COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE OF THE WHOLE - - - Room 400, City Hall4 Philadelphia, Pennsylvania Tuesday, March 22, 2011, 11:15 a.m.5 - - - Resolution 110061 - Providing for the approval by the Council of the City of Philadelphia of a8 Revised Five-Year Financial Plan for the City of Philadelphia covering FY '11 through '16,9 and incorporating proposed changes with respect to FY '11, which is to be submitted by the10 Mayor to the PICA pursuant to the Intergovernmental Cooperation Agreement11 authorized by an ordinance of the Council approved by the Mayor on 1/3/92 (Bill 1563-A),12 by and between the City and the Authority. COMMITTEE MEMBERS PRESENT:14 Anna C. Verna, Chair William K. Greenlee15 Marian Tasco, Co-Chair Curtis Jones, Jr. Jannie C. Blackwell James F. Kenney16 Blondell Reynolds-Brown Donna Reed Miller Darrell L. Clarke Frank Rizzo17 W. Wilson Goode, Jr. Maria Quiñones-Sanchez Bill Green18 - - -19 2 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Good2 morning again. This is the public3 hearing of the Committee of the Whole4 regarding Resolution No. 110061.5 I would ask Mr. McPherson to6 please read the tile of that resolution.7 MR. McPHERSON: Resolution8 110061, a resolution providing for the9 approval by the Council of the City of10 Philadelphia of a Revised Five-Year11 Financial Plan for the City of12 Philadelphia covering Fiscal Years 201113 through 2016, and incorporating proposed14 changes with respect to Fiscal Year 2011,15 which is to be submitted by the Mayor to16 the Pennsylvania Intergovernmental17 Cooperation Authority, (the "Authority")18 pursuant to the Intergovernmental19 Cooperation Agreement authorized by an20 ordinance of the Council approved by the21 Mayor on January 3, 1992 (Bill No.22 1563-A), by and between the City and the23 Authority.24
Thank25 3 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 you.2 We will first hear from the3 Administration. Please approach the4 witness table, identify yourself, and5 proceed with your testimony.6 (Witnesses come forward.)7
Good morning,10 Council President.11 COUNCIL PRESIDENT VERNA:12 Mr. Armbrister.13
14 Good morning, Council President Verna and15 members of Council. I am Clarence16 Armbrister, Chief of Staff in the office17 of Mayor Michael A. 11 - COMM. OF THE WHOLE - Res. 1100611 Financial Plan to you last year, my news2 was not good. 12 On the expense side, our13 mandatory payments to the City's Pension14 Fund had grown substantially, costing us15 $492 million this year alone. 11 - COMM. OF THE WHOLE - Res. 11 Over the past fiscal year, some12 of our tax revenues appear to have13 finally stabilized. 11 - COMM. OF THE WHOLE - Res. 10 In fact, the increase in our11 pension costs in FY '12 consumes the12 entire projected increase in our tax13 revenues. 11 - COMM. OF THE WHOLE - Res. 11 - COMM. OF THE WHOLE - Res. 6 This work is beginning to bear7 fruit. 15 On health-care costs, the FOP16 health plan has moved to self-insurance17 in FY '11, adopting the model that we18 implemented for non-city union employees19 last year. 11 - COMM. OF THE WHOLE - Res. 821 million in the police and fire22 departments. 11 - COMM. OF THE WHOLE - Res. 4 million in FY '12. 11 - COMM. OF THE WHOLE - Res. 4 million in the Office of Property5 Assessment. 14 Using the past five years' average15 expenditures for contracted snow costs,16 the Administration proposes including17 this funding as a line item in the budget18 to ensure that the City is better able to19 manage its resources in case of large20 snowstorms. 11 - COMM. OF THE WHOLE - Res. 1100611 well-being and the educational levels of2 Philadelphians, the Mayor also proposes3 to increase funding to the Mayor's4 Commission on Literacy, located in the5 Free Library, by $1 million. 11 Another key proposal is an12 investment in swimming pools. 11 - COMM. OF THE WHOLE - Res. 16 Since we presented this17 proposed budget to City Council more than18 two weeks ago, the Governor has submitted19 his budget to the Pennsylvania20 legislature. 11 - COMM. OF THE WHOLE - Res. 1100611 centers have been the engines of growth2 for Philadelphia for years. The3 Governor's proposed cuts may reverse the4 employment gains we have made in these5 areas in recent years. 11 - COMM. OF THE WHOLE - Res. 5 million cut in the7 City's Department of Human Services. 11 - COMM. OF THE WHOLE - Res. 8 In closing, let me say that I9 am proud of the accomplishments made by10 fellow City employees over the past three11 years. They worked hard through a12 difficult time and have achieved a great13 deal. 21 DHS is making sure more22 children are safe by focusing on finding23 permanent, stable homes for children who24 need them. 11 - COMM. OF THE WHOLE - Res. 11 - COMM. OF THE WHOLE - Res. 12 Finally, the Managing13 Director's Office unveiled Philly Rising,14 its citizen-centric coordinated approach15 to improving public safety and quality of16 life in Philadelphia's neighborhoods. 11 - COMM. OF THE WHOLE - Res. 1100611 So, yes, Philly is rising. 11 - COMM. OF THE WHOLE - Res. 2
