank you, Madam President.
You're welcome. Mr. Dubow, are all of the Class 200 funds that are to be made available to the Defender's Association and Community Legal Services coming from the General Fund?
I believe they are. I think they are, although I suspect you're asking for some reason.
Well, 68 3/24/10 - WHOLE - BILL 100117, etc. I know that I guess it was -- I don't know when it was, whether it was this week or last week, somebody did testify that CLS received some funding from the Grants Revenue Fund. Maybe it was MOCS.
I know they get some money from DHS, but I thought that was also General Fund money, but I didn't know they got grants money. We can look into that. It's not for this work. It's not -- this is for representation. All of this money comes from the General Fund.
Thank you. The Chair recognizes Councilman Green.
Thank you, Madam Chair. I cannot remember where we left off, but I think -- 69 3/24/10 - WHOLE - BILL 100117, etc.
We were in budget. We had just talked about the receptionist position.
Budget Bureau, Section 12, . It looks like there's an unfilled Assistant Director to Finance position.
Yeah. That is the receptionist position we were talking about before.
And what would be the consequences now that the Five Year Plan is done of not having that receptionist?
I think the receptionist also does -- kind of every payroll transaction that comes through 70 3/24/10 - WHOLE - BILL 100117, etc. goes through that receptionist. So it's really a receptionist --
And when you didn't have that position filled, how was that getting done?
I don't think it was vacant that long, actually. It really wasn't vacant. I mean, it just happened to be --
Was there a payroll cycle while that position was unfilled?
Well, I don't think it was more than -- I think there was a very small time when it wasn't filled. And I think that person who had the job before was still doing some of that function.
Was. But now she's sitting right back there taking all your questions down.
How much does that -- no. I'm just -- Okay. There are four new Assistant to the Director of Finance ARRA positions at a salary of 45K to 98K.
Is there no 15 way to use ARRA money to pay for this oversight?
My understanding, there is not. I'll let the Budget Director answer that one. (Witness approached witness table.)
Good morning. Steve Agostini, Budget Director. After spending many months going through the legislation and the 72 3/24/10 - WHOLE - BILL 100117, etc. guidance from OMB and actually having conversations directly with the federal Office of Management and Budget, it became clear to us that trying to get any kind of general -- any kind of ARRA funding for this was going to be really difficult and at the time looked impossible. We think moving forward there may be an opportunity for us to generate a couple of hundred thousand to pay for some of these positions. So it's our intent to try and do that, but until recently, it's been almost impossible.
There's no 17 provision for administrative overhead so that you can do the reporting that the federal government requires?
There is a provision that allows you to take up to half a percent of particular grants as long as your cost allocation plan for the City conforms to approved cost allocation plans that are used by the federal 73 3/24/10 - WHOLE - BILL 100117, etc. government. The federal government has approved one of our cost allocation plans, one that we use in our human services, but you can only use the grants associated with that area to draw down the half a percent.
Have we put together a cost allocation plan of half a percent for every grant that is eligible for such cost allocation?
And that's where I think we'll be able to generate some of the potential dollars to cover some of these costs. But the guidance and the assistance from the federal government on this has been limited and we just needed to fund a staff to do this.
-- that we will get reimbursement of up to half a percent?
That's certainly 74 3/24/10 - WHOLE - BILL 100117, etc. my hope and that's what we will work toward.
We're going to try to work with the half a percent from those that fit into the cost allocation plan that has been approved by federal HHS, which is OMB --
Outside of HHS, we have no cost allocation plans that have been approved, to my knowledge.
Have we prepared and submitted cost allocation plans for approval?
The cost allocation plan approval process with the federal government is very rigorous and lengthy.
I mean, in some cases could take years. 75 3/24/10 - WHOLE - BILL 100117, etc.
The Chair recognizes Councilwoman Sanchez for a point of information.
Thank you. On that note, the administrative cost that's allowed by the formula for CDBG and others, what are we doing with that?
The administrative cost allowed I think are up to percent for Community 17 Development Block Grant or Community 18 Service Block Grant. The ARRA funds 19 trump those rules. You have to use ARRA 20 rules, not those rules, for ARRA funding.
