I don't have an answer on the controls. The Administration has not developed the details of it to that extent, and we will get back to you.
So you all just decided you might need some money and just said, "Well, why don't we just do $125 million," without a strategy for spending it?
No. What the 178 03/31/04 - FISCAL STABILITY - RES. 040276 Administration has is an understanding that if we're going to better use these resources out there, we have to put -- if we're going to use the assets, we have to put resources on the table. And what we have advanced as a strategy before you actually get to the point of actually spending dollars. There are a lot of conversations that have to happen. There needs to be a budget developed. There needs to be controls in place. And the planning has not happened to that level of detail yet.
What are the legal requirements as they relate to this transaction? And do you have bond attorneys signed off?
I will get you a memo on that. As the concept has been developed, the Finance Department has been in consultation with bond people. I can provide you with a memo that will outline the transaction, what the constraints are, what the controls are.
Excuse me. 179 03/31/04 - FISCAL STABILITY - RES. 040276 Is there any reason why you cannot wait until such time as you know exactly how this money is going to be used, where it would be used, why it would be used?
I would like to have the Commerce and PIDC people talk about that.
They're coming back. Well, I had all of the Administration here that was prepared to stay here to be responsive to your questions.
But you knew that we were coming back on this one issue. We said that we wanted to come back on the $125 million bond issue, the stimulus fund.
I'm sorry, Councilwoman. But is there any reason why we couldn't wait until such time as we know exactly how this money was going to be spent?
I would rather have 180 03/31/04 - FISCAL STABILITY - RES. 040276 the people who are planning the program talk to you about that.
The plan includes $500 million for stimulus. Where will the additional 375 million come from?
The proposal is to use debt financing in order to generate the balance. That's not in this Five-Year Plan at this point.
How do you propose to pay for it? So we're to vote again on a concept or some dollars and we don't know how you plan to pay for it?
There are no dollars in this plan for the balance of the $500,000. Rob, you want to talk about -- I guess Janice responded earlier.
I think what Ms. Davis said earlier is that there are a variety of potential sources, including if we're relieved 181 03/31/04 - FISCAL STABILITY - RES. 040276 of our responsibility for funding the Convention Center. That money then could be used to secure the debt service on this in this fund.
So when we vote for this budget, we are in essence giving you the authority to borrow $375 million?
No. You're not giving us the authority to do anything because that's not included -- there's no debt service included for that issue here. And before we issue debt, we'd have to come to Council. So you're not giving us the authority to do that by approving this.
But then you say we voted for it in the Five-Year Plan. Why put it in the Five-Year Plan?
Because this is part of a strategy. The Five-Year Plan is a document that the City has done historically 182 03/31/04 - FISCAL STABILITY - RES. 040276 that provides information on the City's fiscal health --
Excuse me, please. Councilman Goode has a point of information.
It's a simple point of information. So is there going to be a plan for first $125 million and a separate plan for the other 375, or is there a comprehensive plan for the 500 million?
There's going to be a plan, a comprehensive plan. What we have is a strategy for funding the first $125,000.
I'm not talking about for funding it. I'm talking about in terms of an economic development strategy. Is there a separate economic development strategy for the first percent that is separate from 20 the other 75 percent? 21
We do not have a 22 finished economic strategy for the 23 $500 million, either the first piece of it 24 or -- 25
The question I 183 03/31/04 - FISCAL STABILITY - RES. 040276 believe Councilwoman Tasco asked is, if you don't know what you want to do with the whole $500 million, then how you possibly know what you want to do for the first percent? 6 Because the first 25 percent does not fit into 7 what is a better strategy for the remaining 75 8 percent. 9
Is the sale 10 lease back of the Central Library in the 11 proposed Five-Year Plan; and if so, which year 12 does it start and where are the projected 13 amounts? 14
The sale lease back is 15 in the plan beginning in Fiscal Year '06 at 16 $3 million a year. 17
So if we're 18 planning to close facilities and cut back on 19 arts and culture and the Community College, 20 why would you propose at the same time you're 21 doing the cuts doing the Central Library 22 expansion? 23