Thank3 you.4 Will you explain your revenue5 growth assumptions for the real-estate6 transfer tax for both residential and7 commercial?8
Rebecca9 Rhynhart, Budget Director of the City.10 We worked with a revenue11 consultant, IHS Global Insight, to12 develop our revenue projections. And13 then, just generally speaking, to give a14 little bit background, after we worked15 with the revenue consultant, we also met16 with the Federal Reserve Bank of17 Philadelphia and leading economists there18 to further refine the projections.19 So in terms of the real-estate20 transfer tax in particular, the factors21 that they looked at largely were the22 volume of home sales -- volume of real23 estate sales, both residential and24 commercial, historically, as well as the25 21 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 prices of those properties to model out2 the projections in the forecast.3 So the strongest growth is in4 Fiscal '13 and '14 for the real-estate5 transfer tax, and that's making the6 assumption that it will take until7 Fiscal '13 to get to the heart of the8 economic recovery.9 And when I say that, I'm not10 saying that we're getting a recovery back11 to where we were, but the modest growth12 would be in '13 and '14.13 So in terms of the actual14 percentages, I can pull that up. For15 transfer tax, we're assuming 0.5 percent16 growth this year, in Fiscal '11,17 basically flat. And then percent in18 '12, going up to percent in '13 and19 '14, and then tapering off.20 And those projections, I would21 like to say, are much more conservative22 than what our revenue consultant came up23 with and also what the Federal Reserve24 Bank thought was more likely.25 22 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Thank2 you.3 The plan states that4 Philadelphia County is slated to receive5 slated to receive $2.1 billion in6 Recovery Act funds. Can you tell us who7 received funds, how they were spent, or8 will be spent, and the number of jobs9 that were created?10
I'm Rob Dubow, the15 City's Finance Director.16 The Recovery Act money has gone17 to a variety of things, everything from18 street-paving to some of the19 welfare-to-work jobs, so it's been a wide20 variety of things.21 There's been the neighborhood22 stabilization money. The airport's23 gotten some money. It's gone to a wide24 variety of places.25 23 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
So at2 this point, we don't know how many jobs3 are created?4
Well, the way that5 the federal government defines "job6 creation," you actually have to look at7 it one-quarter at a time. They've done8 it in a way that makes the job creation9 look as small as possible.10 So according to way they count,11 it's actually under 400 jobs, but there12 really have been thousands of jobs; you13 just can't count them under their14 calculus.15
No. A lot of the18 money was intended to be spent over three19 years, so it never was intended to have20 been spent by now. There are some21 projects that are done, and for them, the22 money has been spent, but others will23 continue to be spent over the next year24 or two.25 24 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Thank2 you.3 What is the breakdown of the4 City's pension payment for normal costs5 and the accrued unfunded liability?6
I'm just looking it7 up. So for FY '12, for all funds, the8 unfunded liability payment is about9 $417 million.10
I'm11 sorry, Rob. Would you mind repeating12 that?13
Sure. The total14 MMO for all funds in FY '12 is15 $519 million. The unfunded liability16 payment is $417 million. So the unfunded17 liability is the vast majority of the18 payment.19
Can20 you break down the accrued unfunded21 liability by plan?22
I can. I'd have to23 get back to you on that. Yes, we can do24 that and we'll get that back to you.25 25 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 You mean by Pension Fund plan.2
For9 the record, can you explain what the10 accrued unfunded liability is so that11 someday reading our notes at another time12 could be fully aware of what it is?13
Okay. I think it's14 -- it's the difference between the amount15 we owe all of the participants in our16 pension plan and the amount of assets17 that we have in our pension plan, an18 actuarially determined difference.19
