Committee Hearing, March 21, 2006

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Tuesday, March 21, 2006 10:40 a.m. - - - Room 400, City Hall Philadelphia, Pennsylvania - - - FY 2007 OPERATING BUDGET HEARINGS - - - PRESENT: ANNA C. VERNA, President BLONDELL REYNOLDS BROWN W. WILSON GOODE, JR. JACK KELLY JUAN F. RAMOS FRANK RIZZO JANNIE L. BLACKWELL MICHAEL A. NUTTER DARRELL L. CLARKE DONNA REED MILLER - - - V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 FY '07 OPERATING BUDGET - 3/21/06

Good morning, everyone. I am sorry for the delay. I don't think that we ought to keep our witnesses waiting. So, therefore, I am going to start our hearing This is a continued Public Hearing of the Committee of the Whole. And I would ask Mr. McPherson to please call our first witness. MR. McPHERSON: First Judicial District.

Your Honor, nice seeing you again, and I want to publicly congratulate you. And we do have a copy of your testimony. It will be given to the stenographer. It will be transcribed in full. So, if you will, sir, if you will merely abbreviate your testimony, we would appreciate it. HONORABLE C. DARNELL JONES, II: Surely. Thank you very much, Madam President. Good morning. I would like to initially allow our 3 FY '07 OPERATING BUDGET - 3/21/06 Deputy Court Administrator, Mr. Kevin Cross, to address you, Madam President and members of Council, please.

Thank you. Mr. Cross.

Thank you. Madam President, members of City Council, for the record, my name is Kevin Cross, Deputy Court Administrator for the First Judicial District. With me today is the Honorable C. Darnell Jones, President Judge of the Court of Common Pleas and Chair of the First Judicial District's Administrative Governing Board. Joseph A. Cairone, Court Administrator for the First Judicial District, is unable to attend today's hearing, he is attending to a family medical emergency. Mr. Cairone expresses his apologies for not being here and appreciates the courtesies extended to us today. At this time, I respectfully ask that if there are any questions from the members of City Council, the judiciary seeks 4 FY '07 OPERATING BUDGET - 3/21/06 another opportunity to appear before the Council to give the court administrator an opportunity to respond to the questions.

All right. I just have one question, and perhaps you will be able to respond to the question. If not, we will certainly call Mr. Cairone. On of the testimony, it is indicated that you expect to be cut $4.5 million in federal funds for child support in FY '08. Have you notified the Administration of this? Because it appears they have not included it in the Five-Year Plan?

That's a good question, Madam President, and it is in our testimony. And I was going to briefly allude to that in my oral summary this morning. There was legislation from the federal government, the Federal Budget Reduction Act of February 8, 2006, when it was enacted, that reduced the child support funding that we anticipate to cost approximately $4.5 million. 5 FY '07 OPERATING BUDGET - 3/21/06 Therefore, it was not -- we could not give that information to the budget bureau in time for them to do their Five-Year Plan for the courts. We don't know the full impact of that reduction; hopefully, there is going to be some bills or laws that may repeal or change that. We don't know how the state is going to respond to that and we don't know how it is going to affect us locally. But we do want to make Council and the city Administration aware of this shortfall, in the hope that we can all plan for it in the next fiscal year.

Wonderful. Thank you. Are there any questions from members? We have no other questions. And, as I said, your testimony will be transcribed in full by the stenographer. And we thank you for coming in, Your Honor. We wish you luck.

Thank you so much. 6 FY '07 OPERATING BUDGET - 3/21/06

I must apologize you had to wait as long as you did. Thank you.

Thank you.

Thank you so much.

Madam President, may I just ask you for about two minutes?

Sure.

These remarks were not included in the package that was forwarded to the Council because we had the unexpected occurrence to Court Administrator Cairone. So I just wanted to take a moment or two just to impart some things from my perspective as Chair of the Administrative Governing Board, as well as the President of the Board of Judges of the Court of Common Pleas.

That's fine.

Thank you. First of all, on behalf of the First Judicial District, I thank you for the 7 FY '07 OPERATING BUDGET - 3/21/06 opportunity to come before you. Those of us within the First Judicial District look upon our obligation to the citizens to perform in a highly competent, efficient and progressive and trustworthy manner, and that is paramount to us for the future success of Philadelphia. There are just three things that I wanted to highlight as focus of my attention as President Judge and as Chair of the Administrative Governing Board. First of all, I want to commend you, Madam President, and City Council for the ongoing efforts that you make to make the citizenry aware of what it is that all of us do collectively to improve the citizens' welfare in the City of Philadelphia. As you know personally, we were out just a few nights ago in the public forum to impart that message to the community. And I want you to know that, as President Judge of the court, I plan to be out there all the time promoting that message; to let people know that we are here, that we have a vested 8 FY '07 OPERATING BUDGET - 3/21/06 interest in this community, as well as they do; and that we are responsive to the needs of the community. I also wanted to pay acknowledgment to you, again, as Council President and to the Council and Administration. Because this past weekend, I had an opportunity to visit a couple of recreation centers with the Recreation Commissioner, Victor Richard. And my comment to him, in looking at the Simon Recreation Center and the Dorothy Emanuel Recreation Center, was that the message really needs to get out to the public that this is what the Council, the government, is doing. And it is a good story. A story that needs to be told. And if we can do more of that in terms of prevention, I think that we can address the staggering crime problem that we have, particularly with juveniles. Lastly, I want to come to you to say that part of my vision as the President Judge, unlike in the past, I suppose, where we constantly come and ask you for allocation of 9 FY '07 OPERATING BUDGET - 3/21/06 funds, I come with a greater vision, to the extent that I am in the process and have gotten a commitment from the National Judicial College, where I am a faculty member, to bring a course to Philadelphia. And in addition to bringing the course to Philadelphia, we are bringing judges from across the country and their families and their per diems to Philadelphia. And I hope to have venues such as the Constitution Center, the Philadelphia Museum of Art, as well as the hotels, to share in the bounty that will hopefully bring Philadelphia to the forefront in that regard. And, lastly, I want to highlight one other thing, and that is the Family Court and my desire to make a full commitment to the Family Court system. As you may know, I was in my former life chief of the Defender Association's Family Court Division. And having been the on the bench now for the past 18 to 19 years, I am acutely aware of the needs of the Family Court system. 10 FY '07 OPERATING BUDGET - 3/21/06 And I really want to let this body know that I am determined to do all that I can do as President Judge and as Chair of the Administrative Governing Board to do all that we can do to improve the services rendered; to, frankly, address the overcrowded conditions, and the myriad of problems that confront our community in that regard. And I am here to work with this Council in every way possible. And I thank you, therefore, for your time.

Thank you, Your Honor. I will tell you that I think you are going to do an outstanding job. And as I said, I want to again congratulate you. I know we attended a community meeting, and I know that the residents in that particular area were very, very impressed with you. So I think you are going to be great. Councilman Ramos.

Thank you, Madam President. I also want to take this opportunity 11 FY '07 OPERATING BUDGET - 3/21/06 to congratulate the President of our court system, and also to say that he has gotten off to a very impressive start. He seems to know what are the issues in the system, because he served as a good jurist for a lot of years now, very much in tune with the public. I knew of his name, but I had never gotten to know him. And one day I am loading a truck with water, and there is this guy with his hat tucked down, and he is loading the truck with me, and him and some of his friends were heading towards Louisiana to a town outside of New Orleans that got hit very hard and devastated, as well. And then a few days later I saw his picture in the newspaper. I said, that looked like the guy with the hat tucked down and loading the truck with water. So I think it says a lot about the President of our courts. And welcome, and I know you will do a fantastic job for this city.

Thank you very, very much, Councilman. 12 FY '07 OPERATING BUDGET - 3/21/06

The Chair recognizes Councilman Nutter.

Thank you, Madam President. I won't match the eloquence or recital of the history of my colleague, Councilman Ramos. He did a very fine job. But I just wanted to acknowledge the President Judge and thank him for his continued service. I remember your election. And it is a pleasure to be here in this body with you at that table as the President Judge. And I just wanted to say congratulations and welcome.

Thank you, Mr. Councilman.

Thank you, Madam President.

You are welcome. Any other questions or comments by members of the committee? Seeing none. Again, Your Honor, I thank you and good luck.

Thank you so much. Have a great day.

Thank you. 13 FY '07 OPERATING BUDGET - 3/21/06 MR. McPHERSON: The next department is the Clerk of Quarter Sessions.

