So when you're finished, I'd like the Budget Director come and explain why we can't take care of public safety. I mean, that's all we need to have, is someone injured or killed as a result of an object falling from this building. Thank you, Madam Chair. I'd appreciate that after Mr. Dubow the Budget Director come up to address the 217 3/7/06 - WHOLE - BILL 060001, ETC. fact that we've got a dangerous condition here at City Hall reported in the media today, what we're going to do about it.
Okay. Fine. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Mr. Dubow, thank you for your comments and for your letter. I'd like to focus in on two areas. One is on the unfunded pension liability. Either based on the Five-Year Plan or any discussions that you're able to discuss, has there been any proposal to significantly attack this particular issue in the current Five-Year Plan?
The Plan includes a 218 3/7/06 - WHOLE - BILL 060001, ETC. proposal to reduce the earnings assumption on the pension fund, which will help make our earnings assumption look a little more like those on other funds. I don't think they were really proposals that got at the structural -- the long-term unfunded liability.
And in your opinion, what kind of actions would need to take place in order to get to the long-term structural problem?
I think you need to look at the benefits that new employees receive and look at changing them. I think you also probably want to start offering a defined contribution plan in addition to the defined benefit plan. The key benefit of that is that it really switches the investment risk over from the employer to the employee. At the same time you do that, you need to make sure that you make investment counseling, good investment counseling, available to employees. 219 3/7/06 - WHOLE - BILL 060001, ETC.
And are you suggesting that solely for new employees or for any current employee who might want to make -- I mean, why would a current employee make a shift?
It depends on how long they've been in the system and how old they are. Depending on your age and your years of service, it may make sense to go into a defined contribution if you think that investing in yourself will be better for you in the long run. And to answer the first part of your question, I think that should be offered to new and existing employees as an option.
Short of that, it sounds like there needs to be some -- we're presently at what's referred to, I guess, as the minimum municipal obligation level --
-- in terms of payment? And the current unfunded 220 3/7/06 - WHOLE - BILL 060001, ETC. liability level is?
Is there a standard in the pension industry as to where we should be?
Well, I think it's 70 percent you're able to pay for all current employees and retirees, but not future employees. So you want to be at at least 70 percent.
Have you had an opportunity to develop a schedule or have you taken a look at a schedule? What would it take over ten or 15 years, I guess, to get to 70 percent?
And is that an appropriate time frame or is it a shorter time frame?
I've seen a 221 3/7/06 - WHOLE - BILL 060001, ETC. schedule from an actuary that shows if you paid at what's called the City's funding policy, the policy we had before we switched to the minimum municipal obligation, that within five years, you'd be to about 66 percent. It didn't go beyond that, but I'm assuming at the way it was growing, it would probably get you there within five to ten years. Now, there's substantial costs to that. It's probably about $60 million a year in the General Fund.
Could you, and if you had to work with others, could you work to develop a schedule and forward it to the Chair that would show the City reaching the 70 percent funded level in a ten-year period of time?
Yes. We can definitely look at that, and it would require working with the City's actuary and people at the Pension Board.
Okay. The second area I wanted to look at, you 222 3/7/06 - WHOLE - BILL 060001, ETC. mentioned about infrastructure. We had some conversation in these Chambers during the capital budget hearing. The $52 million for FY07 may be one of the lowest capital budgets in a long time. On the other hand, by your testimony, and I think it came out at that hearing, City Planning Commission based on, I guess, some kind of infrastructure assessment or capital improvement needs has the City needing to invest about $185 million?
At the same time, this year it's also proposed that we separately and, I guess, through quasi public agency or at least technically off the books, borrow upwards of $150 million, 65 to go to art and culture organizations for capital, 65 for commercial corridor improvement. It's not particularly clear where the other 20 223 3/7/06 - WHOLE - BILL 060001, ETC. goes, but let's assume that between issuance costs and maybe there's some side program. I mean, given what we're proposing to borrow, given what our needs are and then this separate proposed borrowing, how do you either reconcile that or do you have an opinion about the current proposed borrowing schedule?
We start by saying everything in the $150 million seems like things that are worthy and beneficial. That said, it seems -- I've been trying to force an analogy on my mind in it. In some ways it's like putting an addition on your house while the roof is leaking. The addition may help your house, but if the core of your house is going to start to crumble because of the leak, you haven't done yourself much good in the long run.
