COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON LAW AND GOVERNMENT - - - Room 401, City Hall Philadelphia, Pennsylvania June 7, 2001 2:00 p.m. - - - RESOLUTION NO. 000476 - Authorizing the Committee on Law ad Government to investigate whether the City-administered health plan currently and in the past has provided the most comprehensive and cost-efficient coverage to City employees for the premiums paid, and whether the City could provide more comprehensive and less costly coverage to the approximately 8000 employees and retirees currently covered by this plan, if other options were pursued. - - - PRESENT: COUNCILMAN DAVID COHEN, Chairman COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN ANGEL ORTIZ COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 (215) 561-2220 I N D E X RESOLUTION NO. 000476 JOYCE WILKERSON, ESQ., Chief of Staff ....... LINDA BERKOWITZ, Financial Oversight ........ 14 BOB OLIVETI, Controller's Office ............ 19 THOMAS CRONIN, District Council 47 .......... 27 RICHARD COSTELLO, Fraternal Order of Police .. 29 LOUISE SIMPSON ............................... 37 SHOSHANA BRICKLIN ............................ 43 JUDITH SAMANS-DUNN ........................... 53 LOUISE PONGRACZ, ESQ. ........................ 55 BOB MC ALLISTER .............................. 56 3 P R O C E E D I N G S
The Committee on Law and Government is calling to order a continued hearing on Resolution No. 000476, which was introduced by me on June 15th of a year ago. That shows how long we've been working hard. The resolution, just for everybody's information, was sponsored by of the members of City Council. 9 We believe the 17th member, Councilman Longstreth, 10 was not present that day or we're sure he probably 11 would have also signed the resolution. 12 The resolution aims to find out 13 information and documents with respect to the City's 14 health policy, with respect to the provision of 15 health benefits for both city employees and retirees 16 of city departments. 17 Over the course of the hearings, we've held a number of hearings and there are a number of interested parties. There are representatives of various labor organizations that represent city employees. There are groups of exempt employees who are not represented by organizations. There are groups of retirees who are -- some are still represented by labor organizations, some received a letter at the end of last year telling them that in 4 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 effect that it's too expensive to insure them and therefore the burden is going to be on them to furnish their insurance because apparently they are supposed to be richer than the City because the City claimed poverty and said it could not afford to continue to provide health benefits. We've been trying to get to the bottom because there are also allegations that, for example, with respect to exempt employees that the plans sponsored and put forth by labor organizations seem to provide better benefits at less cost than the City furnishes to those who are not members of labor organizations. It also seems as if the Administration desires to unify all of the health plans so that there will be one single unit that can be bargained for. And if we did it currently on the basis of what we know the facts to be so far, the argument of it being an economy of scale would seem to work just in reverse because it seems as if the City pays more, offers much less to its exempt employees than received by employees who are represented by labor organizations. So the economy of scale would seem to suggest that maybe those that are not represented yet ought to find a way of 5 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 getting represented that they'll do better. But over the year, we've had several hearings and there's been an effort by us to establish claims. If the City, for example, has documentation to establish the fact that there will be increased benefits to employees and economies of scale will produce savings to the City, we'd like to see evidence of that in the documentation. So far, we have found none. We've found, whatever we've been able to find, has indicated just the reverse. Today's hearing exists because we want to know where we stand. City Council has been studying health benefits with respect to City Council members and City Council employees on its own. We're concerned about our responsibility as a legislative body for the well-being of our own membership and our employees. And in addition, we're concerned about the responsibilities we have in the Council for all of the employees, whether or not they're in labor organizations. The labor organizations serve a very useful purpose to us in the legislative body. We have found that the labor organizations seem to be doing an outstanding job in their representation on 6 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 health benefits, and we've been trying to bring up the level of benefits of the exempt employees up to the level of the organized employees. And as a result, we've been trying to find out, for example, who speaks on behalf of an employee who is not represented by a labor organization if there's a dispute between that person and the insurance company. Our effort to find out that has produced no information at all.
There seems to be no one who speaks up on behalf of the exempt employees. The City Administration sometimes tells us the facts are to the contrary. We're waiting proof that such facts of the contrary appear. There are so many questions in people's minds. We want to know why aren't long-term employees and maybe elected officials long-term, why don't they receive the same level of benefits as the state employees receive? Because we understand that in a number of cases there are lifetime benefits for state employees who meet a certain time level of employment, but we don't know of any such policy by the City. The City recently increased its level of performance on retirement benefits, I think, to 7 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 include to raise the years from four to five, but that after the fifth year of retirement, the City says it basically doesn't have any responsibility. Well, there are questions raised as to whether that's a fair approach. But in all of these things that have any basis for really discussing the issues, we need to have documentation. Unions tell us -- and frankly, I had some difficulty in believing it to be true originally -- that all of their records are audited each year by certified public accountants and they have to account for every penny they have receive from the City for the provision of health benefits in accordance with the contracts that are negotiated. They made a simple request, I understand, when they were confronted with the City's demand that all plans be unified into a single plan. They said, "We want proof what it cost the City. " They have discovered -- and I did not believe at first, but apparently it is clearly true -- that there is no audit of any City records. The City, as a matter of fact, takes the position that they pay no money at all for advocacy 8 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 on behalf of employees because apparently that doesn't exist and they pay no money for anybody to really negotiate a contract with the health providers. As a matter of fact, we haven't been able yet to discover whether the City has anybody negotiating on its behalf or whether they merely accept proposals from insurance companies on insurance company's own terms. Now, these are the kinds of questions we have, and so this hearing is shortly before the summer recess of City Council to find out where we stand. The Committee has issued very specific request for documentation. And I'm going to ask the Chief of Staff for the Mayor, Ms. Wilkerson, to come to the table together with any support staff she may have with her to bring us up-to-date on where we stand on that issue. Ms. Wilkerson, would you come forward? You may have anybody with you that you wish to have. Is that Ms. Berkowitz coming forward?