It is my understanding that the witness, the Honorable Vivian T. Miller, is on her way here. She should be here momentarily. Ms. Reed, do you mind approaching the witness table, Councilman Nutter would like to, I guess, ask you a question or two or three.

We are in kind of a free recess period.

Dianne Reed, Budget Director.

Good morning, Ms. Reed. I know you wouldn't want to miss an opportunity to be at the table, so I figured I would be the person to give you that opportunity. Good morning.

Much appreciated.

I'm sure. Ms. Reed, I think it was either last week or the week before, there was discussion about the response to the Five-Year Plan by 14 FY '07 OPERATING BUDGET - 3/21/06 PICA. And I believe I had asked if you might forward to the Chair a response to the five items that PICA has outlined as areas of concern. Have you had an opportunity to do that?

No. We are still talking with PICA about that. So, various people are working on it; it is not completed.

Okay. The second is, I think, prior to that I may have asked you for a list of city employees who live outside the city. Do you know if that's been put together?

I think that that has been put together.

Do you know if it has been sent over yet?

No. I haven't seen the final letter, so maybe it has not been. But we certainly should be getting that over, because we do have that list.

Okay. You will 15 FY '07 OPERATING BUDGET - 3/21/06 forward that to the President?

Yes.

Thank you. That's all I have for the moment. So when do you think there will be an actual response to the five items as outlined in the PICA report?

Probably by the end of the week.

End of the week. Okay. And then you will forward that to the Chair, as well?

Yes, sir.

Okay. Thank you very much.

You are welcome.

Thank you, Madam President.

Thank you. We will now hear from the Clerk of Quarter Sessions.

Good morning.

Good morning. I would ask you to identify yourself. We do 16 FY '07 OPERATING BUDGET - 3/21/06 have copies of your testimony. A copy of it will be given to the stenographer. It will be transcribed in full, so I would ask you to please abbreviate your remarks.

I didn't hear that.

I would ask you to abbreviate your remarks, but your testimony will be transcribed in full.

Good morning, President Verna and other distinguished Council Members. My name is Vivian Miller, I am the current elected Clerk of Quarter Sessions. I have with me my First Deputy, Lopez Jones; and my Second Deputy, Marc Gaillard. I am here for Fiscal 2006 budget. And what I am asking --

2007.

-- is that we be allowed to have 118 employees, as which was required of us -- given to us last fiscal. We have a level of one hundred and maybe ten, twelve employees. We are down some employees. We were given monies to hire six new employees. We have not -- we have not 17 FY '07 OPERATING BUDGET - 3/21/06 received the money as of yet. And I am asking this Council to please help us to get these monies so that we can come to our current level of staffing.

I see we have a --

Ms. Miller, while you are on the -- I would like to interrupt you for just a minute. As we read the budget as presented to us, it would appear that you are running on an average of 11 vacancies.

That's true.

Now, I don't know whether that is a list problem, that there is not an existing list, or a finance problem that would not allow you to hire. Which problem is it?

It is both. What happens is, delayed hiring. We submit -- I believe I have some examples here. We have someone who has been out, retired in 2004, June of 2004. They have not been approved as of yet. The monies is not there. 18 FY '07 OPERATING BUDGET - 3/21/06 So, therefore, it is what you called delayed hiring. We cannot hire anyone, if we do not have the monies. We were told that we would be given $174,000, that was last fiscal. We have not received that money. So, therefore, if the money is not there, we cannot hire the necessary --

The 174,000 that you are referring to, would that have allowed you to hire the 11 vacancy positions?

It was for six more, six more positions.

So it would have --

How the 11 came about --

Wouldn't that have been 17?

No. No; no. 22

What would it be for?

We are trying to go to the number of 118. We are 11 short. Those 19 FY '07 OPERATING BUDGET - 3/21/06 vacancies I believe we can hire, but we needed more to make 118. 4 We are down, I guess our numbers was 5 down, like, 112, 112 employees. So we needed 6 6 more, would be 118. And that's what the $174,000 was for, was to cover those extra employees.

How many positions do you have filled today?

Madam President, my name is Lopez Jones, First Deputy. We have approximately 110 positions filled as we speak. What the clerk is trying to explain to you, when we got our fiscal budget, they appropriated approximately $4.3 million to hire employees for the Clerk of Quarter Sessions, but at that point the clerk wanted monies for 118 employees. So then she had meetings to try to get the money to take our staffing level up to 118 employees, and that's where the $174,000 figure came from.

I find this very confusing. I don't know if anybody has been 20 FY '07 OPERATING BUDGET - 3/21/06 able to follow this through. Presently you have 110 employees. In your testimony you say you are running an average of approximately vacancies 6

That's correct. 7

And yet you said 8 earlier that you need 117 employees. 9

No. We were approved 10 for 118 employees. 11

So were you given the money for the 118?

No, we were not. We were not. We were given money. And what happened was, it was for 107, I believe, employees. And we went and we had meetings, and we were appropriated more monies to accommodate the 118 employees. But, we never received the monies. So, therefore, we could not hire the other employees.

You know, I think we have been going through this just about every year. 21 FY '07 OPERATING BUDGET - 3/21/06

Yes; yes. True.

And I think it's just so outrageous that you have projected revenues generated by your office for '07 in the amount of $8,425,000. What is the Administration's recommended budget for your office in 2007? I have the answer, if you want me to give it to you. Do you want to give it to me, or --

What is it you need?

If I am not mistaken, Madam President, I believe it is approximately $4.5 million.

It is $4,655,000.

$4,655,293.

So this office produces almost $3.8 million more than they spend.

Exactly.

So I would like Ms. Reed to please come up to the witness table. And can you tell us the rationale for holding up the filling of the positions that 22 FY '07 OPERATING BUDGET - 3/21/06 Ms. Miller has referred to? I think it is absolutely absurd that we in fact could even be collecting more revenue, if we had the personnel to do it.

Dianne Reed, Budget Director. We agreed to fund the 118 positions in the '06 budget. These were awarded at the time of the target budget. And the additional funds were provided in the mid-year transfer ordinance.

I am sorry. You are going to have to repeat that. I was distracted.

I said, the 118 positions were agreed to at the time of the target budget last summer, and the additional funds were provided in the mid-year transfer ordinance.

We never received them.

Well, why did you wait so long?

That was true for everyone else. Everyone got their money in 23 FY '07 OPERATING BUDGET - 3/21/06 the mid-year transfer ordinance, because we don't have another vehicle to do that.

I think you could do a transfer ordinance at any time.

Well, I wasn't aware that there was an issue, so this is the first that we are hearing about this issue.

Well, I think there has been an issue with the Clerk of Quarter Sessions office every year in the last several years, to my memory. And I think it is absurd. I mean, remember last year when she came in, she had a box with her. Vivian, do you want to explain what was in that box? It was monies that you could have been collecting, had you had the personnel to do it. And I'm sure it involved several million dollars, did it not?

If I may, Madam President, there were monies that was affiliated with the Clerk of Quarter Sessions that could have went to the City of 24 FY '07 OPERATING BUDGET - 3/21/06 Philadelphia, if we would have had additional employees to do the job that was needed to do, that is correct.

And, as I said earlier, you are making more than $3.8 million in revenue, more than you spend.

If I might add, there has been a vendor that's been brought in to help put the collections, processing of all of this, into an electronic form. And the clerk is part of the case management system gap analysis that's underway for all the justice partners with respect to what the state wants the city to do. In May -- probably the First Judicial District will speak to this, as well -- the city has to comply with the statewide standards for data. And there will be further suggestions for assisting the clerk to streamline processes electronically coming forward in the next month or so through this study, which is being managed out of MOIS.

Ms. Miller, is 25 FY '07 OPERATING BUDGET - 3/21/06 this the first time you are hearing this, or do you have knowledge of what's been going on?

No, we are aware of it. We are aware of it. They are trying to put into a system all this monies where they came in, we showed them, lie them out on the floor in boxes, that money can be put into the system and given to the city. So that's more revenue that we can generate, if it ever comes to pass. I don't know.

You are going to need somebody to enter that into the system, are you not?

Yes.

And do you have the personnel that would be able to do that?

We do not. We do not have the personnel. That's part of the problem.

She does have the authorization for the personnel and has had since the beginning of the year.

I am sorry, I don't FY '07 OPERATING BUDGET - 3/21/06 believe that's true. I have here in front of me -- okay, maybe I can pass it up -- showing we had jobs back in June 2004 that has never been approved. November 2004, never approved, a court clerk, a payroll clerk. And October 2005, I believe we just got approved. So...