Although I think at least within the 65 for art and culture, some of the anticipated spending 224 3/7/06 - WHOLE - BILL 060001, ETC. is on facilities owned by the City.
I think that's correct. I haven't seen what the detail -- I haven't seen the detail of what the 65 would be for.
Well, neither have we. Don't feel bad. Given the numbers that you have laid out, and I was in and out of the room, but when you go through this document, for round number purposes, you're suggesting that this proposed Five-Year Plan in front of us has anywhere from, is it, $480 million to $550 million in questionable --
Well, we looked at it in a couple of ways. We looked at if you took out the items that we think are clearly speculative, if you took those out, you wind up with about a $330 million problem and including about a 50 --
These are items that are speculative on the revenue 225 3/7/06 - WHOLE - BILL 060001, ETC. side?
Mostly on the revenue side. There's one expenditure item, which is a reduction in health insurance costs. In addition to that, we think there are some other items that are risky in that there's more chance they'll happen, but there's still a substantial risk they won't. If you took those items out of the Plan, then you get to a $480 million problem. And on top of that, if there's even a one percent increase in salaries, a one percent annual increase in salaries beyond Fiscal Year '08 when the current collective bargaining agreements expire, then you get to about 550 million.
Last question. I'm assuming this has been shared with the City Administration?
Yes, it has. We distributed it to City officials the same time we distributed it to Council 226 3/7/06 - WHOLE - BILL 060001, ETC. yesterday.
Has there been any reaction? Do they agree or disagree?
We haven't heard back from them. We only gave it to them yesterday, so they haven't had much time.
I understand. Okay. Thank you. This will make things that much more interesting. Thank you. Thank you, Madam President.
You're welcome. Are there any other questions or comments of Mr. Dubow? (No response.)
Thank you very much. We appreciate your coming in.
Thank you. 227 3/7/06 - WHOLE - BILL 060001, ETC. May I ask Ms. Reed to please approach the witness table. Councilman Rizzo, would you repeat your question, please?
Thank you. I understand yesterday during the Finance Committee hearing that the Capital Budget Office indicated that there were some issues associated with this building that, in their opinion, were very dangerous. Are you familiar with that testimony?
Dianne Reed, Budget Director. Yes. I was listening on the squawk box.
And I understand what that's all about, the capital budget for 2006, but short of putting nets up there to catch whatever may fall onto the roadway or the sidewalk, do you know what the long-term plan is to address this? Because I don't know how long the life expectancy of 228 3/7/06 - WHOLE - BILL 060001, ETC. safety nets to catch objects that are attached to this building will function appropriately. What is the plan? I asked you to get Mr. --
Tustin. I have requested him to come here. He's in another meeting. He's trying to make it over here.
How do we deal? This is, I think, a very serious issue.
I can give you a high-level response to that, and, that is, that we need the loan authorization to pass or we'll run out of money to continue the City Hall restoration in August. And the long-term plan to address problems like the crumbling facade is to complete the facade restoration.
I understand that, but if this is for effect to get our attention, it has. I would think 229 3/7/06 - WHOLE - BILL 060001, ETC. that Capital Programs, Mr. Tustin, would be able to figure out a way short of putting nets up to catch these projectiles or these attachments to the building, they need to get a little bit more creative to get this problem resolved, because I'm not so sure -- and I had a person e-mail me indicating they're not so sure after a month or so with weather, I don't know what they put up there to catch these devices or how heavy they are. I mean, we could have someone killed or seriously injured, probably killed if they're hit with an object that falls from this very tall building. Again, you're the Budget Director, and I understand you're not the right person to be asking this question of, but I think they might come to you and ask you where to get some of the money until the other issue is resolved, to get these repairs done or get the equipment removed or the architectural 230 3/7/06 - WHOLE - BILL 060001, ETC. attachments removed from the building until we figure all this out. I mean, I think it's terribly embarrassing to an Administration that says that they've got attachments to a building called City Hall that may kill you.
Well, the entire project costs hundreds of millions of dollars, and I'm not familiar with exactly the part of the building, so I think Mr. Tustin really is the person that you want, and we'll get him to respond in writing if he doesn't get here before this hearing is over.