I hope this isn't the last moment you feel welcome here, but that could be the case.
Councilman, I have a package of materials and a cover letter I want to deliver. I am Joyce Wilkerson, the Mayor's Chief of Staff. I'd like to read my letter into the record, if that's okay.
May I just suggest you read it slowly enough so that everybody here can follow it.
It's dated June 7. It's addressed to you, Councilman Cohen. "Over the past year the Committee on Law and Government" --
Sorry. "Over the past year the Committee on Law and Government has raised a number of issues with regard to the City's Administration of the plan for 10 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 those employees who do not participate in a union-administered plan. Those issues and the committee's repeated request for specific documentation on the City's health plan are of serious concern to Mayor Street. As a result, the Administration has initiated its own assessment of the state of the plan. That review, which is being conducted by Linda Berkowitz, deputy secretary of financial oversight and the director of the Office of Management and Productivity will cover at a minimum the following: "The process for provider recruitment, selection, contract negotiation and renewal; "The use of, compensation for, and benefits derived from an outside consultant to assist in provider selection and monitoring; "The availability and pricing of medical, dental, optical, and prescription coverage for active as well as retired employees; and "The comparison of the City's plan with AFSCME District Council 47 health plan. "One of the Mayor's goals is to provide the best health coverage for employees that the City can afford, and we believe that we have achieved 11 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 that level of excellence in coverage. We are, however, disappointed in the quality of documentation. " At this point, I want to stop and just make a few comments. On the heels of this hearing and the kinds of questions that have been raised, the Administration has really has undertaken its own review. And while we think that we have quality benefits for our employees, we've discovered a number of areas where either the City's procurement or the documentation that we have fall short of what it is that we as an Administration expected. It is at the instigation, I think in large part by this committee, that we've undertaken this extra level of scrutiny and is why the Administration has directed Ms. Berkowitz to take a hard look at what it is that we're doing so that we can come forward with honest assessment of what we're doing and provide the documentation. The second page of the letter responds specifically to the various requests for 12 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 documentation. Each document that is provided is identified, as you'll see when you match this against the requests that were made of the Administration. There are a number of documents that were not provided. I, working with Ms. Berkowitz, have directed that we make a thorough look so that we can provide Council with a comprehensive understanding of what's going on. The Mayor has directed that when we don't have something, we simply don't have it. We've provided documents that perhaps don't shine the best light on what it is that's going on right now, but in taking a hard look at what we do it's our goal to be candid in what it is that we do. And so over the course of the next few weeks, we'll be going through, developing the record, and we'll respond to City Council's inquiries. "As you know, the Administration has broached the concept of health plan consolidation with District Council 47 and other municipal unions as a way of continuing a high level of quality and coverage while containing costs in an increasing health care environment. We recognize that pursuing consolidation discussions with the union is 13 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 contingent on our ability to administer the City's plan in a professional and thorough manner. Again, we believe that employees enrolled in that plan currently receive excellent benefits, and we will take every opportunity to improve plan administration. "I hope that this information has been helpful. "
Just one general question. On what do you base the notion that the City's plan is the best plan for employees in face of evidence that we have that the cost of the union-sponsored plans are lower and the benefits their membership receives are greater, including the addition of advocacy on support of their union members? Is there any documentation that you presented that would tend to support that statement?
What I'll say is that it's the Mayor's goal to provide the best health coverage. What we want to do -- I mean, it's something that we've said that we've got a quality 14 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 plan and on and on. What we're attempting to do is to deal with that head on. We're pulling out all the documentation, any assessments that we have, we'll be making that available. We think that we have a plan that provides flexibility to employees. It funds a base rate of coverage at no cost to employees, but -- you know, and then goes on to enable employees to purchase additional benefits. We will, when completed, give you what we hope will be a very thorough assessment of comparison between not just this and the District Council 47, but hopefully other benchmarks as well.
When would we expect to get that material? Because we've been asking for it for many, many months.
Councilman, I'm Linda Berkowitz, Deputy Secretary of Financial Oversight. I can only answer you by saying as quickly as we can. There is a preliminary comparison with DC 47's plan that I just received. I have not had the opportunity to go through it and we need to do more than just District Council 47's. We need to compare the City-administered against all the union plans, and that's going to take some time to compile. I 15 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 would certainly hope that we would have something for you when Council comes back into session this fall.
I hope I heard right. We've had these health plans and you're just trying to now figure out if they're good or they're bad?
I don't think that's what I said. Councilman, I believe that the Chairman asked when you all would have benefit of seeing a comparison, and what I'm saying is we believe that our plan is a good plan. We do not have a full comparison compiled.