Some of what the 24 Administration is proposing in cuts and 25 changes need to happen anyway. For example, 184 03/31/04 - FISCAL STABILITY - RES. 040276 when the Fire Department comes and testifies, what you're going to hear is that the demand for Fire Department services has changed dramatically over the last decade. What we have now are fire trucks that we send on EMS runs. We don't begin to have enough EMS vehicles. We don't have the same number of structure fires or vehicle fires that the City has had historically. This is a department that, whether or not we had a financial problem, needs to take a firm look at how it is that it uses its resources. The same thing is true in the Rec Department. This is a City that has a recreation infrastructure that was sized for a time when we had a much larger population. What we have are a string of resources, some within three blocks of each other. A lot of resources we have are poorly maintained. A lot of what the City is talking about doing in this Five-Year Plan are efficiencies that need to happen anyway. We're talking about changing how we provide administrative resources to the departments. 185 03/31/04 - FISCAL STABILITY - RES. 040276 These are the kinds of things that we should be talking about whether we have financial challenges or not. And when this Administration put together the Five-Year Plan, we did it with a number of things in mind, that we have to free up resources to enable the City to invest and so we've tried to make room in this Five-Year Plan for tax reform. We've tried to make room in this Five-Year Plan to allow us to invest to capture opportunities. We've tried to focus on core services and where we're delivering those services in an inefficient way. We have proposed changes to make that better. We've tried to get a handle on some of those costs that are mushrooming out of control for the City like sick leave, like the health coverage for our employees. And so the only thing that drives this plan that drives some of the changes and cuts we propose are not simply the fact that we have tight financial times; a lot of what we're proposing are things that are difficult for us but need to happen anyway. 186 03/31/04 - FISCAL STABILITY - RES. 040276
I'm sorry. Sir, what did you say your name was, Mr. --
You have a very pleasant face, you really do. And I asked you a question and I think you were trying to be very honest with me in your response. However, I find difficulty believing that when we go out for this $125 million stimulus fund from the Water Department, we're paying interest and penalty on that, are we not, on that bond? Or whatever --
You have not convinced me that the water customer is not going to be paying for economic development that was historically paid for by developers. Didn't I ask you if we went out for this that you indicated that we would have to 187 03/31/04 - FISCAL STABILITY - RES. 040276 have either a bond or some other financial instrument to be secured in order to do these funds?
How does it affect the original water bonds once you've removed the reserves?
I'm not asking how the surety policy is affected. I'm asking more so what impact is there on the actual original bond? 188 03/31/04 - FISCAL STABILITY - RES. 040276
There is no 5 affect whatsoever in how the original bond is repaid once you remove the reserves or once you borrow against the reserves?
You're not borrowing against the reserves, you're buying a surety policy.
Once you take the or million out to by the surety policy, taken the 3 or 4 million out that comes from the proceeds from the original bond, it does not affect the repayment of the bond at all?
The bond is repaid just like it would be anyway through the water --
But you're taking 3 or $4 million out of that. The ratepayers continue to pay that money. 189 03/31/04 - FISCAL STABILITY - RES. 040276
Mr. Zies, just stay there, please. I would like Mr. McPherson -- I would like your interpretation of this, please. Will the water customer in effect have to pay more money?
They're already currently paying. The Sinking Fund reserves were portions of borrowings that the Water Department has already gone out with. The current interest in principal on those borrowings are paid for out of the base rates that the water customers pay. So it's not like the Water Department is going go out and issue a new bond for this, it's just that they're going to be taking the Sinking Fund reserves that were borrowed out of various bond issues that's embedded in the current rate structure that the Water Department has. So in essence, the base rate, the water rate 190 03/31/04 - FISCAL STABILITY - RES. 040276 customers will be supporting this economic development because the $125 million reserve, when that was borrowed, is currently embedded in their rates. And I think that Finance would have to agree with that.
I didn't say the debt service was going change. I was just saying the cost of the borrowing that has already incurred of the $125 million that you're taking out of the reserves is an expenditure to the Water Fund and is, therefore, paid out of project revenues that is generated within the Water Fund, and project revenue predominately comes from the base rates that the customer pay. 191 03/31/04 - FISCAL STABILITY - RES. 040276
Correct. I think that is the confusion. No one is saying they're doing more, but what you're asking for is that this economic development tool, stimulus funds, the pot of money is being paid for out of the water base rates, the interest and principal on the original borrowing.
Do you know what the legal requirements are as they relate to this type of transaction?
What we will do is -- I offered before to have bond counsel write a memo outlining both the transaction of what the controls and constraints are on the use of funds.
I'm just curious. The capital repairs that are needed 192 03/31/04 - FISCAL STABILITY - RES. 040276 and projected to be dealt with, would they normally be dealt with out of the Water Fund? Isn't that Sinking Fund for capital projects?