It24 is?25 26 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 Okay. I see any number of2 Councilmembers want to be recognized. I3 have several other questions that I would4 like to ask. We'll give each -- for the5 first go-around, each Councilmember will6 be given three minutes.7 And at this time, the Chair8 recognizes Councilman Goode.9
Thank you,10 Madam President.11 Good morning, Mr. Armbrister.12
And to the14 Finance Director and Budget Director.15 The first question is a general16 question. The Five-Year Plan's required17 by PICA for financial oversight purposes.18 Does the Administration use its Office of19 Strategic Plan? In other words, is it20 just a financial document, or is it21 supposed to be a strategy for economic22 growth as well?23
Although the24 Five-Year Plan meets our legal obligation25 27 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 to satisfy the PICA statute, we view not2 only its development but of our planning3 as a strategic opportunity to kind of4 figure out what the goals and policies of5 the Administration should be. Obviously,6 many of those are determined by the7 resources that you have.8 So I think they work9 hand-in-hand as both meeting the legal10 requirements of the law but they also11 serve as a kind of road map for the12 Administration.13
Can you tell17 me what the City's unemployment rate is18 projected to be at the end of the19 Five-Year Plan?20
We don't have an23 unemployment rate projection for the end24 of the Five-Year Plan. The revenue25 28 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 projection assumptions are in line with2 the Blue Chip Consensus of leading3 economists; it's a report that comes out4 of leading economists. And for the next5 two years, the unemployment rate6 nationally is expected to remain high;7 and locally, we would anticipate that8 too. So there's no exact unemployment9 rate projection in our plan.10
And usually11 when I ask this question to the12 Administration, they talk about the13 national economy, but we know that the14 national economy is different from the15 regional economy --16
So what21 specific investments are being made22 within the Five-Year Plan to lower the23 unemployment rate to the extent that24 investments could be made locally to25 29 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 impact --2
I'll start and3 jump in.4 Certainly, one of the5 investments that we think that we're6 making significant is certainly the7 $1 million we're making in literacy. The8 City suffers from a very high functional9 illiteracy rate. And to the extent --10 particularly with adults, to the extent11 that we can enhance literacy among our12 population, we think that that will make13 them much more amenable to getting jobs.14 It's not necessarily reflected in the15 resources of the plan.16 Among the other things that the17 Administration is working to do is that18 we are looking -- and you will hear more19 about this later on in the year, but we20 have tried to do an overhaul of our21 workforce development infrastructure, if22 you will.23 As you may know, we have asked24 the State to allow us to kind of bring25 30 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 some coherence to what was otherwise an2 incoherent system between a web and a3 PWDC. We actually had a board meeting4 this morning before this hearing, and we5 are very close to reconciling that6 incoherent system and bringing some7 coherence to it, and we hope that that8 would help generate dollars to actually9 training people for jobs that are coming,10 not for jobs that have left.11
Thank you.12 I'll play by the rules, Madam13 President.14
Thank15 you.16 The Chair recognizes Councilman17 Greenlee.18
Thank19 you, Madam Chair.20 Good morning.21 PANEL MEMBERS: Good morning.22 COUNCILMAN GREENLEE:23 Mr. Armbrister, in your testimony, you24 talk about the impact of the Governor's25 31 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 budget.2
And you4 talk about some of the money. And I know5 it's probably too quick to say -- to know6 this, but has there been any either7 adjustments or thoughts about how to deal8 with some of these, like, for example,9 the $1.9 million cut in the after-school10 and summer programs, which will obviously11 be a --12
Yeah. We have13 certainly began to look at what the14 effects of some of these cuts are, and we15 are planning, along with the deputy16 mayors and the commissioners, to see if17 to the extent that these can be either18 absorbed or whether or not they'll19 actually have to be made.20 It's too early to tell at this21 time if either of those possibilities is22 going to occur.23
Any rough24 time frame that you're working on or...25 32 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Oh, well,2 we're working as quickly as we can.3 Certainly some of the information we4 need, we're still dependent on State to5 get to complete that process.6