There are administrative costs in CSBG for those 76 3/24/10 - WHOLE - BILL 100117, etc. programs. There are augmentations to CSBG and CDBG that are ARRA funding. We have not been able to draw down administrative expenses support from those funding, because we don't meet any of the criteria that they've set.
My only concern is because if we have the same staff, only in a few instances where we've hired additional staff to manage ARRA funding, percent could be quite a 17 bit of money. So I'm wondering on the -- 18
Yeah, and we've 19 been told specifically -- and we're happy 20 to give you -- that we cannot use those funds for administrative oversight. In querying both the Recovery Office and the Vice-President's office and OMB, it's been clear that that was just sort of an oversight, that the support for those 77 3/24/10 - WHOLE - BILL 100117, etc. expenses were not included. They didn't include it.
Thank you, Madam Chair. Well, I don't know how long we're going to have ARRA money or how difficult it would be to prepare cost allocation plans or whether or not preparing them now will put us in a position to get cost allocation for future federal programs that may come after ARRA, like infrastructure bills or other things that Congress is talking about, but I'd like to see us at least try to apply to get some of this money.
Are we going to do that this year? What I heard you say was almost -- the implication of what 78 3/24/10 - WHOLE - BILL 100117, etc. you said is, Well, it could take years, and I thought the negative pregnant of that was that we're just not going to bother.
Well, there are a couple things. One, recall that in the plan, the ARRA funded positions go away in months. So that's one way to 10 address that. 11 Secondly, the cost allocation 12 planning process is really a rigorous 13 thing from the federal perspective. 14 Having done a cost allocation plan for 15 wastewater and sewage treatment plants on 16 the West Coast, it really does -- it's -- 17
I'm not 18 questioning that it's difficult or not difficult, but sort of with respect to these four positions, is there any thought to take Councilman O'Neill's suggestion, especially if we know these are temporary positions, and just hire consultants to do this?
We tried to do 79 3/24/10 - WHOLE - BILL 100117, etc. that. We actually had an RFP in the beginning part of Calendar Year 2009 where we tried to have a consultant. We received a number of bids that came back in the $250,000 to $350,000 range just for base price on an annual basis, and we rejected those because we thought the costs associated with that were too high.
Well, this is four people. What is the salary of these four people?
The range there shows the 278,000. So we're looking at positions -- one position in the mid 90's, one position in the low 40's and then two positions, I think, 65 and 70.
With fringe, though, these positions are far more than the bid that came in.
Right. And the 80 3/24/10 - WHOLE - BILL 100117, etc. bids that came in were -- that was with the base cost. There were costs that you would incur on top of that depending on what you had people do.
Okay. Fair enough. I mean, you looked at it. There is a new Assistant Payroll Manager position at 64K in the Accounting Bureau. Has this position been filled? UNIDENTIFIED SPEAKER: It's a filled position.
Yeah. If you look at Line 15, that person moved up from 15 to 16.
It's not a new position. It's someone moving from the Accounting Production Control Analyst, which is Line 15, to Line 16. So it's 81 3/24/10 - WHOLE - BILL 100117, etc. not -- same person, different position.
Office of Administrative Review, Assistant Director to Finance, Hearing Officer position. It looks like this is a newly created position. Has this position been filled?
Yes, it has. There was a -- helping us address a backlog there. You have to wait about 120 days for a hearing before. This brought it down to about 90.
OAR also is budgeted to spend 54K per year FY10 and FY11 in Class 200 professional services funding for contracted Hearing Officers. 82 3/24/10 - WHOLE - BILL 100117, etc.
No. It's in addition, and I think that 54,000 moved over from Executive Direction. So I think it used to be shown elsewhere. Yeah, if you look on .
Does it make more sense to contract out the full-time position such that we're not paying fringe?
There are some that it does, depending on how many hours we need, and some that it doesn't. So some of them are contract and some are not.
This $35,000-a-year person is fully employed eight hours a day doing hearings?
Risk Management, finally, starting with the unfilled Claims Adjuster I position, has it been filled?
Yeah. Both of the positions here, that and the Occupational Safety, they've both been filled.
Okay. What I'd like to request is a -- Councilman DiCicco mentioned the 1,600 people roughly in DROP right now. If you could identify the exact positions and what departments they're in so that we can get a sense of where that is.