No, that's a reserve fund, that's not the capital project fund.
But our ability to borrow to do capital projects is secured by the Water Fund, correct? That's kind of our credit account to make sure that bonds are paid? So as I understand it, the Sinking Fund is segregated that ensures the bondholders and the lenders that in fact the bonds that are issued will be paid, it's kind of an insurance fund for that?
So if any entity needed to go out and do capital borrowing, they would borrow and then they would assure the lenders that the money is being repaid?
So I think where I get confused, and maybe where the public is going to be confused, is that despite the good intention of the economic development fund 193 03/31/04 - FISCAL STABILITY - RES. 040276 where it seems to be that we're kind of raiding the Sinking Fund, albeit with a surety bond that we won't default, but raiding the Water Fund to do this economic development while at the same time raising rates 43 percent to cover the capital needs. When it would seem to me that you don't do the economic development fund, you do the capital repairs the normal way you always do it and the ratepayer wouldn't have to get hit with a 43 percent rate increase.
When the Water Department seriously talk about the rate increase, some of that is to provide the lateral insurance program that came out of Council hearings. So a substantial part of the rate increase is to deal with laterals that have been a longstanding problem in the City that I think everybody was trying to find a solution for. It happens to be reflected in the rate increase that could have simply been a charge. The proceeds that are generated by putting the surety bond are going to still be used for water-related projects, capital 194 03/31/04 - FISCAL STABILITY - RES. 040276 water-related projects. So we're not trying to take the money to subsidize --
I accept your explanation but, as you can see from one step to the next how someone could deduct that in fact the Water Sinking Fund is being used for economic development and that the rate increase is going to cover what would be covered by the reserves in Water Fund.
That's inaccurate. We'll try to do a better job explaining that.
It seems to be strange timing that, one, this innovative and unprecedented use of Water Revenue Sinking Fund coinciding with a rate increase of that substantial nature. Seems to be a cause and effect. And you can explain that it's not and we'll listen to the explanation, but the timing of it is really tough. Madam President, I know I'm not on the Committee and I appreciate your indulgence. Are you going to back to the commerce people? Can I ask one question on overtime? 195 03/31/04 - FISCAL STABILITY - RES. 040276
It's been reported in the press -- I've seen a number as high as $134 million in overtime for the Police Department primarily, but for other departments also. I've got to assume that the 227 million, that's a pretty big chunk of our problem is overtime. What's the plan to get a handle on overtime in every department? And wouldn't attacking overtime and fixing that problem really take away lot of the hole that we're facing with the 227.
When we talked about overtime earlier, the Managing Director identified a number of things that are being done to tackle overtime. The Police Department has initiatives to deal specifically with court overtime. The Commissioner can explain when he gives his department testimony there is now a group that sits with the members of the District Attorney's Office in order to better regulate who it is that's needed to come to court and testify. A lot of the court overtime, we 196 03/31/04 - FISCAL STABILITY - RES. 040276 feel, comes because more officers than are required are called to court at the last minute on a daily basis in order to give testimony. So now there's a mechanism in place that reviews every request for police officers going in.
Excuse me. Who's responsible for monitoring the overtime on an ongoing basis, like over the last year, two years? Is there someone or a group of people that say, "Wait a minute, we're really going haywire here with this overtime. What do we do to get it in control before we face this fiscal crisis?"
The Managing Director has put a system in place, recently put a system in place that will tighten the controls to make every Commissioner responsible, directly responsible, for the overtime in their department so that there will be specific guidelines for using overtime. There will be a very specific procedure for who it is that can approve overtime. 197 03/31/04 - FISCAL STABILITY - RES. 040276
It was not done in a consistent way across government. Some of the overtime also results from sick leave problems that the City has. The City has a very generous sick leave policy, and one of the things we've seen is that when the sick leave is there and available, all too frequently people use the sick leave. When we've tried to cut back on sick leave in labor negotiations, what we've heard is that people need the sick leave in case something catastrophic happens. And so what you'll see in this Five-Year Plan is a proposal to reduce the number of sick leave days and replace it with a short-term disability policy as a way of getting a handle on the amount of sick leave, because when people are unavailable on an unpredictable basis, we end up having to backfill using overtime. So we expect to have a savings in our overtime cost as a result of our sick leave initiative as well. 198 03/31/04 - FISCAL STABILITY - RES. 040276
I'm not going to belabor this any further. And I appreciate everybody's indulgence. But I would think that from a management standpoint over a four-year period, somebody's got to see that number and say, "Wait a minute," rather than waiting so we're sitting here and bludgeoning you over a $227 million deficit. Somebody's got to be responsible for saying -- either the Managing Director or the Budget Office or someone look at these numbers on a monthly basis and project out that we can't continue to afford to spend this money, because of the $227 million, 134 million of it is overtime. I mean, it seems like somebody should have been watching it before now.