How do you know if you have a good plan if you don't have a comparison chart? (Applause.)
Honestly, with no 20 disrespect, if any private sector business said that, they'd be in Chapter 11.
I don't think so. Based on the preliminary information that I have looked at, I believe that the City's plan is a quality plan. It's preliminary -- 16 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476
Excuse me. Where are the documents to support that statement? If you don't have the documents, then that's not how I do business. If you don't have the documents to support your statement, I don't even accept those statements as being credible. (Applause.)
Councilman, the Administration hopes to have something comprehensive by the end of the summer. Over the course of the next coming period as we identify additional documents, we will make those available to you. We wanted to provide you with information we had identified thus far as opposed to holding it until we had everything available. We will be working throughout the course of the summer to try to complete the record, and we'll produce documents on an ongoing basis with the goal of having everything completed.
If I may, we've been holding these hearings now for -- since last June. We've asked for this information since last June. And you're telling me that you are now going to be 17 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 able to begin getting the information together. We've asked for an audit from the Controller's Office. The Controller informs us that they have been unable to secure any documentation, any of the materials that they have requested. Are we going to be here next June holding the same questions and holding the same hearings? I don't doubt the sincerity of what you're saying. I'm just saying that we've heard this before from Administration officials and it's been a year now and when are we finally going to see what Councilman Rizzo said is documentation that goes to the point of these hearings? That's all. It's very simple.
Councilman Ortiz, I'm concerned even more than that. I understand that during the last labor negotiations, and Council tried to stay as far away from labor negotiations as possible except for our concern that they be fair and that labor be treated with respect and we expect labor to treat management with respect, but we don't try to get involved in issues. But you can tell me to deal with one, I understand that a basic issue was that the desire by the Administration to unite all these health plans into one, saying that the 18 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 Administration was convinced that there would be an economy achieved as well as improvements of service. And yet you're telling me that there's no evidence. And I wonder on what City negotiations based on? (Applause.)
Is it good faith to raise an issue when there is no demonstrated ability to support the contention?
Councilman, we have not completed the review of documentation. I don't have that answer right now.
Tell me, has the City Controller sought to make the audit that Councilman Ortiz referred to?
I have not seen a letter from the Controller's Office indicating that they intend to audit the health and welfare. The letter would not necessarily come to me. It would probably be with finance would be my guess. I can follow-up on that, but I have not seen a request from the Controller.
Are there 19 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 representatives of the City Controller's Office here? Will they come forward? You can both remain in your seats. Why don't you just pull up another chair. I want the auditors to come up. Would you identify yourself?
Before I identify myself, I just what to state that we were observers and we were not expecting to be testifying, but I have contacted my office and they said that I can answer a couple questions. My name is Bob Oliveti, Audit Manager with the City Controller's Office. And accompanying me is Stacey Albert who's a staff auditor with the Controller's Office.
Now, is the City Controller engaged in an audit of the health expenses of the City?
The City Controller had accepted a request to audit the health and welfare benefits. We had contacted the Personnel Department, and to date we have not received any information that we requested from the Personnel Department.
When was the request 20 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 made?
There was a number of attempts to set up what we call an entrance conference where we would sit down and meet with them and discuss what we would be doing. That process went on for three to four weeks, I believe.
Could you give me dates when you began the process of trying to get the entrance conference?
Referring to some papers I happen to have with me, I believe it was March 5 that we began the process of trying to set up an entrance meeting. On March 26th, we sent a letter to Linda Seyda. If you want me to read from the letter --
No, but your efforts to set up the entrance conference were not successful?
From March 5th to March 26th we were not able to set up an entrance conference. On the 26th of March, we sent a letter expressing our concern at our inability to set up an entrance conference. As part of that letter in order to speed up the process, we in addition to 21 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 saying that we need to set up this meeting, we included in the letter some of the items that we wanted with the hope that possibly when we did sit down and meet we may be able to get some of those items right away and then we would be willing to wait for whatever we needed to wait for. The entrance conference was held -- I don't have the date in front of me, but I believe it was about mid-April and we sat down with representatives from the Personnel Department. They didn't present any of the information we requested at that time.
Well, they didn't say they had no documents, but they didn't have anything with them.
They didn't bring anything to the conference. They indicated to us that by that Friday -- I believe the meeting was on Monday -- that they would provide whatever they could provide and also give us a list of when they would provide the additional information. 22 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476
I don't believe we heard from them for a number of days after Friday. Then we attempted to contact them by phone.
The phones were working, yes. At a certain point, I spoke with a representative of the Personnel Department who said that he would speak with the Personnel Director that afternoon and get back to us. We didn't get a response after that. I'm trying to recall all this now. At that point we -- I was informed not to continue my contact and that it would be handled at a higher level. My understanding is --
At a higher level within our office. My understanding is that there were a number of contacts made by the Deputy Controller to 23 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 contact Linda Seyda to obtain the information and that they were unsuccessful. I believe at a certain point, our office was in contact with, I believe, Councilman Cohen's office who informed them of the problems that we were having.
So from March to now you've had one conference, nonresponsive to telephone, no information whatsoever?
No. I will be contacting the Controller's Office directly and following up on this.
I will be contacting the Controller's Office today in response to the information I have.