And I said 1,600. I don't remember whether it's 1,600 or we had an spike of an additional 1,600 towards the end of the contract which brought it up to around 3,000. I have to go back and check.
Whatever it is, can you please identify what they are, what the salaries are, what the position is and why we would need to keep 84 3/24/10 - WHOLE - BILL 100117, etc. that position?
The Administration testified that in preparing the proposed FY11 budget it asked departments to prepare two and a half, five, seven and a half percent.
I've got your documentation, which includes 14 items totalling $921,000.
The current budget we have does not take any of these cuts; is that correct?
No, that's not correct. Some of them -- the transfer of the Treasurer's Office, that happened. The contracts happened. The DOT support of the Administrative Service Center 85 3/24/10 - WHOLE - BILL 100117, etc. happened. I think what didn't happen right there, the contracts down toward the bottom, the witness relocation. That's kind of a -- that hasn't been witness relocation in years. It's in our budget in two different places. One is the Aon contract and one may say "to be determined," but it's really probably going to be for looking at PGW.
I'm sorry. I didn't understand that last response. That money was unspent last year?
No. I'm saying it's really -- it was spent in -- it wasn't spent for witness relocation. It was spent mostly on Aon consulting on healthcare and pension expert services for arbitration and negotiations.
Okay. And can we cut -- is there a reason not to cut it this year?
Well, we still -- we would still use it for two things. One would be our negotiations aren't 86 3/24/10 - WHOLE - BILL 100117, etc. done, so I think we'll still have a need there. And the second big thing that we would probably use it for is some analysis at PGW.
And we can't get PGW to pay for that? Why would we do that out of the General Fund?
I understand that, but we can still have the Gas Commission or somebody authorize that PGW pay that bill, can't we?
Okay. The budget detail, Section 12, Pages 91 and 42 indicates that the Finance Department paid Maximus Financial Services, Inc. 40,000. I'm sorry. We talked about 87 3/24/10 - WHOLE - BILL 100117, etc. this.
indicates approximately 40K in recovery services to be provided by a vendor to be selected. Could you please describe this, the type of services to be provided? (Witness approached witness table.)
So originally we had anticipated that we would spend some dollars associated with doing some audit reviews and some reviews of our processes and actually hiring like one of the big firms, big accounting firms, to help us with the -- just review and to prepare for any potential IG or GAO audits. That's still what we are anticipating that we would do that, although we have taken -- to the positions you were asking about a few moments ago, we have bolstered the Chief Integrity Officer's office, as well as the IG's Office in 88 3/24/10 - WHOLE - BILL 100117, etc. order to be able to do a lot of that internally. Because we are sharing information with other cities, because we've had one review by a federal entity, we think we're a little more knowledgeable about what to expect and we can do some of this in-house, but we'd like to have this opportunity just in case, because one of these big six firms is going to be able to come in and we hope provide us with some information, some process review that we may not be able to do internally.
Yes. And the reason is that we want to prepare ourselves in the event the General Accountability Office does a review, in the event that the Recovery Oversight Board does a review, in the event that any of the federal agencies do a review. And just so that you know, we already 89 3/24/10 - WHOLE - BILL 100117, etc. have had a review by a few of those entities, a preliminary review, looking at our spending and looking at our grants.
Without having to touch this money. We'd like to have it available to us so that we can have sort of another set of expert eyes go over what we're doing in terms of process.
No. I understand. There's a lot of people who would like to have money available to them for various different things in Philadelphia and are having to tighten their budgets, and I would --
I would like the City not to run afoul of the federal government on this.
No. I understand. I bet we could get you those services for free from the Private Sector 90 3/24/10 - WHOLE - BILL 100117, etc. Outreach Board or other places if it becomes a problem.
The budget detail for Finance indicates a new four million reserve for unanticipated expenditures in Class 900. At the same time, the Administration's proposed Five Year Plan has fund balances of 64 million in '11, 164 million in '12, 197 million in '13, 206 million in '14 and 191 million in '15, and I'm having a hard time squaring the reserve with the fact that we have significant fund balances which, after all, sort of are there for contingencies.
I think we have this fund balance conversation every year, don't we? This is the third straight year we had a conversation about fund balance.
This is a question actually about reserving in the 91 3/24/10 - WHOLE - BILL 100117, etc. face of a large fund balance.