We do monitor overtime on a pay-period basis, so every pay period we know overtime by department. We report on it publicly every quarter, so we make it available. We talk to our departments on a regular basis. There are some things that drive the overtime that are harder to get at, like the difficulty in attracting and 199 03/31/04 - FISCAL STABILITY - RES. 040276 maintaining prison guards. So you'll see one of the places where overtime is really high is out in prisons. Another big driver Joyce talked about is the court overtime. And obviously, we've been trying for years to get at it. And we know the problem and we've known it's a problem and we've been trying to get --
Let me tell you a good overtime story. Over the weekend, the Philadelphia Recreation Department hosted the National Wheelchair Junior Varsity Wheelchair Basketball Tournament, the national title. There are a hundred employees of the City of Philadelphia Department of Recreation who worked Friday, Saturday, and Sunday to host wheelchair basketball teams from San Francisco and Texas and Michigan and all over the country. They worked for free, all 100 of them worked for free. And that's the department that's going to probably take the biggest kick in the pants of all the departments in the City. That group of hundred or so Recreation employees worked that 200 03/31/04 - FISCAL STABILITY - RES. 040276 weekend for no overtime. And I want you to just consider that when looking at that department and what's going to happen to it in the next couple weeks.
They actually also are one of the best at managing their overtime, and they break it out by type of event, what caused their overtime, so they're an example --
The better department, the more well it's run, the more it gets hurt. Like the gas ratepayers. Thank you, Madam President. I appreciate your indulgence.
Thank you. My question, I think, is directed to the Chief of Staff. Many months ago, I pointed out to the Administration that there was a flaw in the accounting in the Police Department. I am very disappointed that after all these months, there's been no 25 communication with me. 201 03/31/04 - FISCAL STABILITY - RES. 040276 And for the record, the Police Department allows police officers to work on their days off. The police officers are paid by the City and then either the contractor, customer, client, whatever word you want to use, either never got billed or refused to pay the bill. I'm planning to re-introduce the resolution to ask for hearings on this. These are the kinds of things that I think drive Councilmembers up the wall, when you know that there's millions of dollars on the street not getting collected by the City of Philadelphia and we still have a program that's broken. It took me to threaten the Administration with a hearing to even get them to pay attention to me on this issue. So I think it's a disgrace. You know you've got a situation here where there's people that aren't paying their bill 21 to the City for the police service. And from what I understand, you are still providing services to people that haven't paid their bill for years. It's a disgrace. You may have something that you're working on, but all 202 03/31/04 - FISCAL STABILITY - RES. 040276 I keep hearing -- and I talk to people in Police Department, high-ranging people, I ask the inspector of the traffic division has he noticed any change in the way the program at least in traffic division is being administered, and he said not one bit. So, you know, these are the kinds of things -- you want to cut this, cut that. Why don't you try getting some program or stop the program, why don't you try to get the program fixed before you talk about closing swimming pools and getting rid of police horses and all of these neat things that you want to do, because I take it personal when I come up with an idea that you agreed needs to be fixed and it doesn't get fixed.
The Managing Director is coming back over. When he was here earlier, he did talk about this very issue. And rather than trying to paraphrase what he said, he should be here momentarily and he can respond directly to you.
Well, I apologize not knowing that he spoke on this. But from 203 03/31/04 - FISCAL STABILITY - RES. 040276 what I see, no one in the operating end of the government sees beyond the person that I mentioned tell me that they have seen any improvement at all in this program after months and months and months and months and months.
I'd like to have Mr. Goldsmith, he's on his way back over. He will be able to address you directly.
I just wanted to follow-up on Councilman's request of information on this police overtime. Do you have any idea of what the percentage is for the police that have to go into the Justice Center, for instance, on a day off and whatnot, versus the percentage of policemen who are on Operation Safe Streets?
