The Chair recognizes Councilwoman Brown. 345 Whole - 4/14/04 - Bill No. 040255
Thank you, Madam Chair. You show the best percentages for 2002, 2003. Is it standard operating procedure for Procurement to share that information with City Council?
It is or is not? Could you if it is not? Then that's helpful to us in keeping our eyes on how well the City is doing with regards to measuring up to or meeting the standards of both the Ordinance and the Executive Order.
We can, Councilwoman, but keep one thing in mind also is that what we reported on does not include professional services. So we're only dealing with those things that requires a bid, supplies, service, equipment and construction only.
Professional services doesn't include that. So you will be 346 Whole - 4/14/04 - Bill No. 040255 getting only half the picture or part of the picture, not the full picture.
We do send a contract activity report at the end of the fiscal year to City Council.
Okay then. I'll look for that. With regards to pre-bid conferences and meetings, what happens?
At a pre-bid meeting, what happens is that during that time, your terms and conditions, your specifications are talked about. Also minority participation is talked about. The bonding issue, the insurance issues, everything regarding what a vendor or a contractor needs to do in order to bid on that particular project or commodity.
And if 347 Whole - 4/14/04 - Bill No. 040255 there are no MBE or WBEs in those pre-bid meetings, what type of proactive or reactive measures do you take to insure that there's inclusion of those opportunities?
What we have done is that if there is no participation on inclusions, again, we work with MBEC, so they are there when we have pre-bid conferences. So when we find that there are no minority participants, then MBEC actually goes out and tries to solicit companies in doing so. And in the process what we would do is, we will delay the bid opening until such time as we get the participants for that particular project.
Okay. I'll leave that there. Given all of what we've heard really over the last year, not just in recent weeks, but over the last year with regards to sentiment and dissatisfaction around how well 348 Whole - 4/14/04 - Bill No. 040255 the City is not doing with regards to MBE, WBE participation, and with the advent of new leadership at MBEC, what three major priorities, opportunities would you offer up for the City to get better at doing this, particularly in view of the Executive Order and the Ordinance?
One of the things I think we need to take a better hard look at is in the professional services area, because that's one where it's not centralized. It's decentralized from the standpoint that each department would do his own thing without a prescribed way of doing it. So because it is decentralized, you don't really get a handle on making sure that the departments are all doing it the same way. But as Ms. Davis indicated, one of the things that we've done in the past year is with the --
-- CRC is to make sure that MBEC gets involved in it, because they really have not, I don't think, gotten 349 Whole - 4/14/04 - Bill No. 040255 involved in the professional services area as much as they had in the procurement area. And I think that that's an area that will continue to be an area that until it's centralized, it will continue the problems that we're having.
Is there database interface between Procurement and MBEC?
There is a database, but we are part of looking at a new system that MBEC is implementing. So we'll be a part of it. They do receive data from the Procurement system that they utilize, but, again, that's the Procurement area, not necessarily the professional services.
Yes. Well, we're a part of it, to answer the question, Council Reynolds.
Finally, with regards to the composition of Procurement, executive level staff are civil service or not? 350 Whole - 4/14/04 - Bill No. 040255
I have two deputies that are not civil service and I have an administrative IT person that is not civil service.
And I see that one is a female. Kudos to you. What's the ethnic makeup?
The Deputy Commissioner for supply, service and equipment is a white female. The Deputy Commissioner for public works is a white male and the Director of our IT is a white female.
Forgive me. I did not hear your name and your capacity in Procurement.
My name is Janet Hagan. I'm the Deputy Commissioner for services, supplies and equipment.
And so shall I assume that all the executive professionals around you, there are no people of color?
And 351 Whole - 4/14/04 - Bill No. 040255 they're all appointed by you?
I'm going to let the Commissioner off the hook. The Commissioner inherited his staff and he does not have room within his personnel allotment to move people to achieve the kind of diversity at the top that perhaps your --
That you would expect, yes. And so it has been a situation where because of reductions in staff, he has the staff that he has.