We are in8 contact with them. Both the Finance9 Director and the Deputy Mayor for Health10 and Opportunities accompanied the Mayor11 to the Governor's budget address, had12 meetings with the respective secretaries13 in their areas.14 So they tried to get a little15 bit of a head start on this. And so,16 we're working very diligently to try to17 get some sense of that.18
You22 talked about the Fire Department's23 budget. And in the end of your paragraph24 you said the increase in overtime, which25 33 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 will bridge the gap until new2 firefighters can be brought on board. Is3 there a time frame for that?4
Yes, there is5 a time frame. Unfortunately, the time6 frame does not include hiring in the next7 fiscal year.8
That's the10 reason for the increase in the support11 for overtime. We are down approximately12 60 or so firefighters, and the reason13 that we're not in the position to hire14 them immediately is because of a Supreme15 Court case that came down last fall which16 requires us to retool our test.17 So our Human Resources18 Department is actively retooling the19 test. We don't think that that retooling20 is going to take place in time for us to21 have a fire class in place in FY '12, but22 we hope soon thereafter.23
Okay.24 And last thing, you talk about the25 34 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 $4 million for snow removal. Are there2 any plans if we get lucky next year?3
On the6 $4 million for snow removal, is there any7 plans if we get lucky next time?8 (Indiscernible; parties talking9 over each other.)10
Again, the11 calculation was based on our contracted12 services over the last five years. So in13 no way is it expected to represent the14 total cost, but I'm praying for warm15 water between December and February.16
Okay.17 But there's no other plan for that money18 if we don't have to use it.19
It would24 actually be put in reserve.25 35 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Meaning that it3 could not be spent for any other purpose4 besides snow.5
So it6 wouldn't be spent. All right, okay.7 Thank you.8 Thank you, Madam President.9
You made --15 you made in your testimony the fact that16 we are increasing purchasing of services17 this year from somewhere in the18 neighborhood of $2.3, I think million, in19 increase in purchases of services; is20 that correct?21
Councilman,22 can you direct me to that? I'm sorry.23 I'm not sure I understand the question.24
All right.25 36 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 Under the Operating Budget, that spending2 levels for purchasing of services would3 increase 2.7 million last year to4 3.2 million, I believe it is, that we did5 increase from the prior year; is that6 right?7 Don't hold me to the amount,8 but are we increasing purchase of9 services particularly in areas -- like10 snow renewal was one that was identified?11 (No immediate verbal response12 from panel.13
Since I have14 three minutes, I'm going to assume that15 is yes?16
Actually, purchased17 services for snow probably went down a18 little 'cause the cost this year for snow19 removal was a little less than the really20 bad year last year.21 Overall, our Class 200 costs,22 if you exclude taking DHS out of the23 fund, increases by a little less than24 percent. And the big increases are25 37 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 what we have -- we changed the provision2 for snow vehicle leasing, juror fees in3 the First Judicial District, and the4 literacy program.5
And I raise6 that to bring your attention to7 Resolution No. 100848, which we8 introduced in Council, which talks about9 the analysis of purchasing -- outsourcing10 of contracts versus an analysis that11 would look at whether or not things could12 be done better, cheaper, more13 effectively, and efficiently in-house.14 I bring this up in the15 beginning of this budget process because16 for me, it will be a recurring question17 because it started in last fiscal year.18 I think this is important in19 light of the fact that we're still in20 dangerous waters. I want to acknowledge21 the fact that you stabilized this city's22 budget a bit with cooperation from its23 workforce, with cooperation from this24 body and Council. But we are not out of25 38 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 the woods or on safe, calm seas if you2 would.3 In this process I'd like you to4 take a look at whether or not these kinds5 of purchases of service are better done,6 more cost-effectively done, and more7 efficiently done in-house.8 And one of the unintended9 consequences may be that we create a job10 or two along the way that a Philadelphia11 resident may have.12 (Timer bell rings.)13
