COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FISCAL STABILITY and INTERGOVERNMENTAL COOPERATION - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, December 10, 2008, 1:25 p.m. - - - RES. 080603 - Authorizing Committee on Fiscal Stability and Intergovernmental Cooperation to hold hearings re City's operating budget for Fiscal Year 2009. RES. 080890 - Authorizing Committee on Fiscal Stability and Intergovernmental Cooperation to hold hearings re feasibility and benefits of implementing a coordinated municipal advertising program in Philadelphia. COMMITTEE MEMBERS PRESENT: Darrell L. Clarke, Chairman Frank DiCicco, Vice Chair Blondell Reynolds Brown Curtis Jones, Jr. James F. Kenney Joan L. Krajewski Brian J. O'Neill Marian B. Tasco Also Present: Jannie L. Blackwell Bill Green - - - V A R A L L O Incorporated Litigation Support Specialists 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 12/10/08 FISCAL STABILITY, RES. 080603, 890 I N D E X WITNESS Edward Dempsey, Program Director, INVEST 7 Pennsylvania Treasury Department Bernie Strain, PA Treasury Department...... 22 Rob Dubow, City Director of Finance........ 37 Rebecca Rhynhart, City Treasurer........... 37 Vivian Miller, Clerk of Quarter Sessions... 57 Andrea Jefferson, CQS Accountant/Clerk..... 60 Robin Jones, CQS First Deputy.............. 67 Shelley Smith, City Solicitor.............. 89 M. Madden, Director of Business Development 97 SEMUSA Paul Levy, President, Center City District 118 Rhina Cutler, Deputy Mayor................. 135 Transportation and Utilities * * * 3 12/10/08 FISCAL STABILITY, RES. 080603, 890
We are now going to convene the Committee on Fiscal Stability and Intergovernmental Cooperation of the City Council of Philadelphia. Currently-present members of the committee are Councilwoman Blondell Reynolds-Brown, Councilman Curtis Jones, and Councilman James Kenney. In addition, we have Councilwoman Jannie Blackwell and Councilman Bill Green in attendance. Before we start, I just wanted to give a brief statement. This is what, we anticipate, will be a series of hearings either by this committee or another committee of the City Council of Philadelphia in its attempt to discuss initiatives that will increase the revenue stream to the City of Philadelphia. As you know, we are in a significant budget crunch. It is real; it is not manufactured. It's likely to get worse before it gets better. And at the 4 12/10/08 FISCAL STABILITY, RES. 080603, 890 end of the day, we find ourselves wrestling with these issues about existing priorities and existing programs in the departments within the City of Philadelphia and what changes should be made, but the problem is, is that we're arguing over a declining revenue stream as it relates to our General Fund. So as we move ahead it's important for all of us in a collective way -- Council and the administration and all of the row offices -- to come up with initiatives that will allow us grow our revenue base. This particular hearing is going to talk about some of the initiatives that have been put forth by members of Council earlier on in this process and one or two new ones. And we anticipate in the first part of next year, there will be some significant things put on the table to try to grow our revenue stream. So I just want to thank everyone for being present here today, and we will 5 12/10/08 FISCAL STABILITY, RES. 080603, 890 start in short order. I guess we have a witness list. Councilman Jones would like to make a brief statement. Councilman?
Thank you, Mr. Chairman, and I would like to thank you for chairing this committee and having these hearings. When, as a freshman, I came on board and you allowed me to be a part of this committee, I had no idea of the relevance, the significance, the importance of this committee in these economic times. And just to give you your kudos on having a committee which will allow us periodically and on a quarterly basis to review where we are as a municipality. And the other point that I would like to make both to the people testifying on behalf of the Administration and to my colleagues is that the one thing that I found throughout this whole process is that we're in this together. I think, in 6 12/10/08 FISCAL STABILITY, RES. 080603, 890 different ways, we've all said that. And it is our responsibility to figure our way out of this, both through a combination of revenue enhancements and cost-saving measures. But at the end of the day, I think it suffices to say that we will rise or sink together, and we should do this in the best spirit of team effort. So just on my behalf, as a member of this committee, I want the Administration members that will testify here today that we're going to call up to take a great big inhale and exhale because this will be done in a spirit of cooperation and not in a spirit of "I gotcha." Thank you, Mr. Chairman.