The court overtime is roughly $20 million a year, and total police overtime for this year, I think, is in the mid-50s. So court overtime is almost 40 204 03/31/04 - FISCAL STABILITY - RES. 040276 percent of the overtime.
Have you been working with the President Judge of Common Pleas or Municipal Court in developing some strategy or some changes as far as -- at least it will help us cut down on this police overtime.
The DA and Police Department have a project they're working on. The Administration also has a criminal justice coordinating committee that meets on a monthly basis. The overtime is simply one component of a huge problem involving the criminal justice system. Another big driver in our budget is prison population. It is something that the City doesn't control. We don't control the front end. The courts control the front end. The courts control the back end of that. So we have a criminal justice coordinating 205 03/31/04 - FISCAL STABILITY - RES. 040276 committee that has the courts, the police department, prisons, the DA, the PD that meet monthly. We're working on developing a strategic plan to deal more effectively with the whole recidivism issue. So we have a group that meets regularly and it is dealing with not just overtime but all the other places along that continuum where you tend to lose a lot of money.
Isn't this a continuing problem as far as -- you know, this goes on for many, many years, as far as I know. This same problem comes up every year, and it seems to me there doesn't seem to be an answer as to how we're going to cut down on this overtime, whether it be prison guards or whether it be police officers or whatever, but it's driving up the cost of running this City tremendously.
We're making some progress on the court-related overtime. We've projected actually saving $2 million in this Five-Year Plan. We think we can probably do better than that. But the whole criminal 206 03/31/04 - FISCAL STABILITY - RES. 040276 justice system is one that is problematic. And it's hard because we don't control a lot of the components, and they all have an impact on each other. But when the Prison Commissioner comes here, he has strategies he's working on. We're taking a look at using electronic monitors in a different way. We're trying to put systems in so we have a better day-to-day understanding of who's in prison, making sure that we don't have traffic scofflaws in prison, making sure that the people who are in prison are people who actually need to be there and not other people. We have a lot of people who are in our prison simply because they can't even make modest bail, and so we're trying to figure out strategies of perhaps addressing the bail situation. In some cases, it would be cheaper for us to pay the bail than to pay the cost of keeping somebody for months at a time. So we're trying to be creative about the approach, but this is one area where we've got to do a better job. We can't continue to see those escalating costs. 207 03/31/04 - FISCAL STABILITY - RES. 040276 We have almost 46 million just on hospital costs for prisoners. And one of the initiatives you see in this Five-Year Plan is trying to get Medicaid reimbursement for some of the those people. So we're trying to leave no stone unturned. We understand that this is a problem.
Well, in the prisons, there's been some outsourcing of services, I believe, over the last few years.
The healthcare is outsourced. We have prisoners that we house in Delaware County. We're taking a look at doing a much better job using electronic monitors. That's a cheaper alternative for us. And then ultimately the answer is going to be trying to break the recidivism cycle. A lot of people who are released end up back in there. There's no kind of discharge plan. Discharge planning hasn't happened in an effective way, and so we're trying to put together systems that work much better to try to assure that people don't continually cycle 208 03/31/04 - FISCAL STABILITY - RES. 040276 in and out.
I have one other question that goes back to what Councilwoman Tasco referred to. It has to do with the recreation centers. In the plan, there seems to be some effort to close some facilities. Do you know if these facilities -- I'm sure underutilized and whatnot, but do they have any personnel assigned to these facilities?
Some of the facilities have personnel assign to them. Some are year-round employees, some are seasonal employees. As we go around and talk with the District Councilpeople, we're sharing the information on how they're staffed, what kind of programming there is. Our commitment is to preserve the programming, and we're talking with various community organizations that might in some cases step in.
Out of the Recreation Department overall the closings is a $4 million savings. 209 03/31/04 - FISCAL STABILITY - RES. 040276
It also has a huge impact on the Capital Budget. The City spends a lot of money not doing a very good job maintaining a lot of these facilities so we're taking a look at that. I think we have the commerce people here.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. Ms. Wilkerson, my first question is for you and then for the economic development officials as well. I believe you made a statement not too long ago, the City has lacked an economic development strategy for decades.
That's right. I think the City has lacked a clear, integrated economic development strategy.
Are you familiar with the City's economic development strategy 210 03/31/04 - FISCAL STABILITY - RES. 040276 over the last few decades?
Are you aware that between 1984 and 1986 the unemployment rate in Philadelphia dropped from 9.3 percent to 6.2 percent?
Well, would you attribute that to national economy, or do you think there also had to be a sound economic development strategy?