Because we have a high regard of the Controller's Office and they have a duty with respect to auditing the City funds, and I think we do have to establish a basis of 24 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 confidence between the labor groups and the City Administration so that when a demand is made by the City during labor negotiations, it ought to be in a fashion so the unions can treat it as a good faith suggestion. I just find that hard here, unless there's some evidence to support the union's contention, the Administration's contention that there will be an economy of scale. So I just think it urgent that what appears to be stone-walling stop and that records be made available and information be provided in a very responsible and prompt fashion. And I'm hoping that today's meeting will produce those results. Do I understand you, Ms. Wilkerson, to say that your office together with Ms. Berkowitz is going to be handling this matter from this point on?
That's correct. I think that the Administration has a responsibility to operate its programs in a reasonable way. We have a responsibility to respond to the City Controller. It's his obligation to monitor how it is that City funds are spent. My office, under the direction of the Mayor, is committed to doing what needs to be done to develop the information. If it doesn't 25 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 exist, it simply doesn't exist and we'll have to deal with that. It's our commitment to provide quality health benefits to employees and to put into place a system for administering of those benefits and that's the end to which we're working. Like I said before, I think that sometimes it's not easy to get information this way or sometimes, you know, you have to get kicked in the butt in order to react appropriately, and I think in some ways that's what happened on this. But we intend to move aggressive to provide documentation that has been requested and to work on improving where there turn out to be shortfalls in how the City administers the health and welfare program.
Thank you for that, and we're taking that in good faith. Let me at this point note the presence of committee members who are here. The quorum was established at previous hearings, but nonetheless I want to note Councilman Frank Rizzo is to my left and Councilman Ortiz. I don't think that's an accurate description politically, but that's the physical position.
Councilman you can take 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 comfort in knowing from my perspective, he's on your right. (Laughter.)
And Councilwoman Blackwell who is also a Majority Leader of the City Council, our second ranking official in City Council is here with us today. Two staff members Stanley Shapiro and Shoshana Bricklin who have been working with Council representing technically the President and the whole body of City Council. And the gentleman moving around is Tim Kearney who is my direct legislative representative and has been working on the health matter. At this point, I would like to ask Mr. Costello and Mr. Cronin and if there's any other if any other unions -- I don't see the fire fighter's representative, but if there is one here, I would like to ask him to come forward and if there's anyone from District Council 33. President Matthews said a vice-president would be here if he were unable to attend. I would like them to come forward because I want to just raise a few questions with them as to whether or not my description of what occurred during the union negotiations with respect 27 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 to the Administration's proposal for consolidation and unification of all the health plans, whether I described that accurately. Mr. Costello, Mr. Cronin, and any others representing any of the other -- may I excuse, with thanks, the two representatives of the City Controller's Office. We're very grateful to you for bringing us up-to-date. We wish you well in getting the facts from everybody. Would the representatives of the labor groups come to the table?
Mr. Cronin, I see you're the closest immediately to a microphone. Was I accurate in stating that there was a demand made upon the labor organizations, specifically District Council 47 in your case, with respect to the unification of all of the health plans into one?
That is correct. Let me just -- if I can add something to that.
It was made clear -- and I'm just speaking for 47 now. It's really three affiliated locals, Local 2186, Local 2187 and Local 810, all of which are under the umbrella of District 28 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 Council 47 and all of which are impacted by the negotiations, the last round of negotiations. It was not only put out to us information that was needed and was given willingly by us, but as a propaganda tool -- and I think this needs to be said because, to me, and I have to say it to the two representatives here because they represent the Administration, that what we've had is a fraud. And I'm not using that word lightly. And why do I say fraud? Because it was put publicly into the print media and to the electronic media, meaning all of the TV stations and newspapers, that the Administration had a plan, had a plan already that would show that it could save X number of millions of dollars if everything was unified. They had that. They put it out to the public as a piece of propaganda saying to the public, look how greedy the unions are and look how wise our judgment is in what we want to do to the taxpayers. Now, during the course of the negotiations with this plan, because there is a very serious issue, we said to them, "We hear you. You have this plan. May we see it? We've given you everything you've asked for. Can we see your plan, 29 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 what you've put out to the general public now?" Well, we never got the answer. And what I would like to ask the representatives now of the Administration is they had their plan then, where is it now? Why can't we see it now? (Applause.)
I have, working with Berkowitz, not completed going through the documentation. I will provide whatever it is that we have in response to the questions that have been raised. I can't respond because I have not completed the review of the documentation.
Mr. Costello, did you want to -- the same demand that I referred to to Mr. Cronin, was that is involved in your negotiations with the City? Did the question of unification of the health plans come up?
Yes, it did. And as a matter fact, Councilman, first of all, I want to thank yourself and your colleagues for being here today. I understand that other members of Council maybe down somewhere in South Philly where they're 30 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 having a ground-breaking for one of the ball fields we're building and they're giving out shovels and little caps and some other trinket. But I wanted to point out that you may not have missed that event as would be perceived because I sat here with everybody else and saw several shovel loads dumped on the transcript of the hearing today. (Applause.)