Thank you. First up, we're going to have a panel to discuss the electronic money- transferring process in a proposal that was brought forth by members of this Council in a -- I guess in a venue other 7 12/10/08 FISCAL STABILITY, RES. 080603, 890 than a public hearing. So we would like to have, for the record, it laid out in a very specific way, this particular proposal. I'd like to call up Edward F. Dempsey from the Pennsylvania Treasury Department; he is actually the director; and Mr. Bernie Strain, who is also from the Treasury Department of the State of Pennsylvania. (Witnesses come forward.)
Mr. Chairman, good afternoon. Councilmembers, good afternoon.
Good afternoon, members of Council. I'm Edward Dempsey. I'm the program director for a program in the Pennsylvania Treasury Department known as INVEST. We are a -- we operate a local government investment pool, and that is for the purpose of short-term funds to be invested by any governmental entity in the 8 12/10/08 FISCAL STABILITY, RES. 080603, 890 Commonwealth of Pennsylvania along with certain nonprofits. Before I go any further, let me introduce my colleagues with me here today who work in Philadelphia, in the Philadelphia area: Bernie Strain on my right and Gerald Nicholas on my left, who have had many meetings with the staffs of members of Council and with the Treasurer's Office, who have been very receptive to what we have brought forward to them on the table. But I suppose, to get right to it, what we found -- we started an initiative statewide on electronic transfers versus check-writing. And we found -- we did a ten-month period where we took a look at all 67 counties and determined that there were in that period $1.3 billion worth of paper checks being distributed. Now, that sounds like a pretty reasonable -- you know, getting checks from the Commonwealth of Pennsylvania by 9 12/10/08 FISCAL STABILITY, RES. 080603, 890 checks is not a bad idea except when it happens in that number and dollar-amount that when the minimum time from when a check is prepared in Harrisburg and mailed out and received by the municipality is in the neighborhood of four days, minimum. In many cases, they're well beyond that. But if everything goes well by a paper check, there's four days' worth of time, or float, if you will, that is not going to go to the municipality -- in this case the City of Philadelphia; but rather, it will stay with the Commonwealth until that check clears. And we found that in that general study, we didn't do the specific analysis on Philadelphia; we did do a run on the City for that same period. And the paper checks that were sent to the City in the period that we looked at of approximately ten months was approximately $208 million in paper checks. And there's a variety of reasons for that, but the fact is that it was still $208 million. 10 12/10/08 FISCAL STABILITY, RES. 080603, 890 So, as we had with many other municipalities -- county governments mostly. But the City of Philadelphia, we approached the City Treasurer's Office -- the City Director of Finance, Mr. Dubow, was kind enough to entertain us as well found -- to make them aware of what we had found and offer the services we could provide to them. Now, we're not the only ones who could provide short-term investment services to the City, and the City has an awful lot of relationships already established. But we were, rather, coming in to say that (indiscernible) was one that was sufficient for the City to get a better deal; and/or in the case of the paper checks, to make them aware that those paper checks were coming, and suggested that they might consider, where they can, if it's appropriate, to switch to the electronic funds deposit. So from that, we've had, as I said, many meetings, we've been treated 11 12/10/08 FISCAL STABILITY, RES. 080603, 890 very well. And we certainly appreciate the time that we've had with Councilman Jones and Councilman Green. And we're here to assist where we can. But, essentially, our role in this was to make it known to the City that this was an additional stream of revenue that was available and to suggest that if we could help, we certainly would.
Thank you. Let the record reflect that Councilwoman Marian Tasco has joined the committee hearing. Are all of you going to testify?