Well, '04 would not be in this fiscal year.

Jobs that we need to help generate revenue which has not been approved.

Well, the authorizations were there, the funding is there, the budget analyst approved the positions, and I approved the positions. So, I mean, we can sit down and go over these, if you would like to, in a side meeting. I think that might help.

My understanding it was just approved since February? Yes.

I know. If it 27 FY '07 OPERATING BUDGET - 3/21/06 weren't so sad, it would be... I just don't understand why we would hold up positions with a department, as I said, that produces almost $3.8 million more than they spend. And if, in fact, they had more personnel, they would be able to be generating that much more in revenue.

Council President, I think there is just a simple misunderstanding here. We haven't held up any requests. I'm sure we can show exactly the time line when we received the requests, when the analysis and approval through the staff was completed, and when I approved the positions. So I'm sure, to everyone's satisfaction, that can be determined.

Madam President, no 21 disrespect to Ms. Reed. But, again, the clerk specified, there was an employee that worked for the Clerk of Quarter Sessions that separated June of '04. And that position was just approved approximately three days ago. 28 FY '07 OPERATING BUDGET - 3/21/06 So that speaks for itself.

When was the request made?

The question was made.

In 2004?

Yes. The initial request was made, if I am not mistaken my notes state here, June of '04. And the 10 position was just approved approximately three 11 days ago.

What was the title for that employee?

She was a pay processing clerk.

Why would it take so long, Ms. Reed?

Well, that was a prior fiscal year, so that was an entirely different set of approvals. I will have to look and see when the '06 budget request for that position was made, and when we filled it.

I am not going to dominate this for the moment. I will 29 FY '07 OPERATING BUDGET - 3/21/06 recognize Councilman Kelly at this point.

Thank you, Madam President. Ms. Miller, according to your testimony, in 2005 you appropriate monies for the six additional employees. Could you tell me what the employees would be doing; in other words, what their job functions would be and what kind of impact this would have? Evidently it would have a negative impact on the performance of your office.

I believe four would be court clerks and two would be clerks.

Four would be court clerks?

Yes.

Could you give me an estimate on how much additional revenue you would probably be receiving, if you did have the additional personnel that you requested? Just a ballpark figure. I am not holding you to it. In other words, right now you are --

We estimate about 30 FY '07 OPERATING BUDGET - 3/21/06 another couple million dollars.

Couple million dollars, if you had the or the 6? 5

If I had the complete 6 staff of 118, meaning -- 7

So that would 8 justify their being hired. 9

Yes, without a doubt. 10

So it would be a 11 plus for the city, if you had the whole complement of 118 people; is that correct?

That's correct.

I just am bewildered at why we are just going through this. Each and every year we seem to hit this brick wall. Was there a freeze on at the time? Was there a personnel freeze on at the time? I don't know if Ms. Reed would answer that.

Dianne Reed, Budget Director. There has been a freeze in place since approximately Fiscal '01. And positions are only approved unless they are in the 31 FY '07 OPERATING BUDGET - 3/21/06 excepted categories; such as dispatchers, you know, health and safety positions, they are approved by exception. And, so, that we meet with departments, we go over what their requirements are. Last year, in addition to the hiring freeze, we also had the position reduction, which --

Even though these positions can justify by actually increasing the revenue of the city? I mean, do you take that into account?

Yes, we did. And as I recall, we held the clerk harmless. She did not receive a cut in her budget, compared -- the 5 percent that everyone else got. But, let me just verify that.

Would you verify that.

Absolutely.

Thank you. Thank you, Madam President. 32 FY '07 OPERATING BUDGET - 3/21/06

You are welcome. The Chair recognizes Councilman Nutter.

Thank you, Madam President. Ms. Reed, why don't you stay. Let's just walk through this issue from last fiscal year. You made reference to the budget for the clerk's office being approved for FY '06. When was it approved, how much was it approved for, and what were the positions that you anticipated at that time?

Well, there was the budget approved by Council, as you know, last June. And in July we met with departments regarding a target budget which requested a proposal for how departments would accommodate at least a percent budgetary reduction. Most departments took those requested reductions in spending into account. We do that every year, and have done, you know --

You do the 33 FY '07 OPERATING BUDGET - 3/21/06 target budget after we pass the budget?

Yes, we do. We ask people to come in under that, just to make sure we can get through the year in case our revenues might fall short.

Why wouldn't you make the target budget the budget?

Because we want to ensure that we will not end the year in a deficit, if we possibly can. So this is a budgeting -- a prudent budgeting strategy that the city has been using for several years.

So you went through the target budget process, and the agreement was for --

For 118 positions, funded at the amount that you see shown for '06.

4,347,650?

Yes. And then we transferred additional funding in the mid year to make sure that the court could --

Let's stop right there. 34 FY '07 OPERATING BUDGET - 3/21/06

Fully fund those positions. And I don't have the transfer ordinance with me. I show what's shown in the December run that's here, which could be the same.

Let's back up a little bit. We pass the budget in June, you have a target budget conversation in July, the department agrees to it. The agreement is for 118 positions, you are saying, again at $4,347,650?

I don't have the target budget with me, so I will have to take a look at that.

So, but, in any event, apparently the department needed additional funding to ensure that they would have the personnel level at 118 positions?

Right.

All right. Now, that was in July?

Yes. And that --

So when we 35 FY '07 OPERATING BUDGET - 3/21/06 returned in September, why didn't you send us a transfer ordinance to ensure that they would be able to hire the people earlier in the fiscal year, as opposed to our just passing the mid year in February?

I would imagine the reason is that, at that point in time it may not have been clear that additional funding was needed. I will have to see what the intervening number was. I don't know have it with me.

Wait a minute. You had the target budget meeting; right?

Yes.

You agreed to a personnel staff level; right?

Right. And they were authorized to hire those positions since July 1.

But I thought your testimony was, they didn't have the money? How do you hire people with no money?

We transferred in 36 FY '07 OPERATING BUDGET - 3/21/06 additional money for them in the transfer ordinance. I do not have the target budget or the transfer ordinance with me, so I can't track every number for you.

But we didn't pass the transfer ordinance until February.

This often happens to departments. They have to fund these positions on a temporary basis out of their other internal funding sources, and then we fully fund all of this in the transfer ordinance so that they can get back to a whole position vis-a-vis their internal funds.

Are you saying, without the mid-term transfer, the department could have funded the positions from other dollars?

They probably could have done that, yes.

How?

I will have to look at the record and see what the exact transactions are.

Well, let me ask 37 FY '07 OPERATING BUDGET - 3/21/06 this question: When you had the meeting on the target budget, and you agreed to the 118 positions, what was your recommendation at the time as to how they would go about hiring those individuals, if you also knew they needed additional funds, which you knew you were going to subsequently have to transfer to them?

What we said to the clerk at the time was, "Here is your budget, here is your authorized level. You figure out how to hire these out of your budget authorization, and we will hold you harmless in the mid-year transfer ordinance."

And that was the end of the conversation?

That's right. Because a lot of departments have to figure out how to make adjustments, if there are going to be some changes during the year.

Well, what's the role of the Budget Office in helping the departments to figure that out?

Every department has an 38 FY '07 OPERATING BUDGET - 3/21/06 assigned budget analyst who works with them, you know, on a daily basis as needed.

So they either figure it out or they don't, and we either collect the additional revenues or we don't, and, I mean, life just goes on? I mean, is that the deal?

I would say it is not nonchalant or cavalier.

Did the people get hired?

Were the requests made?

Did we collect the money? We kind of need money; right?

I think that accommodations were made so that, in fact, the backlog of clerk receipts were dispatched.

Do I understand that was because you hired somebody to do it?

I don't remember exactly how that process was funded.

I thought you said someone was hired to assist in that process? 39 FY '07 OPERATING BUDGET - 3/21/06

I think someone was. I will have to check. I don't remember the details on that.

How much did that cost?

I don't remember the details on that.

You will forward all of that to the Chair?

Sure.

Thank you. Thank you, Madam President.

Ms. Reed, you keep going back to the target budget. Isn't that the estimated obligation for '06?

No. The target budget amounts for some departments might have been lower or higher. And the target budget level is now adjusted to the same thing as the obligation level as of December.

How does that affect the fund balance?

It all plays into what our current estimate of fund balance is, which 40 FY '07 OPERATING BUDGET - 3/21/06 is higher, as you know, than in the original budget. This happens every year. There is nothing unusual in this process.