All the shovels are not in South Philly at the present time. I have to point out that we've had some fun here today, but it's very serious. And to illustrate the gravity, not only is Mr. Cronin correct, but there were consequences of what happened. We suffered them directly at the FOP as a result of the City campaign last year, which now appears to be based on nonexistent information, we suffered a cap on your health care dollars that took effect last July. We just sustained a 28 percent premium increase from Blue Cross that we're going to meet out of reserves. We may or may not be able to last until the next contract to be able to provide health care to our employees. And now to sit here and find out that the whole thing was a charade and 31 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 a joke is certainly not very encouraging to the members of my bargaining unit. The Administration recently had a lot fanfare and a lot of hoopla over appointing a task force to review the discipline of the Philadelphia Police Department. I would submit to you that we need a task force to review the discipline of this Administration. (Applause.)
If on the next 911 call, my members said, "Well, we're going to study it, we're going to think about it, we're going to look at it and in 7 to 12 months we'll get back to you," I don't think the citizens of Philadelphia would tolerate that. And I don't think it's fair that we should have to tolerate it. And I do say that that would be conditioned on a difference if this committee or the city unions had demanded this information and unfairly put the Administration in this position, I could understand the reluctance and reticence and the delay. And in fairness to Mrs. Wilkerson, she was not the Chief of Staff last January, and I mean January of 2000, when the Mayor expressed to me 32 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 personally and the other union leaders that his staff advised him that it would be cheaper, more economical and more beneficial of the taxpayers of the City to unify all the medical plans. So the information that he based that statement on and that the entire campaign was based on a year and a half ago still remain unknown to anyone in the City of Philadelphia. And as Tom said, if that's not a fraud, well, the old term, if it waddles and quacks, it might be a duck. And the fact remains is that the deception on the taxpayers of this City -- and reiterate the fact that we were accused of hoarding the money, we were accused of all kinds of misconduct during the hearings. We regularly open our books to audits by the City. And to find out that the City of Philadelphia has never submitted to an audit raises a lot of questions as to where that money is going, who they're accountable for, and most importantly of all, based on their record and their practice, who are they to control anybody else's health care dollars? (Applause.)
We said before, and we'll 33 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 repeat here today, that the four unions are prepared to offer medical care to every employee and the citizens of Philadelphia and we will save the taxpayers money and offer better benefits than the City of Philadelphia has done. We can prove it; they can't. The record stands clear. We don't need another six months for that answer. (Applause.)
Councilman, I'd like to add one other thing because much has been made here that Ms. Wilkerson wasn't the Chief of Staff at the time of those negotiations, and that is true. But we're talking about the negotiations which received an awful lot of publicity and we're talking about the union and the City's position in those negotiations that was clearly enunciated. It wasn't kept secret from anybody that can read, write, or listen or watch TV. But what we're saying to you is in terms of the City's position is absolutely clear what they said that they have. Now, one member of that City negotiating team is sitting here, is sitting here, okay? And that is Linda Berkowitz. She sat in on 34 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 those negotiations and heard those statements made and those allegations made in terms of what can be done. Now somebody is here, somebody is here from the union, somebody is here from the Administration. If you put Ms. Wilkerson aside, let the questions be answered. Where is the proof if what was alleged here? Is what really what we have here is a velvet glove hiding iron fist, which is what I believe it is. (Applause.)
As I stated, we will provide the documentation. We are going to be thorough about it. We're going to be working with the Controller's Office to comply with his request. And at the end of the day, you'll have whatever it was that supported the position that the Administration took.
Ordinarily, if this were being raised for the first time, I could understand that you would take summertime and in the fall you would have the answers. It seems to me you owe all of the workers for the City, all the organizations that represent them, more than that. Seems to me we ought to be able to get the date, say 35 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 within the next week when we can get a full accounting of what you have and what you don't have. You can be honest. You can tell us in effect that there never was a plan if there wasn't a plan because I don't think either of you would want to engage in deception. Or if there is a plan, you can produce it. You can say it was just a rough outline of a plan. Or you can have a full-blown plan. We don't know what it is, but I think we are entitled to know what exists as of now. And I don't see why it would take the whole summer to put that together. There may be some things, you know, you might need time for to develop further proposals on, but what we'd like to have quickly is what you now have because what I'd like to see happen is that Councilmembers have a packet of material on the health plans that they can take with them when they leave here on summer recess on June 14th a week from today. So that my thought is that we ought to ask you, and I'm going to request that from the members of the committee to consider this, we ought to ask for a response from you, say, by next Tuesday morning or say next Tuesday afternoon there's going to be a or Committee of the Whole meeting at 2 36 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 o'clock. Say we set a meeting at next Tuesday at 2:30 immediately after the Committee of the Whole meeting for the receipt of all the documentation you have available, together with your statement as to what you propose to introduce at a later time and give us the schedule of what you intend to produce at a later time and when. Now, that will give us a very workable approach to this problem so that when we come back in the fall and if there's an emergency, I say to the representatives of labor, Council will be able to come back at any time during the summer to deal with any emergency situation if one exists. We would like to have that available. Now, is there anything unreasonable about that request?
All right then. First, let me ask, are there any other representatives who wish to be heard on what came up at their negotiations? We're not dealing with the terms that were being bargained for, but with the representations made by the City Administration. Were they the same as those that Mr. Cronin and Costello have reported? And if any of you wanted to 37 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 add any further statement, you're free to. I don't recognize the hand in the back. Is that from a representative of a group.