No. Councilman, Chairman, that's essentially where we are. I suppose the long and the short of it on our end was essentially to let you know that this was -- and just not with the City of Philadelphia. Quite honestly, the County of Allegheny was not aware that they, again, had a lot of direct deposits as well, but they had over $158 million still due in paper checks. 12 12/10/08 FISCAL STABILITY, RES. 080603, 890
We went to some counties. The County of Erie, for instance, had $184 million in the same period. Now, considering their size versus the size of Philadelphia, you know, the fiscal impact is rather dramatic. And the higher the interest rates are, the more of an impact it is. Now, the fact is that while the checks are in process, the Commonwealth is receiving interest on that. But, in fact, for all of those people who are getting electronic transfers, they're getting that immediate. The City of Philadelphia, minimum, is losing, along with all the other entities that we certainly approached to inform them of this, are losing that minimum of four days, which, when you're talking several million dollars on any given day, it can -- depending on what the interest rates, like today, offering somewhere between, let's 13 12/10/08 FISCAL STABILITY, RES. 080603, 890 say, 1.50 to 2 percent. You could be riding 50, $60 a day per million for an entity the size of Philadelphia. That happens quite regularly. That's, again, the millions; in some cases, ten or beyond on a given day. So it can get up to be a significant number pretty quickly.
Okay. Well, I just want to thank you so much for making us aware of that. I know Councilman Jones and Councilman Green have been very aggressive in identifying any potential cost-savings in this particular measure, and I obviously want to thank them for their support. And we look forward to taking advantage of this initiative. Councilman Jones, you had a --
Yeah, just a few questions. And I appreciate you guys coming down and bringing this to our attention. Almost, what, eight months ago now. Let me ask you a couple of 14 12/10/08 FISCAL STABILITY, RES. 080603, 890 questions. At the point -- how many departments on average does the City of Philadelphia deal with that gets a receivable from the Commonwealth of Pennsylvania?
Generally speaking, each and every department; some more than others.
So some 53 -- well, let's say not all of them. Let's say they are close to the majority of them. So some to 40 departments 14 actually get receivables, and these are, 15 like, DHS. 16
Oh, absolutely. 17 You're talking about -- the Department of 18 Welfare would be a large one. And, as you 19 noticed when we went over the report that 20 we handed in, there was an awful lot from 21 the state police. 22
Right. Can 23 you give us a couple of examples of 24 checks; do you have that? 25
Actually, I don't 15 12/10/08 FISCAL STABILITY, RES. 080603, 890 have the report with me.
You produced a report and you brought it to Council a couple of months ago.
And you had checks from the Department of Human Services.
There were several things that came -- one of things that happened is -- and it happens all too often and it happens, again, not just here but across the entire Commonwealth, is you will have people who apply for the same dollar-amount on the same agency, and you will get four or five payments on the same 16 12/10/08 FISCAL STABILITY, RES. 080603, 890 day, in the same amount, coming back to the City Treasurer's Office, mail; rather than one electronic transfer, or at least one transfer instead of all of these multiple checks, that will delay the -- I think what you were talking about was, I believe it was 123,000 is what comes to mind. There was at least four or five on the same day, and they all took the same time to clear. And I believe, if I'm not mistaken, that it was, like, ten days.
So from the process that a receivable is approved at the State level, it can be a 15-day period before a physical paper check is generated.
No, not on our end. We will have, from the time it gets -- from the time a voucher transmittal is sent from the Department of Welfare over to Treasury, and they give us a pay date, we generally pay within 15 days. The problem is that by the time 17 12/10/08 FISCAL STABILITY, RES. 080603, 890 we prepare the check and put it in an envelope and put in it a batch to be sent to the post office in Harrisburg to be mailed till the time it arrives here in Philadelphia -- and I'm not familiar with the mail system here and how it arrives -- we have determined that we're looking at -- and it's a best guess -- about four days minimum from the time it leaves Harrisburg till it actually clears the bank up here and we get it back in Harrisburg (indiscernible) so that the funds have been transferred by check.
Most efficient financial entities count on overnight sweeps of interest and money --
No, that's not 18 12/10/08 FISCAL STABILITY, RES. 080603, 890 true. For this portion. What we identified, Councilman, there are hundred dollars of millions that are transferred electronically to Philadelphia every year from the Commonwealth. What we identified were those checks that were not.
And that's what I wanted to bring to your attention. I wouldn't have anybody here thinking that the City, particularly the Treasurer and the Director of Finance behind me, I'd be terribly unfair to them if I didn't say that the City already did an enormous amount of -- most, by all means, of the money coming the transactions here are electronic. However, the 208 million that we identified is still significant enough to draw the attention, which is why we brought it up here to your attention.
So 208 million, we don't generate -- 19 12/10/08 FISCAL STABILITY, RES. 080603, 890
So the time of processing of four days is a loss of interest to the --
-- the City. But then, because of physical checks, sometimes human error comes to play.
