No, we don't. We can tell you how many firms withdraw on any given year, but they don't give a reason for withdrawing. We have held several workshops on certification to kind of dispel the myth of the complications. Generally, it's a matter of 416 2/25/03 - FY '04 OPERATING BUDGET information gathering. A lot of firms who have been in business for a while may have been grass roots business that may not have the financial information. So if they call our office, we try to provide them with some technical assistance to let them know the kind of information that can be utilized in that effect.
So you do do outreach and have workshops and all those kinds of things to encourage participation?
Yes. And certification. Because, like you say, Councilwoman, a big part of it is their fear of the information. And when they take a look at the application and the attachments, it can be somewhat overwhelming. So what we try and do is let them know the information that they can provide and when they can provide it. Mainly we're looking for control documents. They have a great reluctance of supplying tax returns, if they have them. If they don't have them, they will say, if there's an established firm, that the accountant may have them. So we give the leeway to do that. We also let them know that there's some 417 2/25/03 - FY '04 OPERATING BUDGET assistance out there. They don't have to wait for a long period of time. They could submit the information. As long as it's not controlled information that's lacking, we can help them do a preliminary review and tell them what they're missing.
We have a separate unit for it. However, since I've joined the organization, we've required all of our MBEC specialists and coordinators to participate in the certification process because it helps them in setting their goals and ranges. One of the things that we need to know when we're setting goals and ranges on contracts and projects is that there's a ready, willing and able marketplace out there that is available to do the work. If our professional staff members are involved in the review process, they become familiar with the entities that they are dealing with in trying to identify and match up contracts with.
I know that Councilman Ortiz asked for information, and I know that sending 418 2/25/03 - FY '04 OPERATING BUDGET over the total amount or all the contracts is important, but could you separate the capital projects out of that and the minority numbers, minority participation numbers with capital projects?
In the Five-Year Plan, on , in your last paragraph you talk about the US Department of Transportation's new initiative to unify the certification process. That would only relate to Department of Transportation contracts?
So you think that that -- it sounds like in the paragraph that you think that that's going to help.
That will help greatly because we will have more than one entry place into the certification process. But again, what we try to caution people is, that's really just the Department of Transportation's mode. But because we use the same regulation, it becomes easier. Those firms are grandfathered into the Department of Transportation's contract agreement.
Thank you. 419 2/25/03 - FY '04 OPERATING BUDGET Thank you, Madam President.
You're welcome. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Secretary Davis, in response to a question by the Chair, you offered an opinion with regard to the DROP program. I took down some of what you said. I probably did not get all of it, although I did hear the final part of the answer. You said that there had been a negative impact on the fund, at least in terms of your opinion. And I can appreciate your self-deprecating style and the lowering of the expectation of your worth, but I think from our perspective you would be our local version of Alan Greenspan, so everyone actually does pay attention to what you say. And you can try that with some other people, but you'll never get away with it with me. So I actually do pay attention to what you say. Why are you saying, though, at least from your perspective, that the DROP program should not be extended? And if you could be as detailed as possible in terms of what the either positive or negative impacts are, I'd be very interested. 420 2/25/03 - FY '04 OPERATING BUDGET
And I'll give it from several perspectives. The actuary said that there's been a change in behavior, which is that people are going into DROP two years before they would have retired. That means that we're paying into it earlier.
Paying benefits two years earlier. So that has a negative impact.
Yes. Because instead of waiting until they're 62, they may sign up for DROP at 60 or 58 or whatever.
The point is not -- and I think it's kind of the confusion here. The point of DROP programs across the country has not been to encourage people to leave, but instead, encourage people to stay. In some of your Sun Belt areas where the job market for private sector was more vigorous and there were higher paying jobs in the private sector 421 2/25/03 - FY '04 OPERATING BUDGET than there were in government, people would leave government to go into the private sector. So you didn't have a wealth of 20, 30-year people. People used government as an entry into the workplace and then out into, what we call, the real world. Particularly in Texas there was difficultly holding policemen and firemen who would work in a big City, gain the big City experience, and then leave and go to a small town as a police chief. So DROP was implemented.