The Chair recognizes Councilwoman Blackwell.

Thank you, Madam President. I certainly agree with all that has been said here in terms of our Commissioner raising -- trying to raise money under very difficult circumstances. And I, too, hope that we can find a way to process these issues and give her the help she needs to do a job. She does a wonderful job for us under trying situations, and it shouldn't be as trying as it is. So I agree with all that has been said from my colleagues, and certainly commend Vivian Miller on the job shes does. Thank you.

You are welcome. The Chair recognizes Councilman Nutter. 41 FY '07 OPERATING BUDGET - 3/21/06 Ms. Reed, just bear with us a minute, please. I can't believe that year after year the Clerk of Quarter Sessions comes in here, and it is the same issue. When the office is generating over $3.8 million, I don't understand what the problem is for her to get the employees to fill the vacancies that she has so that, in fact, we would be collecting more revenues. It just doesn't make sense to me. Are there any other questions or comments from members of the committee? I thought Councilman Nutter wanted to ask questions, but I understand his light was on and he has left. I would suggest, Ms. Reed, that you get together with the Clerk of Quarter Sessions before the end of the day, resolve this issue. Because I think we are all of the opinion that something has to be corrected here for not just the moment that we sit here and talk. So would you please make certain 42 FY '07 OPERATING BUDGET - 3/21/06 that this is corrected.

Absolutely.

Thank you. I see no other questions. Ms. Miller, I would appreciate your getting back to us and let us know how this works out.

I most certainly will. Thank you very much.

The Register of Wills is next. Good morning again.

Good morning again.

We do have copies of your testimony. It will be given to the stenographer and transcribed in full. I would ask you, if you will, to please abbreviate your testimony.

Good morning, Madam President and members of City Council. Before I start my testimony, I would like to introduce some of my staff. To my left is Mr. Ralph Wynder, my Chief Deputy. To my right is Anthony DeRose, my Finance Director. We have Jim Tangert 43 FY '07 OPERATING BUDGET - 3/21/06 here, our Administrative Officer. And I have one of my new deputies here, who has been in my office for over 27 years, we just promoted her, Alba Collazo.

Congratulations.

I submitted, as you stated earlier, my testimony. And I am glad to report that this year we project, if I could just be very brief, revenues of approximately close to $3.8 million. And our total approved budget for this year is $3,304, 493. We are going to be showing a profit to the city of almost close to half a million dollars. Next year, keeping the same pattern, our present staffing level, but increasing our services, as you are aware -- and I want to personally thank the Council President and that gentleman to your right, Charlie, for arranging a meeting with Dianne Reed and everybody last year to help us get our productivity monies for the computerization of our office, which, if everything works out, 44 FY '07 OPERATING BUDGET - 3/21/06 hopefully in 60 days we will be up and running. We are just going through the little glitches right now, some last-minute items of machinery -- I mean, hardware. If anybody wants to go online now, you can see, basically, our website. And it is under Philadelphia.gov/wills. You can see -- any citizen can go on now. And there is questions that people always call our office, why should they have a will, and different questions which is very helpful to the citizens of Philadelphia. Our next year budget, our request is within our present staffing levels, and it shows a 3 percent increase, which is a union -- or, I am sorry, all city employees, rank and file, will be receiving. So we are not asking for any additional employees. We will be doing additional services. And if everything goes well, we will be showing another profit to the City and County of Philadelphia next year. I just wanted to state that we are one of the most user-friendly offices, as you 45 FY '07 OPERATING BUDGET - 3/21/06 are aware. We are open Wednesday nights to the public for marriage licenses. And we still provide citizens to the citizens of North Philadelphia and Northeast Philadelphia, where we have our probate clerks go several times a week to make it easier for people to probate estates.

Great. So, based on your testimony, it appears that you are satisfied with the Administration's proposed budget; am I correct?

Yes.

Great. I guess this is the first time in a long time.

Well, I think this is my 26th time here, and I think we have -- with respect to our new Budget Director, Dianne, and Charlie from your staff, who is a former budget director, so, you know, we have opened up the line of communications. And I think we all are on the same page. If you spend some money and fund an office correctly, you will make money.

Exactly. 46 FY '07 OPERATING BUDGET - 3/21/06

And this is not really affecting the citizens of Philadelphia directly. So we get the proper funding, we will bring additional monies into the city.

Well, we congratulate you and your staff for a job well done.

Thank you.

Do we have any questions from members of the committee?

Let me get out of Dodge.

Congratulations. You better get out while you are ahead.

I hope tonight's meeting is just as good. MR. McPHERSON: The next department is the Sheriff's Office.

Councilman Kelly did you want a question?

I just wanted to know how much a marriage license costs now?

What does it cost? 47 FY '07 OPERATING BUDGET - 3/21/06

$50.

Maybe we should raise it to $1,000, and it will help a lot of people, I'm sure.

What are you trying to say? Please identify yourself, proceed with your testimony. The stenographer has a copy of your testimony, it will be transcribed in full. I would ask you, if you will, to please abbreviate your testimony. SHERIFF JOHN D. GREEN: Good morning, Madam President and members of City Council. My name is John Green, I am the Sheriff of the City and County of Philadelphia. In brief, the Philadelphia Sheriff's Office is in need of additional personnel. When we opened up the Criminal Justice Center, we had an agreed number of deputies to be assigned to that facility at 156. We are currently 27 positions short. And through reassignments, change of job classifications for new hires, we have -- we 48 FY '07 OPERATING BUDGET - 3/21/06 are in the position of hiring new deputy sheriff officers, and we are in the process of doing that right now. We are going to need an additional deputy sheriff officers. 6 So our formal request this morning 7 is for an allocation of $14,398,362 for Fiscal 8 Year 2007, of which $665,552 will be used for 9 the hiring of 16 new deputy sheriff officers. 10 That concludes my testimony. 11

I believe you are requesting additional funding of $655,552 for additional deputies. 14 SHERIFF GREEN: That's right. 15

Was this included 16 in your budget request of the Administration? SHERIFF GREEN: Initially we requested 57 additional deputies. We met with the finance department last week, and we agreed on the hiring of 16 new deputies.

Did you say 57, and then you agreed to 16? That's a big difference. SHERIFF GREEN: It is a big difference. And sometimes when you are 49 FY '07 OPERATING BUDGET - 3/21/06 negotiating, you have to look at reality. And the fact of the matter is that our immediate concern is the Criminal Justice Center. Without going into too many details about our staffing level and the processes we use to accommodate the needs at the justice center, that is our immediate need. But the 57 deputies reflected being able to place additional personnel throughout our office.

So, with that being said, what did the Administration say about your additional deputies request? 15

Dianne Reed, Budget 16 Director. We had a lengthy discussion about deployment of sheriffs to several offices. And it was my understanding that, in acquiring additional sheriff's deputies, that in fact the department would cut its overtime so that the additional staff would be budget neutral. And some of that could include redeployment of staff from some of the places where they are posted which are not mission 50 FY '07 OPERATING BUDGET - 3/21/06 critical. So that it would be up to 16, but not necessarily 16, but the entire amount to be budget neutral through reduction of overtime.

What is your overtime? SHERIFF GREEN: Right now we are running about $1.5 million.

I beg your pardon? SHERIFF GREEN: I think we are running about $1.5 million. I will tell you in one second.

In the current year, I believe it is -- I am just being told it is 2 and a half million dollars, and 2.6 in '07. That's a lot of money for overtime. So your 16 additional deputies could be taken from the overtime money, and you are still going to have plenty of overtime money in your budget. SHERIFF GREEN: We are going to have overtime. And I was very candid when I met with the finance department that the Philadelphia Sheriff's Office does not control 51 FY '07 OPERATING BUDGET - 3/21/06 the amount of overtime that is needed in carrying out our functions. For example, last week we received a phone call from a judge who had been threatened. That required using our sheriffs, our deputy sheriffs, to escort the person to and from home. We may have judges who are working overtime; that is, beyond the traditional hours. We have had judges work on holidays. If they have a jury sitting and they didn't -- they do not want to inconvenience the jury by keeping the jury any longer than is necessary, they will work through the holidays. So many times --

Does that happen very frequently? SHERIFF GREEN: Not frequently, but it happens enough to impact on our overtime usage. We also have a number of people who are requested in court. As you know, the more risks require more people coming into court. So whenever the police department enters into 52 FY '07 OPERATING BUDGET - 3/21/06 an aggressive approach to -- in arrest, the final byproduct of that is, you have more people actually going to court, more people being transported from the various correctional facilities, and that also requires the use of overtime.