To Mr. Longstreth and Ms. Naidoff, the same question. If between 1984 and 1986 there was a drop in the unemployment rate from 9.3 percent to 6.2 percent, why didn't we experience the same type of drop in unemployment in the mid- to late-'90s when we had a great economy, if not the greatest economy in the history of the United States, and an economic stimulus program? 211 03/31/04 - FISCAL STABILITY - RES. 040276
Can you answer the question whether if we invested a half billion dollars whether we can get the unemployment rate to 6.2 percent?
I don't know the answer to that, but I do know that the plan that we're talking about has many parts. The economic development investment fund is just one part of it. We're also looking at a very strong and aggressive business attraction and retention effort. We're partnering with the Philadelphia Chamber of Commerce and their Select Philadelphia Campaign to do that. We have plans for an economic development summit where we're hoping to get broad participation from within the community to give us ideas about the strategies to make a growth occur.
Is there a specific target in terms of lowering the unemployment rate?
Thank you. 212 03/31/04 - FISCAL STABILITY - RES. 040276 Thank you, Madam President.
You're welcome. The Chair recognizes Councilman Ramos.
Thank you, Madam Chair. My question is on pensions. Maybe Joyce Wilkerson can help me understand this. As your Five-Year Plan points out, the City has been paying the minimal municipal obligation required by state law. Is this the budgeted amount going forward also, the minimum?
Yes. The amount that's in the plan for each year is the minimum municipal obligation.
I once paid the minimum on my credit card for a long time, and I realized that I was not paying it down. And for some reason that I didn't understand back then, I think I understand it a little better today after going to that experience, that I 213 03/31/04 - FISCAL STABILITY - RES. 040276 owed a whole lot more than where I had started a couple years before then. If your answer is yes, how much longer can we do this without causing a crisis, especially baby boomers that are in government getting ready to retire? If we're only paying the minimum, you might not be able to pick up your obligations to retirees.
It won't cause a crisis, but it means that it will take us longer to amortize the portion of our pension obligation that's unfunded. So we pay that off over a number of years, and that will just be out there longer. If we kept to our old funding policy, we would have paid that down earlier, but we'd also be paying $250 million over the life of this plan than what we have in there now. So that would have a really devastating impact on us.
You're an expert in this field; I'm not. You're saying that there's no potential of a crisis if we only paid the minimum obligation, per state law? 214 03/31/04 - FISCAL STABILITY - RES. 040276
Right. I think if we paid less than the minimal obligation or we skipped a year in making a payment, that's something that could lead to crisis. I think this just makes the problem stay around longer than it would have.
So you feel comfortable -- the Administration feels comfortable that this -- and why did you go minimum last year? I was not here, so please bear with me.
We went to minimum because if we hadn't, our pension contribution would have been about $250 million higher over the life of our plan.
Okay. I'll bring that up at another time. I'll pursue this at another time. Can you describe how the plan change 215 03/31/04 - FISCAL STABILITY - RES. 040276 to the pension system will affect the fund balance?
Either way, we would have had to have a plan balanced. But if we had not gone to the MMO, we would have had to have found $250 million more of either expenditure cuts or revenue increases so it would have made it a much uglier plan. I'll put it a different way. When we started doing the plan this year, we faced a $670 million problem. If we had not gone to minimum obligation, that problem would have over $900 million.
Just because of that answer you gave me, I would suspect that you will at some point and it is a potential for a crisis at some point. You went to minimum because you couldn't afford to pay more.
That's right. What it does essentially means that instead of being 216 03/31/04 - FISCAL STABILITY - RES. 040276 done paying off our liability in 2019, we're done paying in some year further out. So it means that there will be people in 2023 who wouldn't have been paying who now will.
I will address this again. Because of the experience I went through, it didn't seem like until I went away from minimum that I then was able that catch up. And although it might not have been a crisis for me, that is the only experience that I've had that came up as I read that part of your plan. So I still have some very serious concerns about this.
I understand what you're saying, and there is a definite trade-off. We can show numbers.
There were questions for the Managing Director with respect to the police.
Yes. 217 03/31/04 - FISCAL STABILITY - RES. 040276 Councilman Rizzo.