Let me back up for one second. I hate to cut across you. And I know that you were not here when our program was created. But I paid fairly close attention to the program when it was put together. Now, my recollection is that it was, to some extent, our version of an early retirement program, that people would have the opportunity to sign up in this program. It had a definite end to it. I mean, once you signed up -- and I think even now Police Commissioner Johnson may have -- I don't know what happened at the end of his situation -- but there was some concern prior to his appointment that since he had signed up it's irrevocable. You're in, you can't get out. You 422 2/25/03 - FY '04 OPERATING BUDGET can come back and all that, but that this was a way to give people an incentive, at that point in time, to leave and have cash in the pocket, which they otherwise would not have. Now, I wasn't in any of the conferences, but if I were at that particular stage in life -- and we know people are working longer. And given some of the retirement ages, I think by contract or collective bargaining agreement, some people, if they came into the government rather earlier, they can do their, quote/unquote, time, leave there kind of generally, some of them, a little young to be considered retired, and almost start another career with a big chunk of change in their hand as they leave here, a pension, and start at least the beginning of some other kind of career. That's my recollection at the time as to how it was sold.
And that may have been what was used as the selling point here. I'm just going from my experience in other places.
It seems to me somewhat counter-intuitive that if we wanted people to stay, wouldn't continuing the program encourage them? Because the word around town in some sectors, from 423 2/25/03 - FY '04 OPERATING BUDGET some employees at least -- I'm not saying this is universal -- is people say, "Well, I really now don't want to go, but now I'm forced to leave because I signed up for this program. It's a four-year thing. And if it was extended, I actually would stay." So I'm not promoting that notion either way. I'm just trying to understand where we are now, because we were somewhere else four or five years ago when this started.
Again, I wasn't here four or five years ago to understand what that discussion was. DROP has traditionally, in other places, been used because of the disparity between what the market would bear, and you were trying to hold people for another four years. Now, if it was used as early retirement option here, it is probably because there are so many people who are in 25, 35-year ranges, and that was an incentive to get people -- because they were coming into the government very young and not leaving after 30 years when they hit 55 or whatever and so you had no turnover. And I can very well imagine that it would have been -- 424 2/25/03 - FY '04 OPERATING BUDGET
But there's some younger employees who are hoping that they leave soon because it's the only way they're going to be able to move up. This is one of those, where you stand is where you sit.
It's kind of counter to what the experience was in other places where they were attempting to hold because of the salary differential.
Okay. Let me ask this question. My recollection from last year with the NTI program was that there was $20 million set aside for debt service for the NTI bonds. But my second recollection is that we only floated about half of what we anticipated; $142, $146, somewhere up in that neighborhood. Total program, I think, is supposed to be $295, which is, what, $20 million in debt service, I believe, would support. What happened to the other $10 million in debt service, which at the moment is clearly not needed because we're only supporting about 140-some million?
Most of it has been moved out through Transfer Ordinances. In fact, some of it was specifically identified as being moved for 425 2/25/03 - FY '04 OPERATING BUDGET neighborhood improvement projects, CLIP. So that's really where it's gone. We can give you a complete break-out.
No. In fact, what we said was that we would lower the amount of debt service that we paid. The debt service would no longer ever equal million. The most it's going to equal is 14 18 million. And that gap would be used for CLIP 15 and CLIP-like programs. 16
But there was a million 17 dollars in the FY '03 program budget and statement 18 for the NTI Program listed for CLIP. That's my 19 recollection. 20
This is funding for CLIP and CLIP-like programs beyond that million dollars. There's $2 million that's been taken out of what was going to go to debt service, and that is being paid out of the General Fund for NTI programs.
Was this for the 426 2/25/03 - FY '04 OPERATING BUDGET expansion of the program, or is it still for the operations in the 6th and 10th?
In '03 it's the 6th and the 10th. In '04, it'll be part of what helps with the expansion of the program.
Well, the program hasn't been expanded in '03, so what was the $2 million used for?
In '03 it's used for the 6th and the 10th. In '04 it's part of the expansion of the program.
Well, how much is it going to cost to expand the program citywide?
We have not done that calculation. We don't know what the total cost will be when it goes citywide.
So $2 million of the $10 million, in excess, that service was used for CLIP? What was the other $8 million used for?