Madam President, one point of clarification?

Yes, the Chair recognizes Councilman Ramos for a point of information.

Thank you, Madam President. But, Mr. Sheriff, is not your overtime more in the transportation of prisoners? Is that where your overtime, big overtime, is at? Correct me if I am wrong. SHERIFF GREEN: That's where the bulk of our overtime is, is in the transportation of prisoners. And, as I stated, we do not control the number of people who are requested each and every day by the court system.

That's what I 53 FY '07 OPERATING BUDGET - 3/21/06 suspected. That this is something you have no 3 control because, when you have to move prisoners, you have to move them. SHERIFF GREEN: That's correct.

And it could be before 5:00, it could be well after 5' clock. And, in addition, you have these other things that come up, the security of judges and other matters, that add to that burden. Thank you, Madam President. I will ask some questions in round.

Thank you. The Chair recognizes Councilwoman Miller.

Hi. Good morning. Thank you, Madam President, good morning, Sheriff. SHERIFF GREEN: Councilwoman.

I have a followup question to Council President Verna's. And really just a question, actually. Do you provide the same escort and security services to DHS workers that are -- 54 FY '07 OPERATING BUDGET - 3/21/06 feel threatened for some of the home visits? Because that's been a question that one of the supervisors actually has called and talked to me about. They say they need security. Would the Sheriff's Office be the agency that would provide that type of security? SHERIFF GREEN: Well, any law enforcement or security issue that is court related, we would handle. So if a family has been adjudicated through the court system in any way, it would be the Sheriff's Office's responsibility to provide security. Of course, we do not have enough people to provide security for DHS. And, in an ideal world, that would be an area of our responsibility. Quite frankly, in the ideal world, it would be the responsibility of the Sheriff's Office to provide security for witnesses. And recently we have seen a celebrated case where there was some criticism 55 FY '07 OPERATING BUDGET - 3/21/06 about the number of witnesses who felt insecure and were threatened by the mere nature that they would have to testify. So in an ideal world, we would have enough people to provide adequate security and enforcement for the court system. Unfortunately, we do not have an ideal world.

So, then, only if a family is -- or the parents or caretaker is an adjudicated person -- SHERIFF GREEN: That's right

-- would you be able to provide security for a caseworker SHERIFF GREEN: That's right. Which means, if a DHS worker was going to a home as a result of a court order or some court regulations or some court supervision, then we would be responsible for that. Technically, we are responsible.

Thank you. Thank you, Madam President.

You are welcome. The Chair recognizes Councilman Ramos. 56 FY '07 OPERATING BUDGET - 3/21/06

Thank you, Madam President. Sheriff, are you requesting an additional $600,000 plus for the extra deputy sheriffs, apart from the response that -- or, at least the way I understood it from Ms. Reed, where the Administration has asked you to take -- bring down the overtime and use that money to be able to fill the -- was it 11 16? 16 positions? 12 Or are you asking us that, apart 13 from what we heard from Ms. Reed, that you 14 still want $600,000 to add 16 more deputy 15 sheriffs? 16 SHERIFF GREEN: Here is what my understanding of our agreement was: That we would request, and the Administration would support that request, for an additional 600,000 plus to hire additional deputy sheriff officers. Of course, the more people you have, the less need you have for overtime. Meaning that, if you have an additional 16 deputy sheriff officers, then you may be able to put 57 FY '07 OPERATING BUDGET - 3/21/06 two vans, two additional vans, on the road. And the two additional vans will handle more prisoners, thus you will not need to have two vans doing three and four runs, which requires overtime. And, so, needless to say, that, if you hire more people, of course your overtime should go down. And we have demonstrated that we can control our overtime. I think the Administration would agree that, for a period of time, we really controlled our overtime as a result of a request by the Administration. But sometimes it becomes problematic because of the nature of our job and the volume of work that comes from -- comes to us by way of the police department, by way of prosecutions by the District Attorney's Office, and by way of circumstances, as Councilwoman Miller raised, where you have families, you have children who are being affected by whatever, and there was a need for the Sheriff's Office to provide its services.

I am sorry. Would 58 FY '07 OPERATING BUDGET - 3/21/06 you interrupt me a minute, please, because I didn't think your question was answered. SHERIFF GREEN: The answer is, we want an additional 600,000 plus, specifically $665,552.

Understood. SHERIFF GREEN: And then, as a result of hiring more people, the overtime should decrease.

So are we saying you are going to hire the additional 13 deputies, and you are going to subtract that 14 amount from the million whatever point 15 million dollars that you have in overtime? Is 16 that going to come out of the overtime money? It is a simple question. SHERIFF GREEN: Well, all things being equal, I can sit here and say that you should see a decrease in the overtime in proportion to the number of people that we hired, all things being equal. But that's not factoring in possible events that may occur. For example, if we have a situation where there is a need for a more deputies to 59 FY '07 OPERATING BUDGET - 3/21/06 work in Family Court, or if there is a need to transport more prisoners, then, of course, you will not see that proportion in overtime to the number of people we hire.

Madam President. Sheriff, I am with you on that, if you need more deputy sheriffs, you need more deputy sheriffs. And at least I understand you have made this case before. I understand that. What I am hearing is that you still want $600,000 in addition to your budget because you have a lot of overtime that comes, and some of it comes unexpected, the transportation, security, DHS, and so forth. But I believe that what I heard from Ms. Reed -- and maybe Ms. Reed can come to the witness table -- that the Administration's response was -- Ms. Reed, you feel free to correct me. What I heard was the Administration said, take it out of your over time money to be able to do the 16 new hires. Am I correct in that understanding of your statement, Ms. Reed? 60 FY '07 OPERATING BUDGET - 3/21/06

Dianne Reed, Budget Director. Yes, sir, you are. The sheriff is running over $660,000 in overtime this year above budget. I mean, that money would pay for these positions. As the sheriff stated, he can control his overtime. And we shared with him the fact that, because it is critical to the First Judicial District that the courtrooms over there at the level of 156 positions be manned, that it was important in this case, unlike the police department, to hire the people to man -- to person those courtrooms, or staff those courtrooms, rather, than to spend money in overtime.

Okay. So, Sheriff, are you still requesting an additional $600,000, apart from -- different than what the Administration is saying now? They are telling you to use your OT money to bring in 16 new deputies, and you are saying -- and I am with your argument, Mr. Sheriff -- that you never know when -- there has to be -- there is overtime in the work 61 FY '07 OPERATING BUDGET - 3/21/06 that you do, and that overtime money has to be there.

The overtime money is there. There is $2.6 million for '07, and I believe in '06 it was over $2 million in overtime. SHERIFF GREEN: May I just have a minute, please.

That's a lot of money in overtime. And I understand that a lot of things happen.

May I have a minute?

Yes. If you want to cut me short, go ahead.

Councilman Ramos, the answer to your question is that we are not asking for an additional $600,000. What we are going to do is hire people and use the -- part of the $2.5 million.

I just want to make sure that you have got what you need to do the work that you do.

I got what I need. I got the okay to hire 16 additional people, and 62 FY '07 OPERATING BUDGET - 3/21/06 that's the bottom line.

And we appreciate the sheriff working with us on this.

I yield to the Council President.

Thank you. The Chair recognizes Councilman Kelly.

Thank you, Madam President. Sheriff Green, I just have a question about the deputies that you had to 14 remove from the Criminal Justice Center to 15 take over the staffing of Community Court and 16 Traffic Court. 17 Where are the Community Courts? 18

It is one Community 19 Court. And, actually, the Community Court 20 deals with, quote, unquote, nuisance crimes. And they are meeting in an office building, I think it is at Broad and Race.

Broad and where?

Race.

There is only one 63 FY '07 OPERATING BUDGET - 3/21/06 Community Court?

Yes.

And there is Traffic Court?

Yes.

Now, it is my understanding that the police department were always -- they were always located in Traffic Court. Are they still there? In other words, the police liaison officer is in each courtroom.

There is a police liaison person who actually presents the police officer's case, if you will. Police officers, as a rule, are not summoned to Traffic Court to present the case against the motorist, and that is the responsibility of the liaison person.

But I don't know how they justify of having one of your deputies in there, when they have a police officer already present. And you already have -- you just have one Community Court. How many officers, 64 FY '07 OPERATING BUDGET - 3/21/06 your officers, are scheduled for that Community Court?