Good. I asked a question and also expressed some disappointment that a commitment that was made to me to fix a broken problem, a broken process in the Police Department as far as the Police Department or commanders in the Department that I've talked to indicate that they see no improvement in the process than what they did before I brought to the attention of the Administration the fact that police officers are working overtime on their days off, the officer being paid, and the City not being reimbursed or the client never getting a bill. And there's several million dollars on the street that haven't been collected. Could you please bring us up to speed on exactly what is going on? Because I had to threaten a resolution, and I have no 218 03/31/04 - FISCAL STABILITY - RES. 040276 better word, because nobody was paying attention at all until a resolution was going to be presented to ask for a public hearing. And in trying to be at least somewhat agreeable or trying to at least work with the Police Department and Finance and others, I agreed to back off. I think that the attention to the issue was to avoid a public hearing, and I don't really see much occurring because I had real casual hallway conversation with the Finance Director and the Finance Director basically -- and I'm paraphrasing, "We're doing the best we can do." Well, that isn't good when we're talking about a couple million bucks here and there, maybe more, on the street or a process that's continuing to run problematically. Because if we're still allowing people that owe us money to get the police service and they're still not paying that bill, I can understand why we're in the financial condition. That's only one thing we can see. So if there's other problems like this throughout the government and it's not being 219 03/31/04 - FISCAL STABILITY - RES. 040276 addressed, shame on all of us.
Thank you, Councilman. Thank you for raising this attention as you did last November or last December. You and I have had several conversations about this. I was disappointed to hear that you said that I have not told you what we were doing, because I have here a memo, dated March 15, 2004, from my assistant Fran Burns to you and your chief of staff which put together -- because you told me you had not received anything, and I immediately went back to my office and said, "Please make sure Councilman Rizzo gets everything that we have." And she sent over to you, and I have all the information here, dated March 15th a memo from me to the Police Commissioner outlining the monthly reporting requirements that we've insisted it, Directive 62 of the Philadelphia Police Department regarding procedures and policies for police reimbursement overtime program, the aging report as of January 31, 2004, for police reimbursable overtime program, and an internal 220 03/31/04 - FISCAL STABILITY - RES. 040276 memo from myself to the Police Commissioner dated December 29th illustrating the steps taken to implement necessary controls in the police reimbursable overtime program. So if this was not delivered in your hands, for that, I apologize. But certainly, we did everything we did to let you know what we were doing because, one, you have a right to know; and secondly, I think you were very much responsible for us getting off our backsides to do what we should be doing. Since then, I think even more has occurred that the Police Finance Unit is now handling the collections rather than the captains. We've increased the administrative fee from 4 percent to 10 percent. The vehicle costs are now being capture. So I disagree that nothing has happened, it's same old system. Although I will readily acknowledge it's probably still not as good it can be. But we have made, through your prodding, significant improvements to the system and we have done our best to keep you abreast of these changes and we will continue to do so. 221 03/31/04 - FISCAL STABILITY - RES. 040276 I think the last thing that has to be done is for the Revenue Department to take over the collections. We're hoping for that to take place in May 2004. I cannot right now -- and I will get you what the outstandings are on the street. I do not believe there are $2 million. I'd be surprised if it were that amount, but I will find out what they are. And it would be a violation of our policies if we are still providing services to people that owe us money. Our new directive states very emphatically that there can be no exceptions without the explicit approval of the Managing Director and the Police Commissioner. So, again, thanks to you, I think this Administration has started to rachet down a program that I don't think was being properly maintained. And I'd be glad to make copies of what we have sent you, but I'm not sure whether I have more copies in our office because I ran over quickly and I wanted to set the record straight.
Thank you. Why wouldn't the high-ranking member 222 03/31/04 - FISCAL STABILITY - RES. 040276 of the Police Department that's heavily involved in this program have seen any significant change?
I don't know. But I think we all know that the Police Department has different view points and so forth. But I don't know. But it's also relatively new. Two or three months is not particularly old. But I will check with the Police Commissioner, but there should be changes.
So this is a memo that was dated March 15th or a packet of information?
This is a package delivered March 15th from my assistant to you, a copy to Stuart Graham who on here is listed as your chief of staff with a bunch internal memos as well as the aging report, the January aging report. I've not yet seen the February report.
So the commitment that the Finance Department would take over this as a revenue collection like we collect other revenue is still not completed? 223 03/31/04 - FISCAL STABILITY - RES. 040276
No. As I indicated earlier this morning, I think there's some software programs that have to be done or something like that. I think the target date for that is May.
Good. I'll look for that communication. Thank you, Madam Chair.