Because we're going to have to get him back to talk about this and to find out exactly what his plan is, Public Property's plan is. And if putting the nets up is the answer, then that's the answer. But we have the Fire Department, et cetera, so I don't know if it will be appropriate, since he's not here, to hold him here to the end or interrupt the Fire Department 231 3/7/06 - WHOLE - BILL 060001, ETC. or other operating departments. But we need to talk about more about this, because I'm concerned. Thank you. Thank you, Madam Chair.
You're welcome. The stenographer would like a ten-minute break. So we will stand in recess for ten minutes. (Short recess.)
We're now resuming the public hearing of the Committee of the Whole. Mr. Tustin, would you mind approaching the witness table, please. Thank you.
Mr. Tustin, just a moment, please. I thought that Councilman Rizzo had asked --
I got a question for Ms. Reed. We went on a break. I assumed she was coming back. 232 3/7/06 - WHOLE - BILL 060001, ETC.
Is Ms. Reed here? Mr. Tustin, you could sit there. It doesn't matter.
Good afternoon, Ms. Reed. Please identify yourself for the record.
Thank you, Madam Chair. Ms. Reed, you were here earlier when Mr. Dubow and other PICA representatives were at the table; is that right?
And you have a copy of their letter, I believe it's dated March 6th, to the Council President. 233 3/7/06 - WHOLE - BILL 060001, ETC.
And recognizing that you may have just received the letter this morning or read it this morning, in the back there are what appear to be five issues which, as best I can tell, are not new issues, as I believe they were raised a couple months back by PICA in the context of the City's announcement or maybe it was PICA's announcement, I can't remember, on the pretty significant anticipated positive fund balance. I think this was back in the fall. Do you recall that?
So notwithstanding the fact that you may have received the document yesterday, it re-raises issues that are probably about three or four months old, and so in that light -- which I will then assume because you're our Budget Director, you read the document back at that time -- can you 234 3/7/06 - WHOLE - BILL 060001, ETC. comment on these five items? And they would be long-term obligations, Rainy Day Fund, City's tax structure, unfunded pension liability and infrastructure.
What's the Administration position on these critical issues?
I will try to respond, but I wanted to start with an analogy. Mr. Dubow picked the analogy of adding an addition to a house while the roof is leaking, and I would say that if you're in a race and you have a racing car and you have the opportunity to put a new engine in it or fix some rust on a door that might affect you in three years' time, which would you choose to do for competitive purposes? But as to specifics, long term --
Is that a trick question? Is there like a real answer to that? 235 3/7/06 - WHOLE - BILL 060001, ETC.
Engine in a car versus rust on a door. Is that where we are?
Or a leaky roof on the car. But I think that the spending proposals of the Administration are intended to help prime the economic engine of the City to help us carry the economic success that we are experiencing so far and the notoriety that we have to the next level, and a number of the items that are in the PICA list are risks to the Plan, but they are mostly in the out years and they are items that we feel are important as goals for us to achieve for the City's future fiscal health also.
I think I better understand. You would consider these five items to be the rust on the door? 236 3/7/06 - WHOLE - BILL 060001, ETC.
No, not -- no. I'm saying many of the items that are in the highest risk category are in the out years. They will not affect '07 and '08, but they do affect the balance of the whole Five-Year Plan. That is what I was trying to draw attention to.
Okay. I appreciate that. And if I were 98 years old, I possibly might not worry too much about the out years. But I'm not. I'm 48. So I think we actually have some reason to be concerned about the out years, right?
Long-term debt, the City's long-term obligations are high if you include the unfunded liability. For the purposes of rating agencies, you could assume that our debt-to-revenue ratio is actually much lower, which is 237 3/7/06 - WHOLE - BILL 060001, ETC. the acceptable standard for some of them, and the actual debt cost per year after the first year is 12.15, not 13.5.
So you're saying they're off by a million dollars? This is additional?
Right. So just slightly overstated. But, I mean, on the whole, the City's debt-to-revenue ratio, if you take out the unfunded liability, is well within the range of many other jurisdictions. So we looked at this --
But I don't think we can take out the unfunded liability.
We looked at the issue of what additional increment the new borrowing adds to our debt-to-revenue ratio, and it does make us a little higher at the upper end of the range if you're looking at a debt-to-revenue ratio that includes the unfunded liability, but if you take that out, then we're in a good place. 238 3/7/06 - WHOLE - BILL 060001, ETC.