Yes. We'll give you a complete break-out of how that money was moved. We 427 2/25/03 - FY '04 OPERATING BUDGET identified it in a couple of Transfer Ordinances, but we'll break that out.
Ms. Davis, I need to come back for one second, not for my own personal information, but for general information. I want to make that very clear. It's not for personal information, but general information. What is the last day to sign up for the DROP program? This is not a personal request. This is a general request.
I have, at the moment, no 13 interest in the DROP program, although some people would like me to sign up tomorrow.
At this point, if the Board were to discontinue DROP, there has been a regulation safe that has been promulgated that gives employees an additional 210 days from the point that the determination is made that DROP will no longer to continue for employees to sign up. So if we were to 428 2/25/03 - FY '04 OPERATING BUDGET discontinue at the end of September, you would have another seven months to sign up.
And is September the time at which the Board has to make a decision?
Yes. It may take two months or so to make a determination. So, sometime in the fall a determination and vote will be taken, and then 210 days from then.
I will share that information with the appropriately interested parties.
A lot of our constituents are asking about it. Let me have Mr. Roundtree back up as a follow-up to some questions raised by Councilwoman Miller. Mr. Roundtree, I think that Councilwoman Miller asked you how many firms were certified through the MBEC program. Did she ask you that?
Yes. James Roundtree, 429 2/25/03 - FY '04 OPERATING BUDGET Director of the Minority Business Enterprise Council.
Of the 1,200, in the past year, how many of those businesses were successful in bids for contracts with the City?
I'd have to get you that information. Do you want to know how many bid as primes or how many received contracts?
When you say successful, do you mean as prime bidders, or do you mean as subcontractors or consultants?
Yes. Resource-wise, it would very difficult to monitor the number of the firms 430 2/25/03 - FY '04 OPERATING BUDGET that we have in the directory that actually seek bids without being successful.
Well, are you given any information by, I'm assuming, Procurement that indicates back to you that an MBEC-certified firm was a successful bidder?
Yes. The actual bid itself. The process for a bid, the MBEC would review the actual bid, so we would know whether or not the firm that's successful was a certified firm. However, currently, we only review the top three lowest bidders. So if it's a bid scenario, we only review the top three lowest bidders.
So you at least have at your disposal, at a minimum, if one of the MBEC-certified firms is in the top three, you at least have that information?
And you don't need to get it from anywhere and it's right there. That's not a resource issue?
I mean, if we kind of play this out to its completely illogical conclusion, it's possible since, one, we normally don't monitor it; and, two, we just don't know at the moment, is it possible that out of the 1,200 certified firms that none of them were successful bidders in contracts last year? Is that possible?
Do you have a ball park figure as to many of the 1,200 --
No. But I will respond to you. I can get that information for you. We track participation, but we don't -- the annual report that we provide to the Administration and Council will indicate the number of firms that have received contracts, not necessarily who were prime contractors or who bid. What we can find out for you, though, is the number of firms that receive prime contracts or contracts together. I really don't know what you're asking, but I assume that you want to know the number of firms that received prime contracts that were minority.
Well, I think my response 432 2/25/03 - FY '04 OPERATING BUDGET to that earlier was, I want both.
All of this becomes a context issue. You might tell me that for the top three that you're reviewing, that 98 percent of the people who bid were successful. What I want to know about is people who bid who are not successful. And I want to know how many of the 1,200 people are even bothering to bid. So knowing me the way you do, Mr. Roundtree, you know that I want to know everything, be as broad and comprehensive as possible, and then I'll figure out how much I actually want to read.
Point of information. Mr. Roundtree, can you state the purpose of these firms becoming certified?
Yes. For the benefit of participating in the City's minority business program. That's the greatest benefit. 433 2/25/03 - FY '04 OPERATING BUDGET
To give them more of an opportunity towards their bottom line?
Do you have a sense of how many contractors have become certified and have not received any additional business? I've had calls from contractors that are certified, and maybe they sell paper products. We're not just talking about contractors that are doing the trades. And they haven't gotten one piece of business.