I appreciate that explanation. That's certainly understandable. So given that corner that you've been placed in, how long does that scenario last, or is it dependent upon -- help me out. How long does that scenario last? 352 Whole - 4/14/04 - Bill No. 040255
It will last until there is a vacancy that would allow some other movement. It is strictly the numbers game right now.
Okay. I appreciate that. And I understand your position, Commissioner.
We need to put it on the record. The department heads have to walk the talk, walk the walk. What is it? Talk what they walk or walk what they talk. But if you're put in a circumstance where that's not possible, then that needs to be reflected as well. So I appreciate your testimony. Thank you, Madam President.
You're welcome. Are there any other questions of these witnesses? 353 Whole - 4/14/04 - Bill No. 040255 (No response.)
And we will have a call-back date because there are some Council members who could not be here this evening but want an opportunity to ask some questions. Thank you so much.
The Board of Pensions and Retirement is next. We do have a copy of your testimony, so you can certainly abbreviate it.
Good afternoon, Council President Verna and Members of City Council. My name is Gwendolyn Bell. I'm the Executive Director of the Board of Pensions and Retirement, and with me today is Anthony Johnson, our Chief Investment Officer. We've submitted our budget request for fiscal year 2005 for $7,479,300. That's up by $913,300 from fiscal year '04. The increases include an addition of four staff 354 Whole - 4/14/04 - Bill No. 040255 members. So it will be the fringe benefits and salaries for those four people, and inclusion of expanded retirement period of time at sessions. We are now able to offer in each session an additional to 7 participants, and we've increased the number 8 of sessions by 14. 9 We've also increased the number of 10 hearings that we have for the disability 11 process and we've had to hire co-chair for the 12 medical panel, as well as paying the expenses 13 of the recording those meetings. 14 This year we'll have the election of 15 trustees. That's a $75,000 cost that have 16 been surveyed only every four years. 17 We're also involved with the 18 Citywide imaging program. They will be 19 imaging our files. We've budgeted $150,000 20 for that. And the death audit was a big issue last year. We now have a consultant on board that we're paying $11,000 for. So we would respectfully request that you approve our budget request for fiscal year '05. 355 Whole - 4/14/04 - Bill No. 040255
Yes. Because last year when I started here, we were newsworthy because we were paying deceased members in the tune of about $800,000. We have -- actually, it was $2 million, but 800,000 was actually cashed, and we've been very actively involved in recovering those funds. We've recovered $300,000 to date and turned over at least a dozen, about members' families to the 16 District Attorney's office for prosecution. 17
I thought I heard you properly, but I asked Mr. McPherson did she say debt or death.
Okay. We learned something today. Are there any questions from Members of the Committee? The Chair recognizes Councilman 356 Whole - 4/14/04 - Bill No. 040255 Ramos.
Thank you, Madam Chair. The Mayor asked all City departments and units to cut back their budget and now we have yet another board saying that you want an increase in your budget. Why do you need this increase? Why is it so important for you to get another million dollars or close to a million bucks?
Some of the expenses are not controlled. We have -- you probably have been reading that we are under investigation, and we have had to pick up the cost of those attorney fees. So there is close to $100,000 of expenses for legal fees, with the addition of picking up some costs for the Risk Management services for disabilities. The money that we're saving by having the process in place to do the death audit actually saves money, but it had to be added into our budget. So those are benefit costs that we had. The staff members, we've hired new 357 Whole - 4/14/04 - Bill No. 040255 counselors because we were out six months in providing pre-retirement sessions to participants. There was no room for them to come in. We also have out of 71 employees, 7 employees in the DROP program. So we have to 8 continue to provide services to hire new 9 counselors. 10 We will start seeing our senior 11 staff leave within 15 months. 15 months to 12 two years we have 12 people that are leaving, and most of them are supervisors and administrators.