I understand that, but Ms. Reed, we'll spend many days together. I mean, that would be like saying for my own debt-to-equity ratio, if you took out the mortgage on my house, I'd have a lot of money. Yeah, but that's not realistic. What are you talking about?
Well, this is about do you or do you not do the $150 million borrowing based on an idea --
-- of how we look to the marketplace or our fiscal health or anything else.
I understand that, but I didn't ask you that question. I know you have developed this --
Well, you asked me to comment, so that left it kind of open-ended.
-- sense of 239 3/7/06 - WHOLE - BILL 060001, ETC. anticipating my question. Okay. All right.
Rainy Day Fund, Rainy Day Fund would be a good thing. We've taken a look at this. It was not selected for the suite of proposals for this year because it does restrict spending opportunities in a way that would not allow us to do something really creative, as has been proposed this year.
When do you think it will make it into the suite of options?
The Chair recognizes Councilman Kenney for a point of information.
I am sure this is prior to your time, but didn't the Administration oppose a Rainy Day Fund ordinance that I submitted and was defeated and they came and testified 240 3/7/06 - WHOLE - BILL 060001, ETC. against it?
From an historic institutional perspective, the Administration never supported a Rainy Day Fund. They actively sought to defeat it with testimony and phone calls and vote no. I mean, I don't know how you can sit there and say that they support it when they never supported it. As a matter of fact, I have an ordinance 14 that's still spending coming to the Finance Committee for a hearing, and maybe the opportunity to show that you support it now is --
What I was saying is, it was examined and it is not in the budget because it was not selected.
What you said was that the Administration supports it, it would be a good thing, but they chose not to do it.
I said I personally 241 3/7/06 - WHOLE - BILL 060001, ETC. could see that it has value, but it was not selected because it constrains expenditure too much.
We don't want to constrain spending, God forbid. You know, a good legacy is also fiscal soundness. It's not only just projects; it's fiscal stability. That's a good legacy, too. So keep that in mind. I'm sorry, Madam President.
This passage seems to suggest, and I did ask Rob about this yesterday, that we should accelerate the tax cuts even faster than we've proposed to do this year. There are tax cuts that are in the budget through 2015 for the wage tax, and we have shown and have included in our budget projections a pattern beyond just the three years that are in law to the end of the Five-Year Plan, and those are at a pace that we can 242 3/7/06 - WHOLE - BILL 060001, ETC. adjust our spending to with hopefully as little trauma as possible, although what we had to do last year illustrates that's not working perfectly. And if we start to accelerate cuts even more rapidly, we will be looking at many years when we have to consider truly draconian cuts in services.
All right. That's in maintaining the party line that any reduction in tax rates automatically leads to service cuts, because there's obviously no benefit to --
I would not say there's obviously no benefit, because I would dare say, although nobody has done the study to prove it, that part of the reason why property values have increased is that the wage tax has gone down, because the contrary has been held --
-- in the literature for many decades that the reason 243 3/7/06 - WHOLE - BILL 060001, ETC. Philadelphia's property values were so low was because the wage tax was so high. That has been well known. So you would think that the reverse would also be true.
So is it your position that because we're cutting the wage tax, that's why property values are going up?
Yes, that's a good thing. And also we need to cut the wage tax because of the competitive contrast with the suburbs around here where the wage tax is five times any rate around us.
Well, aren't we slightly uncompetitive on the business tax side, too?
We are uncompetitive on the business side tax as well, not on 244 3/7/06 - WHOLE - BILL 060001, ETC. the real estate tax.
I attribute it partly to the fact that businesses have been more profitable, which is reflected by the higher NI rates, relative NI hit on paying the tax now that the gross receipts side has been reduced, so that in fact, the tax proceeds will depend more on profitability than they have in the past, and, fortunately, '05 turned out and early '06 to be quite profitable.
We do have an unfunded liability. The main issue with the unfunded liability, I think, really is the risk issue, which is all based on how many people are going to retire and whether the City can afford to pay for 245 3/7/06 - WHOLE - BILL 060001, ETC. their retirement benefit should that occur in a large group. We are ten percent from fully funded at 60 percent. It would be better to be at 70 percent. I think we need to work our way there. We have talked with the actuaries about the --
Hold on for a second. I thought at least from Mr. Dubow, I thought 70 percent allowed you to at least take care of the current workforce. That's not fully funded.