For Community Court?

Yes.

Two. Two police officers -- I mean, two deputy sheriff officers. But, Councilman --

How many in Traffic Court?

Councilman, I think I can answer your question by simply saying that we have revisited deployment of personnel to Traffic Court, and there will be a change in that scheme. We are going to have to make the hard decision about deployment. And Traffic Court, of course, as you said, because there is a police presence in the form of a liaison person -- and while an argument can be made that if a person is busy presenting a case, he or she cannot monitor what's going on in the courtroom in terms of security -- the fact of the matter is that there is a police officer there. 65 FY '07 OPERATING BUDGET - 3/21/06 And, because of that, we are going to, in essence, bottom line, reduce the number of people that we have at Traffic Court.

I see.

Significantly.

Point of information on that subject, please. Madam President, point of information.

Yes. The Chair recognizes Councilman Rizzo for a point of information.

Isn't Traffic Court a state agency?

Yes, it is.

Why aren't we being reimbursed by the state for your services?

That is a good question. I can tell you that in the past, when the Sheriff's Office does work that allows for reimbursement, we really do not see the money. The Philadelphia Sheriff's Office doesn't see the money; the money goes into the General Fund. 66 FY '07 OPERATING BUDGET - 3/21/06 And, so, that will not impact on our individual budget. And, quite frankly, I don't know if it helps the city.

It is a state agency?

It is a state agency.

You are providing a service to the state agency --

But they come under the First Judicial District.

I think it is a separate court.

What's a separate court?

Traffic Court.

But they still come under the First Judicial District.

But there is no --

They are city employees.

They are city employees? I think there is some confusion on 67 FY '07 OPERATING BUDGET - 3/21/06 who is on first, and whether it is -- I was always led to believe that it was a state agency, Traffic Court. But it is under the -- Charlie, I would never question Mr. McPherson's knowledge of who is what and where. But I think we will need to talk about it later to clear it up and see exactly what's what. Because if we are entitled to some reimbursement -- but Mr. McPherson just pointed out to me that the state contribution has never really developed. And I will come back around. I apologize for taking Councilman Kelly's time.

That's quite all right.

I got the impression from the past that Traffic Court is self-contained; that they raise their revenue, and that they have the ability to spend money.

That's how I understood it.

Now, of course, as you said, Mr. McPherson knows more about the 68 FY '07 OPERATING BUDGET - 3/21/06 budget than you and I put together tenfold. And, so, I would have to yield to him. But the answer to the question, and the answer to the concept, is that we are going to move people out of Traffic Court and assign those people to the Criminal Justice Center.

So you are going to be bringing them back to the Criminal Justice Center?

That's correct.

When did you take over the responsibility of the Community Court and Traffic Court? Was that just recently?

Community Court was about a year ago. Traffic Court may have been about three years ago.

What was the -- well, I would like to know what the rationale was in doing that. In other words, was it the police department or was it the judges or who initiated that request that you, the Sheriff's Office, take over the responsibility of 69 FY '07 OPERATING BUDGET - 3/21/06 safeguarding the courts?

The request came from the Traffic Court judges. And the argument was that it is a court, one; two, as I mentioned before, the police officers assigned to Traffic Court was there primarily to present the case of the police officer; three, that there was an increase in volume of people going to Traffic Court. And, so, those arguments were made. And because we take our responsibility very seriously as far as being the enforcement arm of the court system, we agreed to handle Traffic Court's security. We also, if I may add, we also have prisoners each and every day that we take to Traffic Court, and we maintain a cell room in Traffic Court. Now, we would have done that regardless of this agreement that we made with Traffic Court. And the people who are taken to Traffic Court are people who are already incarcerated; but they have Traffic Court matter, as well as their criminal concerns. 70 FY '07 OPERATING BUDGET - 3/21/06 So we will transport them many times from the CJC, if their subpoenas are coordinated, or, if necessary, from a correctional facility to Traffic Court.

Now, I just have the opinion that Traffic Court does have city employees there, primarily. And what happens is that, they do come to -- they come into City Council each and every year with their budget request and whatnot. And I know that most years that I know of, that there has always been a surplus, and it goes right into the General Fund. And that has been happening over the years. I just wanted to know why all of the sudden they wanted to shift the responsibility to the Sheriff's Office. Because I know for years they have had police presence in Traffic Court. And Community Court, I'm not too familiar with that. But they still have police assigned to Traffic Court, I believe.

Yes. 71 FY '07 OPERATING BUDGET - 3/21/06

Liaison officers and additional officers. So I think that maybe you could -- and I think you are doing it from your testimony today -- that you are bringing some of those officers back into the Justice Center.

That's right.

Which we need them more so. Thank you, Madam President.

You are welcome. The Chair recognizes Councilman Goode.

Thank you, Madam President. Good morning, Sheriff.

Good morning, Councilman.

In your testimony and in the following questioning and answers, you said the $665,000 will be used to hire 16 additional deputies, and after conversation said that is to be offset by a decrease in 72 FY '07 OPERATING BUDGET - 3/21/06 over time spending. Are there any other additional increases in your personnel budget?

Well, there is the 3 percent that was mentioned earlier, that is going to all city employees. There is no 8 other increase. As a matter of fact, if you look at the personal service contract area of our budget, you will see where we have -- we went from -- and I am just approximating -- maybe six or seven vendors, to maybe three at this point. So we are working real hard to decrease other aspects, the cost of other aspects of the Sheriff's Office, too. Now --

The reason I ask is --

-- quite frankly, I would love, I would love -- we have people who are not Civil Service appointees, people who have gone without a raise for five years. They are people who are Civil Service exempt. 73 FY '07 OPERATING BUDGET - 3/21/06 And I would love to give those people a raise. And, hopefully, if we demonstrate that we were able to do a better job with our overtime with the new hires, in some manner or form we will be able to get additional monies to give a raise to the people who have been without money for the past five years.

The reason I ask is because I don't have the budget detail in front of me, it is not presented in your testimony. So I was just wondering what was your budget last year and what is your budget this year, and what was your budget in terms of Class 100 last year and what's your budget this year.

Excuse me. This is Tyrone Bynum, who is the Finance Director in the Sheriff's Office.

Good afternoon. Tyrone Bynum, Finance Director, Philadelphia Sheriff's Office.

Good afternoon.

Last Fiscal Year, 2006, 74 FY '07 OPERATING BUDGET - 3/21/06 our total appropriations was $12,580,038.

A little slower.

$12,580,038.

What was the Class 100?

The Class 100 was $9,887,795.

And the Class 100 for next fiscal year?

Next fiscal year would be $10,238,668. And that's without the additional deputies.

Sorry. I don't know where you are getting your information.

That's just the full time.

But we are looking at the budget in brief, and the figures that you are giving are --

I am generally speaking in terms of salaries. I am not including the overtime or the temporary seasonal. I think that was the question. In Class 100.

Actually, in Fiscal Year 75 FY '07 OPERATING BUDGET - 3/21/06 2006, we were appropriated, it looks like, $12,982,075.

That's includes Class 200, 300, and 400. I thought you were asking just in terms of Class 100.

The budget in brief we have shows $13.3 million last year and $13.7 million proposed for next year.

I am sorry. That's right. Yes, that's right.

Let's just deal with personnel services right now. And let's, actually, just deal with your numbers. And if we use your numbers for a second, the increase of 9 point -- roughly $9.8 to $10.23, it is an increase in Class 100 of approximately how much?

I don't know. What is the increase?

What's the increase in Class 100, according to you?

350,000.

And all of that is attributable to the 3 percent increase? 76 FY '07 OPERATING BUDGET - 3/21/06

Yes.

Is that right?

Yes. SHERIFF GREEN: Yes.

100 percent of that?

Is that correct?

Yes.

Now let's deal with the discrepancy between the budget book and your numbers. If it was $13.3 in the budget in brief for the last fiscal year, why are your numbers at $9.8? Because even for personnel services, it is at $12.5.

Could you please repeat that question.

According to the budget in brief book for Fiscal Year '06, the total was $13.3. But even the personnel services is at $12.5, almost $12.6, but the numbers you gave us were $9.8.

Yes. That's including the overtime. I thought we were talking about 77 FY '07 OPERATING BUDGET - 3/21/06 strictly salaries. But including overtime, yes, it is $12.5.

So overtime is included in the personnel services?

Yes.

Who is entitled to the 3 percent increase, again?

The uniformed personnel and the civilian personnel. That would be city employees, Civil Service, through arbitration.