This death audit, we paid $840,000 to people that were dead?
We actually paid about 2 million, but we found a lot of the funds in bank accounts and the checks, that we were able to reverse those direct deposits. So there was $840,000 in cashed checks where the department had paid deceased members for about eight years.
And you were 358 Whole - 4/14/04 - Bill No. 040255 only able to recover $300,000 from the 840,000?
So far, yes. We're actively working on that. A lot of those funds were paid to widows or widowers of the deceased members who are not in position to pay us back in full at this point. A lot of them had to go on into repayment agreements with us, but they'll be paying us back over time. And where we couldn't recover or couldn't identify who had cashed those checks, we're actively looking to have those people found and prosecuted, and we have found about of them. 17
Madam Director, how did this happen? I mean, it was bad enough that I read $840,000, but you said it was close to $2 million. How did we allow this to happen?
Well, I started in July of 2002 and found that even though in a few cases people are notified of these deaths, that the policy to suspend payment had not 359 Whole - 4/14/04 - Bill No. 040255 been in place. I can't explain why it happened, except that the reason I heard was that there were a number of vacancies in the department and they just couldn't keep up with some of the activities going on there.
You heard that because of some vacancies in the department, this was overlooked?
Part of it, Councilman, was a breakdown in communications between the Treasurer's Office and the Office of the Board of Pensions and Retirement. Checks would go back to the Treasurer's Office or notifications that nothing was happening. Direct deposits would go back to the Treasurer's Office and there was no follow-up activity on those. Once we identified that situation, we had already engaged someone with expertise in internal control and had them look at the Treasurer's Office and the Board of Pensions and Retirements for their interactions around 360 Whole - 4/14/04 - Bill No. 040255 this process and developed a process to prevent this from happening going forward. Thanks to Ms. Bell, we have a process in place now that wouldn't allow this to happen, but it had been occurring over some extended period of time, and it was clearly a lapse.
And to whom does this board respond to? Who does it report to?
I am the Chairman of the Board. They are part of technically the office, but they report to the Board of Trustees.
And this breakdown of communication between the Pension Board and the Treasurer, is this the former treasurer or the present treasurer?
It is the former-former treasurer, but it may have gone 361 Whole - 4/14/04 - Bill No. 040255 back over several treasurers, because it was something of very long standing. As soon as it -- I was part upset because we had the Board of Pensions Director and the Treasurer sitting in staff meetings every month and the Treasurer's Office was never raising a red flag that they were getting all of these checks back and that they weren't getting a response from Pension. So it was a lapse on both sides. But as I say, I can't lay the blame on any one person's feet because it went back a long time and there were probably several treasurers and at least two directors over in the Pension Fund who would have been involved or been in place at that time.
I'm just rather curious. Ms. Bell, how would you know if a retiree who is on pension is deceased unless you're notified by someone? 362 Whole - 4/14/04 - Bill No. 040255
Well, the normal practice was that we relied on family members and looked in the newspapers and checked the Social Security match, but we've hired a firm that can do that for us. So they use a couple of sources and they report to us. So we use a number of things. Most people are honest. And some of the widows actually felt that they were entitled to continuation of a hundred percent of the benefits. So we found that there was not fraud in their cases, but --
Many of them wouldn't realize that they're not entitled to --
-- the entire portion of the pension. I'm sorry, Councilman. I was just very curious.
That's 363 Whole - 4/14/04 - Bill No. 040255 perfectly okay.
We're now using a firm in California and it's Employee Benefit Services.
Madam Director, when you refer to outsourcing in your prepared text, do you mean outsourcing abroad or outsourcing outside of Philadelphia, outside of Pennsylvania?
It's under Administration under Staffing. It says, "This move will cut back the cost of outsourcing many projects."