No. I am Louise Simpson and I'm a representative of retirees.
Why don't you come forward for a moment. Thank you. Is there any further, Mr. Cronin, Mr. Costello. I think you were clear.
I'm delighted that we're going to hear at least a definitive date. And I'm very anxious and I'm sure the members retirees and the members of the various locals that 47 is the umbrella to, we will be here to hear those answers.
The other thing is I just hope, I hope since this was reported in the press again now over the year ago --
You want to speak into the microphone. I want to make sure the reporter gets this.
I just hope that the same media that reported what it reported in terms of the Administration's position is here to hear the 38 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 Administration response this time. I'd be thrilled.
My name is Louise Simpson. I'm a retiree. I once belonged to District Council 47 and promoted out of it into the non-represented organization, and I have been fighting for what the retirees for the non-representative group have gotten, or rather not gotten. As of December the 18, I received a blue piece of paper. Here it is with all that the plans with open -- during the open enrollment. Every one of them has underneath it, "These do not include prescriptions." Now, because of this Council, this particular section of City Council and what Councilman Cohen has done, we have gotten a lot. We have also not gotten a lot. On May the 1st, I received the new plan that I was going to receive. It was a very interesting plan. The last plan that I had, which 39 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 was Personal Choice which I had deducted from my retirement, was for a year. The new plan is for month-to-month. Now, Blue Cross said in their cover letter that they have a company called QCC that takes care of this medical plan. Now, the way I feel about it, that sure can cut both ways. They can cut us off any month that they want to or raise prices or we can get it changed back to what it was before. One of the very interesting things is, is that the plan that came out May the 1st was retroactive for deductibles to January the 1st, with the exception of prescriptions, which means that all of the prescriptions that were paid for by retirees in the non-represented group were paid out for nothing and go for nothing. This committee will be out on retirement after next week. And I'll tell you what everybody is doing. Linda Seyda is dragging her feet. She has been dragging her feet for as long as I can remember. And I would like to commend Ms. Wilkerson for her unbelievable sense of humor. Anyone who believes that the City of Philadelphia can provide a health plan that is going to be cheaper than any of 40 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 the union has to have a great sense of humor. (Applause.)
Now, there are many, many other things that are going on. Now, because this committee is going on vacation on the 14th, that means that those of us who are covered by that plan that came out May the 1st could be hurt during the summer and we will have no recourse.
Ms. Simpson, let me explain what summer recess means. It means that there are no formal scheduled hearings. Every other part of City Council, including the presence of many of the Councilmembers and representation of employees and representation of City, continues on. We'll all be mostly available during the time. So we're saying to you and to those similarly situated as you that if there are problems, we want to hear them. Our offices will be open. Each of us will be reachable. Several of us may be out of town or out of the country for short periods of time, but most of the time we will be available. And if there's a need for a formal hearing, as I stated earlier, the City Council will be ready to be convened. So I don't want you to feel that you're going to be 41 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 without any form of protection.
The other thing that I want to address is Ms. Wilkerson has only addressed herself to those people who are still City employees who are covered by a labor union. She has not mentioned the retirees at all. And there are retirees who are buying little blue plastic things that cut their pills in half because they can't afford them. Now, I have a particular condition where I need to take six prescriptions a day. There's somebody who needs to take nine prescriptions a day. And every year the cost of our medical benefits goes up. Now, we are going to have to provide a deductible, but no one has said whether or not any of the monies that we put out from January will be applicable to the prescription deductible. And as far as we have gotten as far as our information is, it's not, which means that the retirees, once again, are going to be hurt. Now, we're not non-reps, but this is going to hit those people who are exempt at all. So take a look around.
Let's have a reply 42 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 from Ms. Wilkerson on that.
But you're going to put it on your agenda to get the answer.
Because the complaint seems to be a very legitimate one, as stated, and we ought to know whether it's sound. And if it is found to be sound, we'd like you to include by Tuesday your recommendations with respect to how it will be dealt with.
All right. I'm going to ask you to conclude your presentation.
This is the last thing that I'm going to say. And that is, Personal Choice has been made a non-group choice which means that we are no longer covered as former employees, and that has to be changed. We're paying for it. This has to be changed. We are City of Philadelphia employees who are retired. We should not be in a non-group plan, period. 43 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476
Would you include that, Ms. Wilkerson, in your reply to us on Tuesday, your response to that?
And I thank you very much for the opportunity to giving you this information.
Thank you for giving us that information. We're going to have a staff member just ask some questions to make clear what we've been furnished and what it is yet to be furnished. Is that right?
After that, we're going to ask if there's anyone here who wishes to be heard on any phase of this hearing. So anybody who has anything they feel will contribute to a solution to the problems we've been talking about, we'll be very happy to hear you. Or if you have an issue that needs to be addressed, we'll be happy to have that, too. At this point, I'm going to recognize Ms. Bricklin from the central staff of the Council.