That's true, too. That's also true. No, but 70 percent is considered to be full funding as a thumbnail gauge.
So what's the Administration plan to get to 70 percent?
We will, I guess, annually be looking at our earnings assumption and see whether we can move it up or down, because optimally the earnings for the fund would have to keep 246 3/7/06 - WHOLE - BILL 060001, ETC. it stable and so there would be more money there.
Well, you're proposing to reduce it. Doesn't that actually result in spending more money?
Yes, it does, but I mean both things have an impact on the fund's ability to pay.
Okay. So let's go back. What is it that's proposed in this Five-Year Plan that's going to lead toward a more fully funded pension plan?
Well, dropping the earnings assumption from 9 percent to 8.75 has increased the payment that we're making. So, in fact, we're putting more into the fund as we would if we were assuming another policy like the one the City formerly had in place.
Could you forward to the Chair a comparative schedule between what the payments would 247 3/7/06 - WHOLE - BILL 060001, ETC. be or what payments you would make based on the percent actuarial assumption 4 versus the 8.75, and simultaneously with 5 that comparison on the same lines side by 6 side show the amount of, depending on how 7 you want to do it, either the funded or 8 the unfunded liability and what those 9 different schedules result in ten, 15, 20 years down the line.
The combination of low assessments and the constitutional debt limit that we have has been constraining the amount of money that we have to spend every year. So that I think that if the City goes to full valuation and we begin to see that also creeping into the constitutional limit, which we can't really do anything about, that we should, as each year is added, see our opportunity to spend more money 248 3/7/06 - WHOLE - BILL 060001, ETC. and increase. Our only alternative in the short run given that we have the constraints in place is to pay for infrastructure out of the operating budget. Then that would result in a lot of tough decision-making.
Well, let me ask this question. This will be my last question. Our own City Planning Commission says the City needs to spend $185 million annually to keep our own infrastructure in good condition. That's one. Do you agree with that?
The current budget proposal is to spend $52 million in FY07 for capital on our own facilities and at the same time there's an off-the-books transaction for $150 million in borrowing for in all but a couple instances, I believe, items that are not City-owned facilities. How do you justify the $150 249 3/7/06 - WHOLE - BILL 060001, ETC. million off-the-books borrowing in the context of, I say only, only proposing to spend $52 million on City-related facilities when our own Planning Commission says we should spend $185 million?
Well, that was really a policy decision to embark on a borrowing to help stimulate the City's economy through arts and culture and neighborhood corridors. So the question would be would you rather have spent all that money on infrastructure and really have not had the opportunity to increase our rate of growth.
Well, let's go back to your analogy. When are we going to fix the rusty door on your car? I mean, at what point? I mean, all this later years, back end, down the road, I don't have to worry about it, somebody else will. I mean, there is a debt. There is a time when someone is going to pay for the deferred maintenance, the 250 3/7/06 - WHOLE - BILL 060001, ETC. neglect, the let's-just-have-a-ball, spend it now and we'll worry about all of our own stuff later. I mean, we've been through this a couple times where we have neglected all of our own infrastructure, paid exorbitant amounts of money to subsequently fix it. What is the justification? I mean, what's the economic impact? Has someone done an analysis of what the economic impact will be of the $150 million borrowing?
Well, yeah. I mean, part of that is known, and that is the impact on the Art Museum, because the Art Museum --
Right. That's 30 of it. I don't know if a study has been done on the economic impact of the neighborhood corridors part of the 251 3/7/06 - WHOLE - BILL 060001, ETC. project.
Do you have a schedule for the other $35 million in art and culture spending?
I am not participating in deciding what the projects are. Is that what you meant?
Deciding, know of, might be aware of, were you possibly in a meeting where it kind of might have been mentioned?
Okay. Well, what I'd like to ask you to do is, first, if you could forward to the Chair a fuller response when you've had some opportunity, but kind of soon, to the various items laid out in the sixletter from PICA to the Council President. And, second, Ms. Reed, I know 252 3/7/06 - WHOLE - BILL 060001, ETC. you to be a person of seriousness with regard to your job, a tremendous quest for knowledge and information. Have you asked anyone how the other $35 million on the art and culture side would be spent? I mean, as the Budget Director, do you kind of want to know?