Yes. We're currently -- well, we're moving our technical 364 Whole - 4/14/04 - Bill No. 040255 group. I think that's what I refer to. We're moving them over to MOIS. And we're currently using a consultant to do just about everything technically that's done. MOIS will pick up some of those responsibilities. And we probably will still have the consultant to help us run our pension program, but we will not need them to do every little thing that's being done now. We're going to be incorporated into the central processing of the Mayor's office of information services. So that will cut back on consulting expenses with our tech unit.
They will be outsourcing a small part of it, because they have people that we can rely on to do some additional programming for us and some management for us. We've had difficulties with our manager in our tech unit where he didn't have the expertise to do some programming for us. 365 Whole - 4/14/04 - Bill No. 040255
The point I'm getting at is, is any of the work that you were doing that is now being done by MOIS, are they sending this work to be done by people living abroad or is it just sending it out of Philadelphia? Because nowadays when you talk about outsourcing, you're talking about having some work done for you.
Whether in the private sector or in certain parts of -- in certain states they're sending it to India, to China.
No. No. We're actually interviewing for a consultant now and we have five vendors on the list, and most of them are very close to Philadelphia. New Jersey, Pennsylvania firms. So there's no 20 outsourcing outside of the east.
Those of us in this City Council know about elections. You state here you'll pay $75,000 for an election. The election is of the members of the Board? 366 Whole - 4/14/04 - Bill No. 040255
The election is for four of the elected trustees from the District Council, 33, 47, and then the police and the fire. There are four members that are elected. And so it's to run the election, to certify the election, to do the mailing, to count the votes. And in most cases, I've worked with two other firms. It's usually done by an outside agency for validation of the votes.
That's a lot of money for an election of four people on a board.
Hopefully not. So we're not going to pay any more. So we will negotiate so that we will not pay more, and we will try to get it for less, but I included in the budget what the cost of it was for four years ago. 367 Whole - 4/14/04 - Bill No. 040255
Do the people run for these positions, for four positions, or how does it work?
Yes. I believe at least two of the current members are being challenged. So people run for this. A number of other people can run for these positions. So they will take care of the fall election.
Are all of them, all four members, union representatives?
Yes. We have two members that are elected that are actually retired City employees and one active member and one member of the FOP.
At some point, I would want to talk to you for the purpose of me learning about that. Taxpayers are paying for this election. The union doesn't chip in for this election?
I'm going to look into this. I'm the Chair of the Committee of Labor and Civil Service, and I 368 Whole - 4/14/04 - Bill No. 040255 will present a resolution tomorrow to take a look into the proposed plan of the Administration on the issue of pensions. I might just as well take a look at some other things that have come out of your testimony today just for the purpose of the public knowing and for myself and my colleagues to know the workings of this Board. Thank you.
Thank you very much. Are there any other questions of these witnesses? (No response.)
Ms. Bell, thank you. Thank you very much. Our final department, City Planning Commission. We do have a copy of your testimony. It will be given to the stenographer. It will be transcribed in whole. I would ask you to please be as concise as possible.
Well, given the 369 Whole - 4/14/04 - Bill No. 040255 lateness of the hour, if you would prefer, since this has been entered into the record, even though it's wonderful testimony, I wouldn't have to read it, if you'd prefer to simply go to questions.
That's music to my ears. Do we have any questions of this witness? Councilman Ramos, I see that you're checking.
No. Last time Ms. Griffith was here, I asked questions. Let's see if the stuff she was supposed to send us she has.
I know that we had a number of questions for you during fiscal stability and during the capital. I really have no questions. 370 Whole - 4/14/04 - Bill No. 040255
Madam President, I pass. I'm looking at my notes and nothing is coming up.
That's fine. Thank you. No questions. Ms. Griffith, congratulations. No questions.
Thank you. The Committee will stand in recess until Monday, April the 19th at 9:30. Thank you. (Committee of the Whole adjourned at 5:45 p.m.) - - - 371 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on April 14, 2004, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)