So it winds up on an administrator's desk and they don't see it on top of the other mail, and it may take a while for it to be processed internal to the City of Philadelphia.
And so, even in some worse-case scenarios, they have been lost.
In someone's drawer. And then we have to start the process all over again because we've 20 12/10/08 FISCAL STABILITY, RES. 080603, 890 misplaced that check.
It happens, I'd say, at least from what we've seen, 'cause we operated the Treasury Department and the Lost Checks Bureau, as well, Office and routinely have to deal with that. That does happen. I think it's a -- it doesn't happen a lot, but it does happen, and sometimes they can be for significant amounts.
Okay. Other municipalities, you mentioned, have not done that. Have we any best-case scenarios or other best practices that that we can look at that have, in fact, improved their --
I think when you have a municipality certainly the size of Philadelphia, over a billion dollar budget, I mean, the amount of checks that are written, the amount of vouchers that are sent in, the requests for payments made are enormous. And that's an enormous 21 12/10/08 FISCAL STABILITY, RES. 080603, 890 task to corral, if you will. What we suggested in our conversation and, certainly, I would say, again, the Treasurer's Office and Mr. Dubow's office were certainly in agreement to look at the -- when a process begins here in the City, as it has, and we've run into the same problem elsewhere across the State, that the process for payment to be done, if you corral it there, if you start from that process, that it is no longer either allowable (indiscernible) or appropriate, or certainly, at the very least, it is desirable, unless it is can be otherwise be proven reasonable, to only get electronic payments, that you should be -- because it's distinctly to the advantage in terms of security, efficiency. And when it becomes a large number, when you get in excess of $100,000 or upwards to a million, which, in this city, happens a lot, obviously, by that report we had, sometimes people who are 22 12/10/08 FISCAL STABILITY, RES. 080603, 890 starting the request for payment aren't aware of it, they don't think about it. All they want to know is, they want to put the paperwork in and get the money back as fast as they can. Sometimes it is the fault of the Commonwealth, where we should be in the Department of Health, the Department of Welfare, the State Police, we should be encouraging people to utilize that.
Mr. Strain, in your best estimate, how much did the City of Philadelphia lose last year based on interest payments not being electronically deposited? Best guess.
Because as the interest rates started to drop from when 23 12/10/08 FISCAL STABILITY, RES. 080603, 890 they were percent. 3
I would say it wouldn't be hard to suggest probably in excess last year of a million dollars. I would say that would be conservative based on --
Councilman, for the record, there's -- we talked -- you had mentioned about uncashed and/or lost checks in the process. There's about $70,000 that the Commonwealth has in its possession to date that it is waiting for the City to collect in uncashed and/or lost checks.
So depending on whether -- 24 12/10/08 FISCAL STABILITY, RES. 080603, 890
Two years ago, there were, during the Street Administration, I believe, there were in excess of $500,000 that was not collected in the course of two years. I think the City needs to develop a program to review its uncashed and/or unclaimed property at least quarterly. That would help those funds --
One of the things we've suggested is that we routinely -- now, we represent one program, but we also represent the department, and certainly, there are other programs within it. And the unclaimed property is one, and certainly the uncashed checks is another. Because of the size of the City and the size of the number, it's going to happen because of these amounts of transactions over a period of time. And we actually talked to the Treasurer's Office about periodically -- at least, like, quarterly -- reviewing what might very well be there for the City and return 25 12/10/08 FISCAL STABILITY, RES. 080603, 890 it.
Let me just ask a -- and I'm not a conspiracy theorist. But then, again, who would not want this to happen? Who benefits by us continuing on this path?
I mean, again, and I don't -- again, there's no conspiracy theorist on this end, myself, certainly. But the fact remains that the only one who benefits, to my knowledge, would be the Commonwealth, where they're Commonwealth checks, because, while the check is out there, until it's cashed, it remains in the Commonwealth's account. Now, believe me, in the short budget year, the Governor and the members of the General Assembly are known for what we're going -- you know, being short (indiscernible) ourselves this year. But the fact remains, when we write that check, it's the municipality's check; in this case, it's the City of Philadelphia's check. It is no longer the 12/10/08 FISCAL STABILITY, RES. 080603, 890 money of the Commonwealth. And, in fact, on the very same VT -- and there may be some Philadelphia checks or payments there that are going out by wire, so they're getting the immediate benefit of that cash because of the wire. On the other hand, a check for the City is going to go out, and it's going to be four days until it gets to your account. So there's really -- to my knowledge, there is no benefit to get a paper check versus an electronic. I mean on our end, on the Commonwealth's end, it's more expensive for us to prepare a paper check than it is a send a wire.