Mr. Goldsmith, before you had arrived, I had asked this kind of general overtime question of Ms. Wilkerson and Mr. Dubow. I'm sure that there are people, including yourself, in the government that monitor the monthly numbers regarding overtime. And then when I look at the $227 million hole that we're looking at this year and if I take the press accounts numbers as accurate -- I don't know if they are or not -- they indicate about $134 million of an overtime problem overall, not just the Police Department, but overall, a pretty big chunk of that 227. Last year or the year before, was 224 03/31/04 - FISCAL STABILITY - RES. 040276 someone saying to the Mayor or to someone else, "By the way, this overtime thing is getting a little much. What do we? Do we start cutting back on some of this overtime now?" I understand that, according to Ms. Wilkerson, you put in place recently some process to control it, a committee to look at and sign off on, commissioners need to justify, all those kind of things. And she also mentioned issues relative to, in her opinion, generous sick time issues that cause understaffing problems that wound then require overtime. But at some point in time during the course of all last year or the year before, was somebody saying, "With these monthly numbers, we're going to choke if we don't start cutting back now." And why wasn't it cut back when it was apparent that it was going to be a problem?
Well, I can't speak to the year before last because I came about a year ago. But I think overtime has been an issue that the City has looked at for a while. 225 03/31/04 - FISCAL STABILITY - RES. 040276 It's a tough bear for us to get our arms around, but we have to do it. The number I work off is $117 million of overtime -- is that the number we're using?
It's a significant portion. But when you analyze the overtime, as I think we've started to do, and you look at it by different departments, the overtime is probably comprised of -- probably 80 percent of it is probably three departments. And then you have issues that we can't really -- and some of that is stuff we have to reduce. And others are issues -- for example last year we had terrible snow. And we probably had 3, $4 million of overtime in snow. Fortunately, we got some recovery because there was a disaster called for. So there's some overtime issues you can't do 226 03/31/04 - FISCAL STABILITY - RES. 040276 without, and I think we all understand that.
But were there discussions, though? I guess the cabinet meets every week?
We've had discussions. In fact, the Mayor likes to tell a story he was having some work done I think by Public Property in his office and his secretary said they would be here on a Saturday, and he said okay. Then he thought about, he says, "Well, why are they coming in on a Saturday? That's going to cost us overtime." And he had them come in on Wednesday and he went and worked in another room. I think there's an enormous amount of sensitivity in this Administration about overtime.
Thank God. If there wasn't, I don't know what the number would be.
There's a great deal of sensitivity, but there's also some of it that, you know, court overtime is one which is 227 03/31/04 - FISCAL STABILITY - RES. 040276 perplexing because it requires the cooperation of three different agencies; it's police, DA and the court system. Unfortunately, you see it all tabulated in Police Department, but a lot of that is driven by the DA's Office and court system. And that's not to affix blame on them; it's just saying that the more agencies you have, sometimes the more difficult it is.
I guess the sad part is that if you look at what we're being asked to accept in the way of cuts to arts and culture, to the Recreation Department, to things that people really truly enjoy, just a little bit of tightening in the last year on the overtime, not substantial tightening, just a little bit of tightening would have been able to keep those things in place that people are going to be upset about and that a lot of Councilmembers think may be short-sighted as a result of not helping the Art Museum which raises again, as Councilman Kelly said, more visitors and more revenue than all the sports teams combined. But we'll bend over backwards 228 03/31/04 - FISCAL STABILITY - RES. 040276 for the Phillies and Eagles, which they're wonderful people, but just a little bit of belt tightening in overtime would have saved the $4 million in cuts that are really going to be painful. Hindsight is 20/20, but somebody had to see that in the last year. And I'm sure someone mentioned it; we just didn't do anything about it. Thank you, Madam President.
Thank you. Are there any other questions of the Managing Director? Councilman Ramos.
Just a quick follow-up question. Thank you, Madam Chair. How much of this overtime money went into the Safe Street Program?
I don't know off the top of my head. Approximately 35 million in '03.
As far as overtime goes, 46 percent of it is for Police Department and then another 17 is prisons.
And of the 46 229 03/31/04 - FISCAL STABILITY - RES. 040276 percent, what percentage was for Safe Streets?
That was last year. This year it's probably in the high 20s, so it's probably about half of -- their total number in '04 is 54 million, so about of 13 that is court, probably 27 or so is Safe 14 Streets, and then the rest is things like 15 special events and emergencies that come up. 16