So in terms of the increase in overtime, how can you spend that money?

I'm sorry?

In terms of overtime costs, how can that money be spent?

How can the overtime money be spent?

Yes.

When, next fiscal year?

Yes. If there is seemingly not necessarily -- well, the numbers for last year say $12.58 in terms of personnel 78 FY '07 OPERATING BUDGET - 3/21/06 services. The numbers for next year say $12.95. But you are looking for $665,000 to hire additional deputies. 5

Right. 6

But there is not 7 $665,000 more money. 8

You said there is not -- 9

There is not, 10 according to the budget in brief book or 11 according to your numbers. 12 Even if you are going from $9.8 for 13 last year, to $10.23 for next year, that's 14 still only $350,000. That's not $665,000. 15

As I stated, we met 16 on -- we met last week with the city. And this document reflects what was going to be presented and what was the city's projection prior to the meeting that we had last week. Now, if your question is, how is the overtime going to be spent, it appears that --

I guess my question is real simple, I am just trying to figure out, because some of the budget detail 79 FY '07 OPERATING BUDGET - 3/21/06 wasn't in front of us, if you can convert overtime for the hiring of those additional 4 deputies, can you convert overtime for other 5 personnel services? 6 Because clearly your overtime costs 7 are increasing to hire 16 -- clearly your 8 personnel costs are increasing for the hiring 9 of 16 additional deputies, but it is not 10 665,000 more money in your budget, according 11 to your numbers or according to the budget in 12 brief. 13

You want to know if we 14 can use the overtime -- if we are going to use 15 the overtime to hire 16 additional deputies, 16 can we use the overtime in another capacity?

For other personnel services.

For other personnel services. Dianne, can we do that? If we are using the overtime to hire 16 additional deputies, can we use the remainder of the overtime or a portion of the remainder of the overtime for other personnel services? 80 FY '07 OPERATING BUDGET - 3/21/06

Dianne Reed, Budget Director. We are hoping that the sheriff will work with us to achieve a bottom line that is the same as what we have budgeted, that that is the critical issue for us.

I got that part, Ms. Reed. But if the number in the budget testimony says $665,000 for additional 12 deputies, the budget for personnel services 13 does not increase by that amount from the 14 current fiscal year to the next fiscal year. 15 What has been said is that somehow 16 the $665,000 will be used to hire 16 additional deputies, hopefully will be offset by a decrease in overtime.

Correct

The implication there is that, one way or the other, it will be covered. So my question is that, clearly in terms of the budget in brief, you are saying somehow you are going to provide money between 81 FY '07 OPERATING BUDGET - 3/21/06 overtime and the other cost to hire your additional deputies. I am asking -- and this is supposed to be offset by decreases in overtime. I am saying, whatever other overtime can be decreased, is that money available or should it be available for other personnel services?

It would depend on 11 whether the services are justified. 12 I mean, we are trying to keep our 13 work force costs down overall because of all 14 the nonwage costs that go along with new 15 positions. 16 So that, really, to agree in the case of the sheriff to increase the number of positions, you know, kind of flies in the face of our general approach to other departments. And that is because of the assistance that the First Judicial District really does need from the original agreement in the courtrooms. So I would hope that there would not be additional hiring. Although, since every position would have to come through the budget 82 FY '07 OPERATING BUDGET - 3/21/06 office, we would look on it on a case-by-case basis.

Case-by-case basis. I understand the need for the 7 deputies. I am not questioning the need for 8 the 16 deputies. I am not questioning the 9 665,000. I am not questioning an overtime 10 figure because, of course, that's not totally 11 predictable. 12 What I am questioning is why a 13 personnel budget cannot be increased for 14 exempt employees who haven't received a raise 15 in five years, when exempt employees within 16 other parts of the government, who seemingly work overtime, but are not paid for overtime, are compensated in a number of other ways and, more importantly, have received increases.

Well, I am a little confused by that. Because our records show that the department got a 7/1/04 3 percent increase. There was a percent increase on 7/1/05. There is a planned percent increase for 7/1/04 and a percent increased for 2007. 83 FY '07 OPERATING BUDGET - 3/21/06 So I do not know who those people are who did not receive increases.

That's for exempt employees or nonexempt employees?

My record doesn't show who received it, just that these -- this in the aggregate was granted.

I can clear that up. That was -- they were, actually, changes in positions. They were not salary increases; they were, actually, people who changed positions and changed responsibility, and there was an increase. And those increases were made possible because we had -- we would have someone resign or leave the Sheriff's Office. And we would take a portion of the person who has left, their salary, and give it to the new appointee; that is, for someone who is taking on additional responsibility. But, in answer to your question, if the Administration agrees, I would be more than glad to use the remainder or a portion of the remainder of the overtime costs for other 84 FY '07 OPERATING BUDGET - 3/21/06 personnel services, as you described.

Just in general, I mean, I am just really trying to look at what the budget detail is and what the increases are. And if there is a 3 percent -- if there is budgeted a 3 percent for nonexempt and exempt, I think that it could be included or should be included. Or, as we approve a budget, we know what's budgeted and what's not budgeted in terms of personnel costs.

The raises that have been budgeted are for all Class 100 positions, which would be all the positions. And, you know, the difference between the budget in brief and the detail really is indemnities in Class 500, which don't show up in the budget in brief.

So a 3 percent increase is budgeted across the board?

Yes.

Thank you. Thank you, Madam President.

You are welcome. 85 FY '07 OPERATING BUDGET - 3/21/06 Are there any other questions or comments from members of the committee of these witnesses? Thank you all very much.

Thank you.

The County Commissioners Office was supposed to come in at 1:15. We received communication that something has come up, and they have asked us to schedule them for another day. Therefore, this committee will stand in recess until 1:45, at which time the City Controller will be in and, at 2:15, the Board of Revision of Taxes. So we will stand in recess until 1:45. (Short recess.)

The Committee of the Whole will now reconvene with the Public Hearing. MR. McPHERSON: Our first department is the City Controller's Office.

Good afternoon. Welcome. Please identify yourself for the 86 FY '07 OPERATING BUDGET - 3/21/06 record, proceed with your testimony. THE HONORABLE ALAN BUTKOVITZ: Good afternoon, Madam President.

And, excuse me, before you commence. We do have a copy of your testimony, it has been given to the stenographer. She will transcribe it in full. I would ask you to please abbreviate your testimony.

Good afternoon, Madam President. I am joined today by my First Deputy Controller Harvey Rice, our Post-Audit Deputy Al Scaperotto and Pre-Audit Deputy John Thomas, as well as the Administrative Services Director Andrea Rose. The Mayor's proposed budget for our department is $7,835,000, which was, essentially, a repeat of last year's budget, with a 3 percent increase for nonexempt employee salaries. That proposal doesn't allow for any of the new initiatives that I am interested in embarking on as the new controller, first initiative being an increase in the number of 87 FY '07 OPERATING BUDGET - 3/21/06 annual performance audits. Controller Saidel brought the performance audit to Philadelphia, and the office has been performing two a year. New York City, by contrast, performs 36 a year. It is our goal, since we audit 40 agencies, financial audit during the year, to, during the course of my term, get around to performing a performance audit on each of those agencies; therefore, the objective is to get to ten performance audits a year. We are making efforts to contribute towards this goal by reducing the number of hours that we are investing in other audits. Right now we do a single audit, we do a citywide audit, we do departmental audits, and there is some duplication in that process. The managers in our office have developed a plan which will result in a reduction of 9,000 man-hours a year on the departmental audits, which will be contributed towards this performance audit goal. We would probably need about 20,000 hours to reach our performance goal audit, of 88 FY '07 OPERATING BUDGET - 3/21/06 which we have developed almost half out of those cuts. The office has had a highly successful record of accomplishment in the performance audits that it has performed. For example, in its audit of the recycling program, we found that only 6 percent -- 6 percent diversion unit in terms of recyclables that were recycled; whereas, 40 percent was the achievable goal. The difference between those two figures yielded a potential savings of $17 million a year, if the city was able to achieve that goal. 6 million. It has been a rule of thumb in our office that an investment in an auditor generally achieves multiples of that employee's salary in savings to the city. By the same token, the review of the $60 million homeless program demonstrated the lack of certain long-term solutions for the 89 FY '07 OPERATING BUDGET - 3/21/06 homeless with mental and substance abuse problems, and our audit served as a template for significant reforms in that program. Secondly, we are interested in getting a better handle in my role as a member of the city's Board of Pensions. Not only with respect to enabling the Pension Board to have a very sophisticated approach to investment decisions, but also making use of the city's ability to use proxies in corporate governance battles. There has been an increasing trend in the country to regress from the defined benefit pension, for example, and there is even some discussion of that being a goal in city government. We are highly critical of that approach. We believe those funds have been earned and are part of the compensation that has been promised by corporate America to employees in the future for work that they have already performed. And that the forum for these battles will be moving out of legislative chambers and 90 FY '07 OPERATING BUDGET - 3/21/06 into corporate Board and shareholder meetings. And Philadelphia should be prepared to move forward along with other progressive pension funds, like New York City and California, and be a very aggressive actor on those situations. As school controller, we are engaged in a pretty extensive audit of the school district right now, which has not been performed for many years. There is a very ambitious school construction program underway.