Well, one of the perceptions is that when you become certified, that that guarantees you a certain amount of business, and it really doesn't. What it guarantees you is an opportunity to participate. You still have to do all the other things. You have to pursue the marketplace. We spend a fair amount of time providing information to our certified firms about opportunities that exist in the bid process or the proposal. We also provide information on how the system works now. Because right now they can get the information right off the Web. Anything that we 434 2/25/03 - FY '04 OPERATING BUDGET bid or most of our requests for proposal is advertised on our Web site, on the Philadelphia Web site. So we inform them of that. We also receive inquiries from prime vendors who are interested in using minority women or disabled businesses. Then we develop a list for them and we provide that information, not only to the primes, but then to the minority and female vendors who we've supplied their names for.
Okay. I'll probably come back to this a little later. Thank you.
Madam Chair, I think that Councilman Goode has a question.
Thank you, Madam President. Mr. Roundtree, I will look forward to seeing the information that Councilman Nutter requested. And rarely do we ask for anecdotal information, but I'm assuming that you're somewhat familiar with the 1,200 people who are certified?
And could tell us whether 435 2/25/03 - FY '04 OPERATING BUDGET the amount of people receiving contracts are in single digits, double digits or triple digits? In terms of the amount of the 1,200, how many people are receiving work? Is it in the single digits? Is it in the double digits? Is it in the triple digits? I'm sure it's not over a thousand.
It's in the double digits, as far as firms receiving contracts.
I would prefer to provide that information more specifically to you.
I would prefer to request it anecdotally, in terms of your familiarity with those 1,200 people who are certified, whether less than a hundred of them are receiving work. You should know that. You should know whether it's in the single digits or double digits or triple digits. We know it's not over a thousand of the 1,200 firms.
No, it's not over a thousand. I would say the triple digits. I would say somewhere in the vicinity --
So there are hundreds of firms? 436 2/25/03 - FY '04 OPERATING BUDGET
Can you say that with confidence, that there are hundreds of firms?
No, because you asked me to say something succinctly about something anecdotal.
I am asking you in the context of requesting anecdotal information.
I'm not asking you for absolute. I'm asking your confidence of whether it's in the triple digits, whether there are hundreds of firms out of 1,200 certified that are receiving work. Or is it possible that it's in the double digits, only tens of firms?
I am, Madam President. Thanks. Let me ask this question. If there's a bid -- and let's say that Councilman Goode has a firm 437 2/25/03 - FY '04 OPERATING BUDGET and he bids on a contract and he's successful. He's the prime or maybe sharing it with another firm, and he's 100 percent owner of his firm and he's certified. He's a minority business and he gets that contract. And I guess we put down on our records that his company receives 60 percent of that particular bid or a 100 percent of that particular bid. And not that the Councilman would do this, so maybe it's inappropriate to use his name in the example -- but Joe Schmo's company happens to be a 100 percent minority owned. And they then subcontract a significant amount of that work from the bid, as they may be allowed to do with other firms that are not minority owned. For record keeping purposes and calculation purposes, do you credit the winning minority company with having a 100 percent of that work?
No. For record keeping purposes and for percentages purposes, the way the system works is, when the bid comes in, if a minority firm is identified for participation, it will be on what we call the Solicitation and Commitment Form. We would then call Joe Schmo, whoever the firm is, and ask them if they had 438 2/25/03 - FY '04 OPERATING BUDGET participated in the process and if they can tell us what level of participation they were at. That's our first contact with the firm.
In the bid form it will say what the level of participation that the prime is going to perform on that contract. But if they said prime contract and they are within the guidelines of the procurement process, we will count it 100 percent.
No. First of all, you can't prime all the work out to other people. In matters of a prime contract, they have to be able to perform -- it would vary -- a certain amount of the work with their own forces.
Suppose I tell you I'm going to do all the work and then something happens, some of my folks can't come in, whatever the case may be, my truck broke down, the dog ate 439 2/25/03 - FY '04 OPERATING BUDGET the form, whatever. And we're now coming up on the time to do the work And I decide, well, I've got to get this job done and Sam is sick and Joe is in the hospital and the other one couldn't come in, whatever the case may be. And I decide to hook up with somebody else to make sure this job gets done. Are you saying that I can't do that?
I'm saying I would have no 10 way of knowing based on the detail you just provided that that happens.