Was that my14 buzzer? Oh, time passes quickly when15 you're asking questions.16 And I say that to say, for17 example, when we look at snow removal,18 you said it went down. It's my19 understanding, based on testimony from20 District Council 33, it's because you did21 a lot more of that snow removal in-house,22 using the Streets Department and in23 conjunction with the Water Department.24 All I'm asking, is an analysis25 39 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 done whether it is cheaper to do that2 versus to contract out with the number of3 snow removal firms that are out there in4 the region, and to analyze that so that5 this body and the departments, more6 importantly, get a better handle on7 whether or not we're saving money by8 doing it inside, or does it come out9 better to contract out?10 And I'll yield my time, which I11 have no more, Madam President.12 (Laughter.)13
And if you14 could answer that, if there's a15 department process, 'cause we asked this16 last year.17
Okay. I18 think -- I'm not sure if the19 Commissioner, the Streets Commissioner is20 here, but the one thing I would comment21 on about snow in particular, as an22 example, I'm not sure that that may be23 the best level because that is a24 peak-demand service that is not a uniform25 40 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 service that's required.2 So that is probably the kind of3 service that you're probably more likely4 to, for short periods of time, contract5 out. There may be other things that the6 government does that you may want to have7 that analysis done, but I'm not sure that8 snow would be, you know, the example I9 would use.10 But certainly I'm sure managers11 who are held to very high standards12 regarding their utilization of resources13 hopefully make that calculation. I'm not14 sure if it was made in that particular15 instance.16
If I could21 just respond to that one?22 I understand that that might23 not be the thing. I think it's the exact24 kind of contracting that we should begin25 41 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 that analysis on.2
Because if,4 in fact, we have a workforce that is5 ready, willing, and able to do that6 service and it costs us less to just7 engage them a little more maybe in8 overtime versus contracting out, where9 there may be an additional cost because10 of the outsourcing of it, is the exact11 place that we can kind of get an12 apples-to-apples comparison versus last13 year versus this year and the reduction,14 and whether there was a cause and effect15 or not.16
And I'm not18 drawing a conclusion one way or another,19 but just saying and beseeching you that20 the analysis should be done.21 Thank you, Madam President, for22 your indulgence.23
The24 Chair recognizes Councilman Green.25 42 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Thank you,2 Madam Chair.3 I don't know if it's still4 morning, but it is. Good morning.5 PANEL MEMBERS: Good morning.6
My7 question -- I have sort of a general8 question to begin with, and that is, it's9 my understanding that there's an10 agreement between Council and the11 Administration that we're going to get12 cuts or recommended reductions in various13 departments that result from the State14 budget cuts prior to any of -- any15 department that would be the subject of16 State budget cuts testifying before City17 Council.18
And I think that's21 one of the reasons we worked with22 Council, to change some of the dates23 around, so that it would be more likely24 that those departments that got cuts came25 43 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 at the end of the process, and that's2 kind of the way it worked out.3
Okay, great.4 I just wanted to get that for the record5 so that when we get there we'll have that6 information.7 And how long would you guess8 before a hearing for a department we will9 get new information? 'cause, obviously,10 we're not getting to review those11 departments until we have actual12 department data, and we'll need time to13 look at each department that is going to14 have changed information.15 What's reasonable for us to --16 you know, can we get it a couple weeks in17 advance or a week in advance or --18
Well, part of that19 depends on the State. There's still some20 information we haven't gotten from them,21 particularly with DHS, you know, and how22 the allocation will look.23 But, you know, as soon as we24 get that, we'll turn it around as quickly25 44 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 as we can. We'd like to obviously get it2 to you as early before the hearing as we3 can.4 I think those hearings are on5 the 27th?6 MR. McPHERSON: The 20th.7