Thank you, Councilman. This question is for either member of the Administration. You handed us a letter today that 44 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 referenced a list of documents that we have requested based on testimony in two hearings, June 21st of 2000 and March 8th of 2001. One of the major questions and issues for this hearing has been the use of brokers or consultants in terms of procuring our health products. The answer to several of the questions that we pose was that currently the City contracts with Manuel N. Stamatakis to provide us with provider selection negotiations. I'm reading from your letter. And monitoring relative to dental, optical, and prescription coverage and that he has been performing such services since 1992 under an agreement that contained annual provisions for renewals. Now, one thing that you did indicate which we did not know before is that Mr. Stamatakis -- that the RFPs state that the benefit provider is required to compensate Mr. Stamatakis for his services at the rate of percent of all amounts billed to the City. My question is, based on this response, and could you provide this, how much in dollars has Mr. Stamatakis received and if you could break that down by fiscal years so we know what kind of dollars we're talking about? 45 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476
The other thing is the next one you talk about -- we asked for some RFPs for medical and prescription coverage, prior RFPs. I want to clarify that you said that you will be giving us a new RFP that you're letting, but we would like to know about the old RFPs. This investigation really needs to look at the history as well as what you're currently doing to ameliorate the situation.
That goes the same for the vision and dental coverage. We have asked for prior coverages. So for any of these things, we really need to see a historical pattern so if there is an improvement, we can at least verify that there is an improvement. We've already asked for prior. In the list of documents here, there is a request for prior as well as current RFPs for particular periods of time, and I would ask that you pay attention to that and provide us with that material.
What we will do is identify the time period that we searched so that 46 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 you'll know if there's nothing for that time period, it means there was no RFP issued. But we'll search back.
I guess on the last question here which was a question requesting information about non-personnel and -- just one moment. About non-personnel and non-finance employees who were involved in the provision of benefits or in any way, you've indicated that you did not -- the City does not calculate how much these employees spend doing these kind of activities. And it would be useful perhaps to know why because I think that the unions do actually calculate what their employees spend in terms of doing these tasks. So in terms of comparison, we need to either know how much these employees spend or we need to then -- you need to then take that out of what the unions provide, spend on administrative costs, which is what these are usually called. You said you can't do that, the City does not do that.
That's correct. We don't allocate costs in that manner because they're not extraordinary costs and because the individuals who have some responsibility in the department for 47 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 distributing the health plan forms and collecting them back when they're completed, they do that as the part of the normal course of their work. And we believe that the time spent is minimal. Now, I personally have not seen a breakdown of the union's -- any administrative cost from the unions. And perhaps they can provide the methodology that they can share with us.
Isn't it true, though, that the Administration has a trustee on each of the health and welfare boards for each union. So wouldn't you know already about these costs for -- all the costs for the union, including their administrative costs? I mean, I find it hard -- I think we've been looking at this and we know that the Administration has access through your own representatives on these boards.
I believe that the point that Ms. Wilkerson has been trying to make during this hearing is that the records that we have been able to review in terms of what the City has internally are inadequate.
What we will do is we can identify or give you a sense of how the 48 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 personnel department is organized to handle health and welfare issues. What you'll see is that there are a number of people who work from the departments, part of their job responsibility is to provide health and welfare information to employees. What we probably will not be able to do is reduce that to a dollar amount or number of hours per week spent. But to the extent that we can provide you with information that helps clarify how those services are performed, we'll do that. But I don't know that I'll be able to say "And it translate into, you know, .5 hours a week."
And one final question, when we do receive these documents, if like today, some of the responses prompt us to have additional questions, you will be available in a timely manner to address those concerns so we can just clarify, in a clarifying sort of --
I hate to do this to you again but, Ms. Berkowitz, I hope you're not just setting the stage for bad news. You're telling me 49 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 that you don't have a feel for what the administrative costs for administering this plan is.
That's not what I said. I think the question was -- I was responding to the question posed about costs that are incurred outside of the finance and personnel departments. And it is my understanding that they are primarily clerical responsibilities that are minimal in nature. And because of the nature of that work, clerical support folks in the departments hand out lots of stuff and they collect lots of stuff back. It is really not, in my opinion, a legitimate methodology to try and allocate the passing out of material to the administration of the health plan because those individuals would have their jobs if they did not pass out a single piece of paper relative to the health plans. It's just part of their overall responsibilities.
Well, I came from the private sector before, a major corporation, and I know personally because I was responsible for an area that was responsible for most of the time that our clerical spent was dealing with health-related insurance forms. As matter of fact, it got to the 50 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 point where it dominated the day's work just dealing with "What form do I use, this bill isn't straight, I'm getting a duplicate bill here." It's hard for me to believe that we would consider that facet of the cost outside the personnel department is minimal.
Councilman, for example, I know best probably what goes on in City Council. City Council has an administrative person who in connection with her responsibilities of handling payroll, getting computers for people, also is the link point between the employee and the personnel department for health and welfare benefits. What you're asking us to do is try to figure out how much of her time she spends on the personnel health and welfare issues and then to cost that out. And what we're saying is we could perhaps guess. We do not keep records on that basis.
And I know best, since you have experience, I have experience when I don't get my computer, I don't get the light bulb fixed in the office, I don't get the pager battery because they're doing health and welfare benefits and insurance work. 51 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 (Applause.)
What we can do is describe to you how those services are performed and we can do the best we can. We do not keep accounting based on that.
You're an attorney. Attorneys keep a very detailed list of every minute they spend on the phone, they have the egg timer on the desk. And I believe a business also keeps track of what amount of time in fleet management. If a mechanic's working two hours on a particular vehicle, they're able to determine how much time they spent on a particular vehicle because they keep track of how much money that particular vehicle's repair -- I think sometimes lack of detail and lack of knowledge of that issue is by design.