It's your scenario, so I have to assume that it could happen. I can't say here categorically it has happened or it hasn't happened. I'm basing on your scenario, the possibility exists.
Okay. We'll re-visit that topic. Madam Secretary, could you tell us about this -- again, this is where your expertise will be tremendously helpful -- this proposed financial transaction regarding the Free Library?
I've only heard bits and pieces of information, something to do with 440 2/25/03 - FY '04 OPERATING BUDGET depreciation and selling it off and we get some money and then we pay some money, a tremendously complicated kind of thing and I just cannot understand it. Could you explain it?
Yes. We're going to provide the written explanation. It is, in fact, a sale lease back that will take advantage of the fact that we have depreciation that we do not use because we are a non-tax entity. And there are businesses who want that. They also want to get a special accounting treatment, whereby they don't have to reflect the rents that we pay on their books. So between that and the depreciation, they're able to give us a lower rate, although it is a taxable rate.
When you talk about a sale lease back, are we're talking about the sale of the library and our leasing it back, the government leasing it back?
Yes. But we maintain the 441 2/25/03 - FY '04 OPERATING BUDGET property under the building. It is more complex than just a straight sales lease back. And that's why I prefer to give you a written explanation and that's being prepared.
Lastly, in the testimony, in the fifth paragraph, you have, "This budget anticipates 151 full-time General Fund positions, a decrease of positions from the FY '03 budgeted 10 positions." 11 So, are you saying presently you have 171 12 employees? Or is that what you were budgeted for? 13
As of the increment run in 17 November, there were 166 filled slots. 18
Is there one page in the 19 large book that would give me that answer, or do I 20 have to go to the six different units?
So let's see here. In FY '03 you were budgeted for 175?
171 full-time, 4 part-time. In the General Fund. 442 2/25/03 - FY '04 OPERATING BUDGET
I see it. And then the run, you're saying you were at 166 plus 1.
So, again, as we went through this yesterday, does that mean that there are actually five unfilled full-time positions and three unfilled positions that you were carrying?
And now you're talking about in FY '04, going to 151. Let me go back for a second. You have 166 full-time live bodies in the shop?
And when you have in your testimony, though, 20, can you reconcile those for me? 443 2/25/03 - FY '04 OPERATING BUDGET
The is the difference between last year's budget and this year's budget.
Now, yesterday we learned 10 that the Mayor's Office is showing a reduction of 19 11 positions, although only 7 of them are actually 12 filled; 12 are vacant. And we're anticipating 7 13 filled positions leaving the Health Department. 14 That leaves 36 from the Mayor's announced 50 coming 15 from four different agencies; the Mayor's Office, 16 MDO, Finance, and Health. Of the 36, are you 17 saying now that your part in that is 15? 18
No. My part in the 50 is not all 19 of the 15. Some of the 15 are coming for other 20 reasons, you know, some DROP. I'm losing because of the DROP. They're not all in that 50 administrative people that have been identified going forward.
I'm assuming you're referring to the 50 that have been announced as leaving by July 444 2/25/03 - FY '04 OPERATING BUDGET 1st?
Yes. Now, this was 50 announced on January 28th as leaving in 30 days.
No. I think what the Mayor said that he would announce the 50 within 30 days, and they would be leaving City employment by April 1st.
Okay. So let me make sure I understand that. We're going to announce in 30 days who's leaving and they're leaving by the end of the fiscal year?
That there will be people who will leave because of the DROP and for other reasons.
I have to get the specifics. 445 2/25/03 - FY '04 OPERATING BUDGET
Just for the record, this is what the speech said: "Within the next 30 days, I will eliminate 50 Administration positions, mostly in the Mayor's Office, Finance Department, and the Managing Director's Office." So I think, as a somewhat reasonable person, I took that to mean that in 30 days, 50 people would be terminated. I think it could have been a misunderstanding on my part.
Yes. I think what we had always been telling people was that we would announce the 50 and they would be gone by April 1st.
Look, I'm not trying to rush anybody out of the door. I'm just trying to understand what's going on. So, Ms. Davis, you have 15, but you're not saying at the moment that they're tied into the balance of the 36 that we learned from yesterday?