There are many hundreds of millions of dollars that are being invested until the building construction program, which is really substantially behind schedule, gets moving. And that requires a redirection of resources of the office to work on that project. Controller Saidel had indicated that 96 percent of the office's time was completely committed to mandated routine work of the office, so the accomplishment of any of these new initiatives requires some growth in our budget. 91 FY '07 OPERATING BUDGET - 3/21/06 We are requesting that the number of auditor positions be increased to 82. And we have created both a fraud unit and a community affairs unit. And we are asking for funding in both of those departments, including the creation of some forensic audit positions in the fraud unit. Much of the work, the investigative work, done by our office has been in the area of residency and disability. And we are, really, required to be operating at a more sophisticated basis and at a quicker pace. We are investing in training of our investigators and of our other professionals, which is going to be requiring the use of certain professionals in law enforcement to come in and upgrade the skills of our staff. The bottom line is that we are respectfully requesting an increase of $450,000 in Class 100 funds and an increase of $180,000 in Class 200 funds, for a total requested increase of $630,000 above the Mayor's proposal for Fiscal Year 2007 budget. Thank you very much for this 92 FY '07 OPERATING BUDGET - 3/21/06 opportunity.

You are welcome. Mr. Controller, have you discussed your request for additional funding with the Administration? And, if so, what has their response been?

Yes. I met with the Mayor yesterday, and they are studying our proposed changes. They would like as much of it -- they would like to see us shift more of it into one-time expenditures, or into Class 200, and we are working to see to what extent we can accommodate that request. But, overall, I would say that we received very good response and I am optimistic of receiving support from the Mayor and the Administration on our request.

Very good. City Council and PICA have both raised concerns with regard to the city's pension fund. I see that you are asking for an additional hire to assist you with the pension-related issues. 93 FY '07 OPERATING BUDGET - 3/21/06 Can you tell us what these issues are and what benefits you believe will accrue to the pension fund?

I have just attended my first two Pension Board meetings since becoming the controller. And it has been my impression that the Board is operating under what I think is an unrealistically optimistic set of assumptions in making investment decisions, and that that is a potential danger. First of all, the high rate of return that the Philadelphia Pension Fund has traditionally operated on, 9 percent, is something that has not been achieved for a long time. And in a race to constantly catch up with that proposed rate of return, there is a requirement to take more risky investments than funds that are overfunded, such as California, do. California, I think, has a 7 percent expectation on their returns. I am concerned that we could -- we 94 FY '07 OPERATING BUDGET - 3/21/06 right now have a $4.2 billion pension obligation. I am sorry, we have $4.2 billion in pension assets. We have a $7.3 billion pension obligation. And there is a lot of pressure to try to make those figures come together. I am concerned that, in the race for higher and higher returns, that we risk substantial losses in taking a nonconservative approach. For the first time, the Pension Board has made investments in hedge funds, which we don't even know what the composition of the portfolio is. It has become popular now to push for investment in real estate, because there is a generally accepted view that Philadelphia missed -- Philadelphia's Pension Fund missed the boat on real estate investments, where many other large cities were riding that bubble. My concern is that we are coming in at the tail end, and we will be paying good money just before there is a slide. 95 FY '07 OPERATING BUDGET - 3/21/06 And in addition, I am raising this issue about corporate governance issues. No 4 one is paying attention to these proxy issues in Philadelphia right now. New York City is -- Philadelphia owns stock in large corporations. And, in conjunction with other pension funds -- other city governments, State of Pennsylvania, other state governments, and unions -- we have an opportunity to try to move corporate policy in a way that would be friendlier to American workers on issues like outsourcing or issues like the protection of workers' pensions in corporations. I think that entire area has been unexplored. And there is just a tremendous amount of activity that I have during the day. And when we go to a Pension Board meeting, that's a whole day a fair to begin with. It is going to require -- we are going to have to go over to the Pension Board and spend three days just watching them do what they do at the Board, three days watching the financial advisors do what they do, watch 96 FY '07 OPERATING BUDGET - 3/21/06 the fund managers, and so on, to really get an understanding of this. Right now we are very highly dependent on the advice of the financial advisors, and I don't think that we are living up to our responsibilities as pension trustees by doing that.

Thank you. I was wondering if you are familiar with the letter that City Council received from PICA that outlined their concerns of the Five-Year Plan with regard to speculative items that total $386.5 million and risks of almost $100 million, for a total in excess of $480 million, which doesn't even include or address future employees' pay raises. Would you care to comment as to the viability of the Mayor's proposed Five-Year Plan that is before us?

Yes. Our office does share many of those concerns, particularly in the period Fiscal Year 2008 and beyond. I mean, for example, there is an 97 FY '07 OPERATING BUDGET - 3/21/06 expectation or there is a projection that Philadelphia Gas Works will be paying us $45 million in 2009. We don't think that there is any basis for anticipating a reversal of the Gas Works' fortunes so that that is likely. The social worker reimbursement figure of $19.3 million is not in the Governor's budget this year. It is down here in the Five-Year Plan for 2009. I mean, there is no foundation for assuming that the Governor will have a change of heart in later budget years on that item. We concur pretty much with PICA's view of the gross dollar amount of the questionable revenue sources. But we are hopeful that the process will work as it has in prior years, and that there will be ongoing discussions between the Administration and PICA; and that the issues which are of concern will be narrowed, or hopefully eliminated, before the budget enactment.

Thank you very much. 98 FY '07 OPERATING BUDGET - 3/21/06 The Chair recognizes Councilman Rizzo.

Thank you, Madam President. Welcome to our Council chamber.

Thank you.

You are the new controller. Is there anything that we should know, or the public know, that you have changed or eliminated? I know there was a hotline for the controller to investigate various issues. Are you going to continue with that? Is there anything you think we need to know about changes in policy?

We trying to become more interactive technologically. We were successful in January in being the first office to get the campaign finance reports online, and we were able to do that within hours of the filing deadline. 23 That raised the number of computer 24 contacts with our office from 500 a day to 2,700 a day. 99 FY '07 OPERATING BUDGET - 3/21/06 We are interested -- some of you may remember Mayor Tate was in office. There used to be a TV program on Sunday mornings in which people would call in and tell him that they had a hole in the street or a problem in the neighborhood.

Mayor Rizzo did that, too.

I was going to get to that. I was working it up chronologically. But in this era, we have something like 60 percent computer usage in the City of Philadelphia. We think that we want to make the internet more of a point of contact with city government, with our office, as a way of identifying whether there are systemic problems in some of the departments, and whether certain neighborhoods are getting preferential or discriminatory treatment in the provision of services. We are building a very substantial database of local community leaders, so that we can hook them in the loop with our office 100 FY '07 OPERATING BUDGET - 3/21/06 in terms of newsletters and communications. We want to be a better ear in terms of finding where the gaps are in service. We are -- we want to do more short-term turnarounds. Traditionally our office does a very thorough and professional job; but it takes a long time to do a thorough review and then to review it with the department and accommodate their comments. And, frequently, by the time the report is issued, it is not timely. It may be issued in the following year, the issue isn't a big issue anymore. We are interested in breaking these things down into smaller packages, also, so that we can quickly come to grips. And we will be doing some things in the next week with regard to traffic control, for example, that will be along these lines. So that we can identify serious hazards or problems for citizens in Philadelphia, and package it in a way that we can, hopefully, get a quick response and remediation of this, rather than just issue a report that might lie 101 FY '07 OPERATING BUDGET - 3/21/06 on somebody's shelf for a few years. We're not interested at all in doing that.

Well, good luck and thank you.

Thank you.

Thank you, Madam President.

You are welcome. The Chair recognizes Councilwoman Blackwell.