I'm curious, but it's really being decided by the people who make the economic development policy decisions.
It would be the Chief of Staff, the Commerce Director and others.
He's at the table and I'll take advantage. Mr. Tustin, you're the Capital Program Director, right? Do you know what the schedule is on those same items?
Okay. So, Ms. Reed, you'll get a more formal response to the PICA letter to the Council President?
Thank you. Councilman Kenney, do you have questions of Ms. Reed?
Yes. Just quickly on the pension fund. You've testified that we're going to reduce the earnings assumption from 254 3/7/06 - WHOLE - BILL 060001, ETC. 9.0 to 8.75; is that correct?
That will be -- the amount that we pay will be the MMO. That will be the minimum municipal obligation, actuarially determined.
I understand that. All we're doing here is shifting the burden from the earnings to the General Fund and not changing the MMO; therefore, not making a dent in the problem.
No doubt. But if you're reducing the earnings estimate and increasing the payment from the General Fund so that it's a zero sum 255 3/7/06 - WHOLE - BILL 060001, ETC. gain, it's a zero sum gain. If you're not increasing the minimum municipal obligation, then you're not putting a dent in the problem. You're just shifting it from the earnings to the General Fund. You shouldn't get credit for reducing the earnings projection, which the actuary does, that's their job, so we pay more money out of the General Fund. There's no overall decrease. It's still the minimum obligation. You're just shifting it from earnings to the General Fund.
So would I. That leads me to my second question. I called my investment broker the other day and I inquired about a property I was looking to perhaps acquire, and he almost choked and said, Don't even think about it, because the way the fed is going with the interest rates, they had 20 minor upticks over the last few months. He 256 3/7/06 - WHOLE - BILL 060001, ETC. said, Stay away from real estate. And what I see is the Administration moving in the direction of investing in real estate to improve our earnings. Why are we doing it now when real estate values are going the other way overall?
Well, that was testified to by the Pension Board, the Board of Pensions.
Yes. I actually didn't hear that. I think I was, unfortunately, on my Blackberry. I apologize.
You got to get rid of that Blackberry. So there's really no overall improvement to the condition of the fund because we're simply paying the minimum payment required by law; we're just shifting it from the earnings to the General Fund. Is that a safe assumption? 257 3/7/06 - WHOLE - BILL 060001, ETC.
I don't care what the actuary says. In reality, we're not improving the condition of it.
Yes. The thing about the earnings assumption is that we had to change it because it was too high.
No doubt. No doubt. But if we're only making up the difference between the lost earnings or the unrealized earnings and the minimum municipal obligation, how are we improving the condition of the fund? We're not. We're paying our minimum obligation. We're not moving anywhere off of the 59 percent funded towards the 70. We're making the minimum payment and we're not making any more money in earnings.
I think what also is happening is that the Board is holding their money managers accountable for increasingly improved financial 258 3/7/06 - WHOLE - BILL 060001, ETC. performance. So hopefully we'll get it on the back end of it, which is --
Now that the horse is gone, we need to bard that door. I mean, again, I will reiterate I think that in addition to the issues discussed by Councilman Nutter and in addition to the issues discussed by Mr. Dubow, I'm going to harp on this pension fund, because I'm telling you, it's a weight around our neck. It's going to sink us. You might not be here to see it, but some of us will be, and I'm not looking forward to going back to 1991. Thank you.
Thank you very much. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Mr. Tustin, I'm not a member of 259 3/7/06 - WHOLE - BILL 060001, ETC. the Finance Committee, but I understand you testified yesterday before the Finance Committee, and you were quoted this morning in the media of a very dangerous condition that exists here at City Hall, and I'm sure there's other situations throughout other City-owned property. But specifically the media reports this morning and your testimony yesterday that -- and I think you alleged that the fact that there's been no 13 budget, capital budget, for 2006, that the conditions here at City Hall, there are certain attachments that you had to put nets around to prevent them from falling because they already have fallen and could kill someone if they hit them or seriously injure them. I hope that's not just a statement. Yeah, that could kill you.
Would you like to see the actual -- 260 3/7/06 - WHOLE - BILL 060001, ETC.
I got the gist of it. That's part of the limestone face of the cast iron.