You have been most generous with your time and your answers, and I will come back if the time allows to ask you some other questions about the budget book. Thank you. 446 2/25/03 - FY '04 OPERATING BUDGET Thank you, Madam Chair.
I wanted to do a couple of additional follow-up questions that were initially mentioned by Councilwoman Donna Reed Miller and Councilman Angel Ortiz. When you prepare the document that provides for us the breakdown of contracts, the initial request was contracts across the board, and then Councilwoman Donna Reed Miller's request was to separate out capital. I would ask that you also separate out professional services in those four categories we asked about; Philadelphia residents, women, minority, African American, and Latino.
I don't think we can do it by ethnicity. We can do minority contracts.
Could we please ask Mr. Roundtree to join the table again? At the bottom of the testimony -- this is 447 2/25/03 - FY '04 OPERATING BUDGET actually provided by the Procurement Commissioner. It says, "Procurement will continue to partner with MBEC in training programs designed to educate minority vendors about the bidding process and business opportunity with the City." How often does that type of activity happen on a case by case basis? Is it structured over the year quarterly or monthly or what?
No, Councilwoman. James Roundtree, Director of Minority Business Enterprise Council. Up until November of last year we were having it on the third Wednesday of every month. We would have representatives from the Procurement Department, the Revenue Department, and MBEC to talk about the process of doing business with the City. We also hold seminars at various locations for specific projects. Every year we had one for MED Week, which is called the Philadelphia Day. We invite a number of the major purchasing-type people to meet with the minority and women business community. We conduct a seminar during March for women's business. It's called Women's Month. We co-sponsor with a number of organizations 448 2/25/03 - FY '04 OPERATING BUDGET an activity primarily to interest women and talk about the certification process in doing business with the City in that activity. And then we participate with a number of other resources or other agencies around the calendar year for them. When they have seminars we participate with the big Chamber of Commerce and their Business Day. We set up a table and provide information about the City's process. And we work with a number of other groups around the calendar year, but most of them invite us to participate.
So when you say other groups, might that not include interfacing with PCDC and PIDC as well?
Yes. More so PCDC than PIDC. PIDC, the Greater Philadelphia Urban Affairs Coalition, we've held workshops with the African American Chamber's contractors round table. Last year we held a conference with the Mid-Atlantic Business Association. They're basically small businesses around the Southeastern Region Pennsylvania. And then the other organizations contacted us and asked us to participate. 449 2/25/03 - FY '04 OPERATING BUDGET
So the outreach is certainly there and, I guess, the recruitment business inviting them to do business with the City, but is there any tracking at the point that you have the 1,200, any procedures in place that allow you to track those individuals down the line to see if they, A, ultimately end up in the system and, B, ultimately get an opportunity to do business?
Yes. And that's a matter of reviewing the bid solicitations that come in from the City. For example, under NTI we've held three outreach meetings. And we plan the whole outreach meetings in every Councilmatic district that has some activity. And specifically we go to a high school and we invite the contractors to the high school, ask them to come to the high school, because you need to know how to get through to the business in order to do business there. We invite the minority business community and we do a card exchange or some kind of information format or networking session. We limit it to 20 minutes a presentation, but the other 45 minutes to 450 2/25/03 - FY '04 OPERATING BUDGET an hour is just identifying who you are and trying to do some networking so that the prime contractors who may be bidding the project know some of the minority firms who are interested in doing business with them. And then we review the bids that come in. Basically we compare who attended the conferences and who's responding to the bids.
So is that what you mean when you say you track participation? That was your quote.
Yes. From that standpoint. But what I was responding to Councilman Nutter, we don't have a formal process that says, you came in March. You got certified in March. And then some time in November we go back to you and say, you still have not done any business with the City? Or if you're certified for three years and a whole year has passed, you haven't done any business with the City.
Mr. Roundtree, you referenced the NTI project. And you could have referenced the stadium projects that have their own accounting system set up. In many cases, 451 2/25/03 - FY '04 OPERATING BUDGET particularly the stadium projects, GPUAC is doing that monitoring and is very involved in that process. In terms of MBEC itself, what do you do?
We are involved in the process also. We attend all of the pre-bid conferences --
But what do you do on City-funded projects where there's no GPUAC monitoring?
The same thing. We provide the information about the projects --