Let me target my question a little more specifically. Who does the Commonwealth of Pennsylvania bank with?
Yes. (Indiscernible; parties talking over each other.) 27 12/10/08 FISCAL STABILITY, RES. 080603, 890
I will speak to our custodial holds our money. That money that comes through is -- currently right now is Wachovia, but we have -- the Treasury Department has a relationship with many banks across the Commonwealth.
Thank you, Mr. Chairman. Good afternoon, gentlemen. PANEL MEMBERS: Good afternoon, Councilwoman.
I have a follow-up to Councilman Jones' question where your answer was about $1 million.
Okay. So tells us, what is what I call "SOP," 28 12/10/08 FISCAL STABILITY, RES. 080603, 890 standard operating procedure, for following up with those individuals, citizens on the other end, in terms of notification that those dollars are about to be lost?
Well, to be honest with you, the -- it is the -- in this case, it would be the City of Philadelphia. When they are writing up a request for payment, they're the ones who tell us, the Treasury, how they want that payment to come. They say whether they want it electronic, they say whether or not they want a paper check.
Again, we're in this electronic age, and a lot of your smaller -- keep in mind now, the City already gets hundreds of millions of dollars electronically transferred every year.
This is only talking about that part that has escaped. 29 12/10/08 FISCAL STABILITY, RES. 080603, 890 We wouldn't have even -- actually, we wouldn't have even looked to Philadelphia had we not seen what happened in the other 57 counties. So, again, Philadelphia is a big player. From a personal standpoint from the INVEST program side, we were looking to get Philadelphia's participation, in all honesty, you know, to benefit us three and our program, and we decided, you know, if these others were having problems, we thought, well, Philadelphia is about as big as everything else, and their number's probably going to be sizeable, which it was. So we saw an opportunity to get additional business for our program.
Otherwise, I mean, if you -- if the people in any of the individual departments, they might not be aware it's to their advantage.
Okay. So then what recommendations or suggestions would you offer to our government to fix 30 12/10/08 FISCAL STABILITY, RES. 080603, 890 what appears to be -- if it's a million dollars, that's big. So given where you sit and what you see works well in other municipalities in terms of best practices, what recommendations would you offer to us?
To go back and take a look at the specific process you have, to any one of the departments who is going to put in a request for a payment from the Commonwealth and, for that matter, anywhere else, that where you're going to get a payment where you can get electronic payment, that should be the preferred way of being paid, 'cause that gets the funds back into the City's hands quicker than a paper check under any circumstances, unless you're going to stand down there and get it right off the press and walk across the street and put it in your depository.
I mean, it turns around that fast. 31 12/10/08 FISCAL STABILITY, RES. 080603, 890 But I will tell you, for purposes of full disclosure, there are some very sophisticated money-management operations within the county government, two of the most sophisticated that I've seen in the four years I've been in the program.
North Hampton County and Dauphin, and they had missed paper checks in excess of -- Dauphin County was in excess of 50 million, and I forget the number, but I think it was 19 or 30 million in North Hampton. 20
So are you 21 able to cite one or two features of those 22 best practices that give them the 23 characterization you've just described? 24
Well, when I say 25 "sophisticated," when I went in to the one 32 12/10/08 FISCAL STABILITY, RES. 080603, 890 county, North Hampton in particular, they run all the money through one central area, so they control it all.
So one central area, meaning one city department like Revenue?
Yes. They have -- I won't say it's exactly set up that way. I don't think they call it "Revenue," but their fiscal control is there so that all the cash that comes in is there. They manage it all, they make sure that the cash on hand is sufficient to pay the checks on any given day of the week. It's tightly controlled. And in many other counties, you have row offices who control their specific counts of money.