The 20th. So, I8 mean, to the extent we get stuff from the9 State earlier, we'll get it to you as10 quickly as we can.11
And are you12 going to get it to us as the department13 is finished rather than hold it all till14 one big revision or --15
Well, I think it16 will be kind of interactive, so I think17 it will have to be the whole thing.18
Okay, all19 right. Okay, I wanted to understand that20 for the record.21 Miss Rhynhart referenced22 consultants that had been hired to do23 analysis of sort of the volume of24 expected real-estate transactions and25 45 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 also the price increases, which are the2 increase in value of real estate, which3 are the two components that make up what4 our real-estate transfer tax collections5 will be.6 But also, with respect to the7 second part, make up, you know, sort of8 what our estimates of increasing real9 estate values are over the next five10 years to the extent we expect that and --11 (Timer bell rings.)12
-- are there13 written reports that have been provided14 to you along those loins?15
They actually16 did the projections for all of our taxes,17 but it was a back and -- you know, it was18 a back-and-forth. There's not a final19 report that we got from them.20
You got25 46 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 their final report that you didn't agree2 with?3
We got their --4 right. We got their -- I don't want to5 say we didn't completely agree with it,6 but we decided to be more conservative --7
-- but we got10 their annual projections so that the tax11 rate growth that they projected for each12 fiscal year, we have that.13
Thank19 you.20 The Chair recognizes21 Councilwoman Blackwell.22
Thank23 you, Madam President.24 You said you were adding more25 47 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 money in the budget for pools all summer.2 What's "all summer"?3 (Laughter.)4
Well, I think7 Deputy Mayor DeBerardinis can8 operationalize that, but it really means9 for a full summer that we intend to have10 the pools open.11
I'm not sure.14 I think we have someone here who can give15 you the operational details on that.16 (Witness comes forward.)17
Good18 Morning, Commissioner. Identify yourself19 for the record, please.20 COMMISSIONER SLAWSON: Good21 morning, Council President Verna. I'm22 Susan Slawson, Recreation Commissioner.23 Good morning, Council.24
Good25 48 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 morning.2 COMMISSIONER SLAWSON: The3 typical summer for our pool season is,4 the pools normally open the day after5 schools are out, which is usually around6 June the 23rd, that Friday. And our pool7 season lasts until the middle of August,8 around August 15th. It's not until Labor9 Day.10 I guess I've been here about11 three years now, and they haven't stayed12 open until Labor Day even prior to me13 coming.14
I only15 asked that to Mr. Armbrister because he16 noted that they were including more17 money, so I wasn't trying to put you on18 the spot; I was trying to put him on the19 spot.20 (Laughter.)21 COMMISSIONER SLAWSON: Okay.22
Thanks,25 49 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 Councilwoman Blackwell.2
Thank3 you.4 My next question is with regard5 to the cut in human services and the cuts6 to supportive housing.7 Obviously, we're very, very8 concerned in those areas, and I9 understand those cuts affect not only the10 public in general, but it also affects11 the School Board and their programs with12 mental health, with children.13 And obviously, I'm very14 concerned about these cuts to the Office15 of Supportive Housing. I understand we16 could lose not only intake workers but17 counselors, and people can't get out of18 trouble without the supports that we19 need. We're really concerned about that.20 We're already closing the Ridge shelter,21 which is a horrible issue.22 However, it takes money to23 relocate people, to find places. And24 without -- I always believed that there's25 50 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 some areas that should be exempt, and2 it's always my opinion that this area3 should be exempt, but I would certainly4 like to hear your comments with regard to5 DHS and OSH.6
Councilwoman,7 we too are concerned, and I think that's8 one of the reasons why we highlighted9 those cuts.10 (Timer bell rings.)11
The two that12 you mentioned specifically relate to the13 HSDF funding, which, as Dr. Schwarz can14 tell you, has been the most flexible of15 the funding dollars that we've had that16 have allowed us to really attack the17 homeless issue.18 We are concerned that if that19 funding goes away and we are not able to20 replace it in any meaningful way, that we21 will see adverse consequences of that22 cut: increased homelessness, families,23 things like that that we hope that we can24 avoid.25 51 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 But we are concerned as well.2