I don't mean to beat it to death. But, again, it's hard for me to believe that we're going to point to an efficient operation and we don't know how much we're spending to administer it. (Applause.) 52 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476
And I think it's important to indicate the services that are performed, for example, it's unfair to compare total costs and expenses if the labor organizations have people who really service their membership on their problems and the City doesn't service anybody. I think that's got to be pointed out that the reason the City's costs in one area is lower is because they don't do anything on behalf of the employee. But we want to know that. We want to know to what extent do employees get helped who are exempt from labor membership as compared to those who are in labor membership. We understand that in the labor organizations if an employee feels that the carrier or provider is not doing what they ought to be doing, there is someone whom they can go to who will speak on behalf of the employee. What we're told among the exempt employees is we're told basically go to the insurance company which turned us down in the first plays and the exempt employees don't seem to have any representative. I would urge you to address that question. If you think I'm wrong, please state your view and why, because that's 53 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 important. If you're going to compare, you've got to compare equal services. You can't say the City has no administrative costs; it makes no sense because there's got to be administrative costs in administering any plan. Now, is there anyone who has not been heard who wishes to be heard on any aspect? Would you come forward? And your question may or may not require answers. You came first. Why don't you go ahead? Identify yourself. I'm going to ask each person to identify themselves, who they are and what organization, if any, they represent.
I'm Judith Samans-Dunn. I'm with the Association of City Management and Professional Employees. I just wanted to add, a little while ago you were asking the union representatives how they dealt with the City when the City said "Here, we want a unified health and benefits plan." We're the non-reps. We're prohibited from being represented, but we are civil servant employees of the City. As a matter of fact, we have a number of people nearing retirement age right now, 54 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 a number of people in the drop program, and our association is particularly concerned with how the retiree got two-weeks notice, you just heard, two-weeks notice that they no longer are going to have prescription coverage. That's where we're going, that's where we're concerned. That's where your staffs are going, that's where we're concerned. Guess what? We got also got two-weeks notice as to what our health care plan could look like, what our choices were because we also got them in mid-December, starting January. We got some shocks, we got some increases in our deductibles. We got some increases in what we would have to pay out of our paychecks. And, no, that plan does not look horrendous. But there was a major city news blitz when they talked with the unions about health benefits and who gets what. We don't get any press that we got cut this time and that there's nothing in place to stop further cuts that might be additional nibbles every year or it might be whacking the heck out of us. We have a major concern here with the process. We've offered repeatedly to be a part of the conversation in this with the City 55 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 Administration. We don't want to be forever at odds with our own Administration. And we're not representative, but we can certainly share information around our members and give feedback. We can do that. So we just want to make sure we're here in the dialog and we want to make sure some system is in place where we all get a fair shake.
Good afternoon. My name is Louise Pongracz. I'm with the law firm of Willig, Williams, & Davidson which has the privilege of representing, not only District Council 47, but also the Philadelphia Fire Fighters Local 22. I'm really here to mostly to point out a sort of a technical point which is that there are very standard allocation procedures that are used in order to determine the actual administrative costs, and it is not an unusual situation where either an employer shares costs with a fund or that a union also shares, for example, building space or facilities with a fund. Just to follow-up on Councilman Rizzo's comments, and I also might note highlighted in Mr. 56 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 Cronin's comments earlier. These procedures, for example, entail doing interviews. One of the funds which we represent recently did a time study. You give out time sheets to people who perform mixed services and you run it for a test period of two weeks and after that you collect it, you quantify how much they spend. It's not a difficult process. However, I would also like to note that that allocation does not end with the personnel costs as appeared to be implied the earlier information provided by Ms. Seyda. It also has to include computer costs, telephone costs, all these other costs that go into the actual cost of providing health benefits. It's all part of the picture and it is possible to get the information. As you all know, our health and welfare funds are exempt from taxation under specific portions of the Internal Revenue Code. One of the conditions of that is that the money is spent exclusively for the purpose of providing benefits and defraying reasonable administrative costs. That's why the unions not only can, but must do it. There are established procedures for doing it. I am confident that the City can discover what they are 57 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 and that they should do it. (Applause.)
My name is Bob McAllister. I'm the benefits administrator for AFSCME District Council 47. And everything that Wendy just said, all of those administrative costs that we have in the District Council 47 Health and Welfare Fund each and every year are audited by Price Waterhouse Coopers. And the City of Philadelphia by way of their trustee on the fund has all of that information. So every dime, every dime that is spent in District Council 47's health and welfare plan, the City has access to that and knows where it's going. And we would really like to see the opposite, we want to see all of their administrative costs. (Applause.)
Thank you. Is there anything further to come before this committee today? If not, the committee will stand in recess until Tuesday, June 12 at 2:30 in the afternoon at which time we will await both Ms. 58 6/7/01 - LAW & GOVERNMENT - RES. NO. 000476 Berkowitz and Ms. Wilkerson and the production of the documents and the other information requested. Thank you very much. (Council adjourned at 3:15 p.m.) - - - 59 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of June 7, 2001, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON LAW AND GOVERNMENT ___________________________ Lisa C. Bradley, RPR and Notary Public