You have -- the Treasurer does -- has certain authorities. The Controller's Office has certain -- they're kind of spread out. It's difficult to corral. 33 12/10/08 FISCAL STABILITY, RES. 080603, 890
But even the ones who were, I'd say, the most sophisticated, have the best deal going, even they're unaware of it because they're not aware of all of the requests for payments made. So if it comes from the top down, suggesting that, you know, it's a new day and we need the money in here as quick as we can get it, we want to be sure that where it is at all possible that every payment coming into the City comes electronically, unless it can otherwise be proven necessary.
And for us, from what we've seen -- and I won't say we've seen it all, and that there may be some reasons -- no reasons that we're aware of that you should be getting any kind of a payment except electronic.
Particularly if 34 12/10/08 FISCAL STABILITY, RES. 080603, 890 you wanted to put, you know, like a dollar-amount, where it makes sense. And your finance professionals could tell you where that makes the most amount of sense. But to have a million-dollar check sitting out there for three, four, five or beyond days, it just -- we haven't seen any reason that there should be for that.
Okay. Now, you may have answered this question; I just don't remember what it was. Did you offer up one or two recommendations that we, as a government -- a practice we should adopt to eliminate the scenario you just described?
Actually, we had that very discussion with the former treasurer and the current treasurer and Mr. Dubow.
And they were very receptive to it. 35 12/10/08 FISCAL STABILITY, RES. 080603, 890
But when you have the amount of, again, the agencies that we're talking about that are applying for the money, it takes time, because a lot of these people are doing it on their own, you've got to get the -- you know, it has to be (indiscernible) here how best to be able to do that. But they were certainly receptive to what we were talking about.
Well, thank you for your testimony. It's very enlightening.
Thank you. Thank you, Councilwoman. All right. Thank you, gentlemen. What I would like to do now, at the request of Councilman Jones, is we'd like to ask the Administration, Mr. Dubow, if he can step forward and respond to a couple of the questions or statements that were raised. 36 12/10/08 FISCAL STABILITY, RES. 080603, 890 And, gentlemen, if you could just kind of hang up there on the side, because we might want to call you right back. So please don't go away. (Witnesses come forward.)
And for the record, I just want to note that Councilman Brian O'Neill and Councilwoman Joan Krajewski are at the hearing, and we have officially established a quorum. Thank you. Councilman Jones?
Thank you, Mr. Dubow. We had an opportunity to discuss this some months ago, and I guess the only question -- and I was asked to raise this with you from Councilwoman Blondell Reynolds-Brown as well -- is: In light of the fact that paper checks, you would agree, is an inefficient way to move money, and you're keenly aware that we're in a fiscal crisis, where are we on implementing a more efficient process by which -- that the City receives revenue 37 12/10/08 FISCAL STABILITY, RES. 080603, 890 from the Commonwealth of Pennsylvania?
Okay. Well, let me just start by saying that we agree with you that we should go paperless with State checks, you know, as quickly as we can. We have been working with both the incumbent treasurer and staff for the incoming treasurer to try to get it done as quickly as possible. There are some technical questions on their end that they're trying to work out, and as soon as they're worked out, we will move ahead with it.
Can you give us a sense of what some of those issues are?
Sure. Rebecca Rhynhart, City Treasurer. The information that the State includes on the electronic fund transfers 38 12/10/08 FISCAL STABILITY, RES. 080603, 890 is not sufficient to identify what the payment is for, for the accounting system. So it might just say "City of Philadelphia"; it doesn't say, you know, "Police" and what the payment is for. So they're looking to it to fix the problem so that they can put more information on it just so that our staff isn't overburdened with that.
If I understand it correctly, you just said that one of the problems is identifying the individual department.
Or is it a little more specific as to the individual program that your accounting system has to identify?
I think it's the department and also what the payment is for. So if there's a contract number or an invoice number, that type of information.
And is that a 39 12/10/08 FISCAL STABILITY, RES. 080603, 890 make, like, change to the system? It is?
Well, that's what they're looking at, if they can make some sort of adjustment to their system, to make it work.
So on estimate -- and not an exact number, because you're not prepared to do that maybe at this moment -- how many different departments, programs, contracts are we talking about annually?
I don't think I could give an exact number, but they're -- it's a wide variety of departments.
So if we were in the physical world of paper checks, when a check comes into the department, is that information included on the physical check?
On the physical 40 12/10/08 FISCAL STABILITY, RES. 080603, 890 check, it is; there's a piece of paper that they include. But on the electronic fund transfer, they don't include that information right now.
Now, I'm not a technological genius, but is that a hard thing to fix? (Addressing Mr. Dempsey.) Can you come back up? (Mr. Dempsey returns to witness table.)
It is not technologically impossible at all. However, what it is, it involves the agency, their bank, their banking instructions, IT requirements. And that is something that we have -- I have talked to Treasurer Weissman about it, and actually, I've talked to Treasurer-elect McCord as well. That is a longer-term problem that has to be resolved 'cause it doesn't only affect Philadelphia, but it certainly affects everybody else who receives large 41 12/10/08 FISCAL STABILITY, RES. 080603, 890 amounts of electronic transfers, as the City does, as do many across the State. But one of the things that we had offered that we could do from our program side is, if there was a particular problem area of identification, that we could set up the account within INVEST, of which the City is already a member, and title it so that the only money that would come into that account would be from that program.
In the -- as I said, in the interim. That would be a short-term solution.
So if I understood the stopgap measure, it would be to set up an account that was a catchall account --
Or set up as many as the City wanted to for those particular 42 12/10/08 FISCAL STABILITY, RES. 080603, 890 problem areas in the interim, but only in the short term. The long term has to be that -- they call it "the addendum" that identifies the electronic payment as it comes electronically. It needs to -- it should, for the purposes of everybody's receiving money from the Commonwealth, properly identify so it can be properly recorded. But I would say even that, it would be better for the -- if the City gets an electronic payment for which they're having trouble identifying, at least while it's in the bank account --
Versus while it sits as a check, again, the Commonwealth is still drawing the interest.
Do you have a 43 12/10/08 FISCAL STABILITY, RES. 080603, 890 response, Madam Treasurer?
I think we are looking at all of our options. Our first thought was to work with the State Treasurer to see how quickly they could implement some sort of change. But, of course, you know, we agree that it's a good idea to move to electronic fund transfer as quickly as possible, so we're working towards that goal.
When you say "as quickly as possible," that reminds me of a term called "all deliberate speed" when it came to integration of our schools, and it proved to take a lot longer than a lot of people thought. So my question is: Do we have a goal of a deadline? When we talk about a spigot that's leaking at a million dollars estimated a year, when can we kind of set a timeline? We know exactly when the libraries are going to close, but when are 44 12/10/08 FISCAL STABILITY, RES. 080603, 890 we going to close this loophole to figure out how we can save a million dollars a year, which is half of what I think the amount of costs to operate the libraries is estimated amount of savings. So the sense of urgency is something that, I guess, this body would like to see as well.
When we met with the representative of the incoming state treasurer, we told him this was our number-one priority and that we wanted this done as quickly as it could be done.
And I can assure you that I work with the treasurer. You know, our program is not separate from the Treasury Department. And, in fact, if the priority is that of the City, I'm sure that Treasurer-elect McCord will indeed make that a priority. And, again, coming in. He's going to be there for four years. I would 45 12/10/08 FISCAL STABILITY, RES. 080603, 890 say that this -- because it's not just a problem significant to Philadelphia; it is a little more significant to Philadelphia 'cause the numbers are larger. But, in fact, this is a problem in Allegheny County, it's a problem in a variety of other large municipalities and counties across the State. So it's one that I know that there has been some work done on. But to have the incoming treasurer make that commitment that would be a priority, I can assure you that -- I'd say you'd see some action probably within the first six months.
Well, thank you. Mr. Chairman, we meet on a quarterly basis, and maybe we might make a footnote to check on the status of this at our next quarterly meeting of this committee.
I -- unfortunately, we'll probably end up meeting more than quarterly, given our 46 12/10/08 FISCAL STABILITY, RES. 080603, 890 current financial situation. And as I said earlier, we plan on being very aggressive in this economic issue and in making sure that we provide whatever support for the Administration to get whatever revenue is necessary for us to hopefully restore some of our services. So absolutely.
Thank you very much, Mr. Dubow. So what have you been working on lately, anything in particular? Are there any capital or software costs or systems costs that are associated with creating this new stream of quicker revenue to the City? I'm more asking the State, I think. Well, if you know, fine; but if the State knows if there are any costs involved. Are there any changes to our 47 12/10/08 FISCAL STABILITY, RES. 080603, 890 computer systems or to --
I couldn't answer on the -- I don't believe -- I don't know what there is in the State's (indiscernible). I know the technical term for the addendum comes out as it currently does. We can only send from Treasury what we're given, you know, from the agency; for instance, what we get from the Department of Welfare, and then the bank that they're dealing with and/or the bank that the City would be sending their electronic payment to. That all has to be very specific.
So if we're going to change now, it might -- I can't say that on our end that there wouldn't be a cost.
I'm not 48 12/10/08 FISCAL STABILITY, RES. 080603, 890 worried about your end; I'm worried about ours.
I understand that, Councilman, and I don't blame you. The fact is, until we sit down with all of the people who are involved in making the changes, is there a software change? Could be; don't know that. And if that would be a cost that the bank would eat if it's on, you know, the City's bank, considering the --
Now, as I understand the process, does the City have to initiate to the various departments in the State the requests for the reimbursement?
Okay. So is there a delay that City folks are aware of relative to the request from DHS, for example, for reimbursement from public 49 12/10/08 FISCAL STABILITY, RES. 080603, 890 welfare? Is there a delay or is there a timeframe wherein the Department of Public Welfare processes the claim to send the check over to Treasury to disburse so the City?
I'm not -- that end I'm not as familiar with. Again, what we were focusing on, Councilman, was, in fact, from the time the payment request comes over from the AT till it comes to the City, that there was a gap that we could close. Now, to say that -- to sit here and say that we could close the gap on a given department and make that process -- that's the process of that department, and I certainly couldn't comment on that. But what we can say factually is that we know that if it's a paper check that's produced, till it arrives in the 50 12/10/08 FISCAL STABILITY, RES. 080603, 890 City till it clears, that we know that there's a certain minimum there that we sit on. I mean, the Director may disagree, but I generally would say it's about a four-day minimum.
Do you have any insight into the -- any of the hardware, software, or systems costs that may be associated with this not new form but, you know...
I think, from the City's perspective, we've received electronic fund transfers from others, so we're set up to receive it, to my understanding.
Okay. And it's just trying to sort it out once it gets there.
There's a mixup between the State that it sends out to, in this case, the City's bank. That's part of the problem.
Okay. Has this been discussed in the Administration 51 12/10/08 FISCAL STABILITY, RES. 080603, 890 from the time you got here, or do you remember discussions about this in prior administrations? Not -- it's probably more Rob, you, than --
I don't -- in prior administrations, I probably -- I don't remember. There may have been, but I don't remember.
Thank you. I'm not sure that I understood 52 12/10/08 FISCAL STABILITY, RES. 080603, 890 the -- if we ever got an answer to: What's the problem with just creating a separate account for each program or department that receives money from the State and allowing them to just put it in there; and that way, when it hits that account, you know that it's for that program. I guess I don't understand why that, as an interim measure, if it's going to take six or nine months for the State to provide it exactly the way you want, why we just can't open, you know, 53 accounts under our main INVEST account.
That -- and I don't know whether we've heard that before, but I didn't remember that, so that was new, and that's something that we'll look into.
Well, I don't -- we have to talk about the details which, you know, an open hearing is not the appropriate place to do that, but -- 53 12/10/08 FISCAL STABILITY, RES. 080603, 890
So the other thing is to have one INVEST account and then have an arrangement from them to send an e-mail to our treasurer as to all of the wires we receive in one day or all of the electronic fund transfer we receive in one day and where they go. So we'll have a pot of money and we'll know where to send it --
Right. And if they were able to do that, that would be great. (Addressing Mr. Dempsey.) But I think what you're saying is, you're not able to do --
Okay. Thank you. Also, at the hearing of the 54 12/10/08 FISCAL STABILITY, RES. 080603, 890 Committee of the Whole, at the end of that hearing you, and Mr. Agostino committed to getting me all of the information that I requested in the context of some library data I was seeking and other data in a request that I had sent over through Clay Armbuster, which you had a copy of, et cetera. And I still don't have most of that data. You had committed to get it to me by the end of two weeks ago Friday. Can you tell me why I don't have the information that you committed to give to me?