Well,3 I'm hoping that we will have a plan for4 them because, you know, people can't live5 on the streets. I've been here long6 enough to see it in all extreme fashions,7 and we've come a long way.8
And10 I'm hoping that while I'm still able to11 walk and work that we'll get rid of12 homelessness in Philadelphia. It's13 always been my goal, my vision, and my14 dream.15 But certainly I am concerned16 about us walking backward because it's17 just frightening, and it would be18 devastating.19 And certainly, we found in20 Center City, as we just expanded the21 Convention Center, and we want to do all22 of these programs, people don't want to23 see homeless people in even greater24 numbers on the streets. They don't want25 52 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 to be there, people don't to want to see2 them, but we can't legislate them away or3 cut them away be; they'll be there unless4 we create programs for them.5
So I7 always pledge my involvement in this8 issue, and we continue to work with OSH9 on this issue.10 But certainly, I would hope11 that you could present to this Council,12 as we deliberate this budget issue, what13 plans are in those areas with DHS, the14 Health Department, and community-based15 health as it relates to schools and the16 NOSH.17
Well, we will18 certainly do that.19 And, Councilwoman, I just want20 to reiterate that it's certainly this21 administration's goal, much like yours, a22 shared goal in terms of ending23 homelessness as well.24
Thank25 53 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 you.2 Thank you, Madam President.3 COUNCIL PRESIDENT VERNA:4 You're welcome.5 The Chair recognizes Councilman6 Rizzo.7
Thank you,8 Madam Chair.9 Good morning.10 PANEL MEMBERS: Good morning.11
Chief of12 Staff, could you, or the appropriate13 person, bring us current on what we've14 spent, what we plan to spend, the current15 status of the WiFi network that we16 purchased?17
Yeah. I'm18 going to have to ask Tommy Jones, if he's19 here, from DOT, to bring you up to speed.20 Oh, Joe James is here.21
I'm having22 trouble finding anything about that in23 this book, so maybe I just overlooked it.24 (Witness comes forward.)25 54 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 DEPT. CHIEF JAMES: Good2 morning. Joseph James, Deputy Chief3 Information Officer for the Division of4 Technology. Good morning, Councilman.5 We have spent -- the initial6 purchase of the facilities was about7 $2 million. And we used grant money to8 accommodate that along with some capital9 grant money10 The operating cost is where we11 just started to take over the network and12 to reoptimize the network. Our operating13 cost is about $900,000, and it's in our14 Operating Budget.15
So in the16 Five-Year Plan, it doesn't talk much17 about your plans for that. It mentions18 these computer centers, but it doesn't19 talk about any goal for the use of that20 in the next five years.21 DEPT. CHIEF JAMES: I think22 it's part of our capital projects. We're23 talking about our overall network24 infrastructure investments. We view both25 55 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 networks together, the wire line network2 and the wireless network, and we have3 substantial dollars in our Capital Budget4 to build out those networks and start to5 see the convergence of those two6 facilities into one facility.7 So it's a combination of a plan8 we have in our Capital Budget, which9 we're going to talk about at, you know,10 our capital hearing. Tomorrow, we're11 going to talk about how we view the spend12 for the wireless network and the wire13 line network.14
For the15 future, for the Five-Year Plan, is the16 mission of bringing WiFi to the17 communities, to the neighborhoods still a18 goal?19 DEPT. CHIEF JAMES: No, sir.20 We are talking about taking the network21 and turning it into a public safety --22 it's an internal network, and I believe23 that's how we proposed it all along.24 It's a public-safety wireless25 56 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 network. It's not going to be providing2 WiFi for residents; we're not in that3 business anymore. And we're going to use4 that for municipal services in addition5 to the public-safety, first responders.6
Thank14 you.15 Councilwoman Miller, is she in16 the room?17 (Councilwoman Miller not18 present at this time.)19 COUNCIL PRESIDENT VERNA:20 Councilwoman Tasco.21
Thank you.22 I'd like to go back where you talk about the minimum24 requirement payment to the Pension Fund.25 57 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 And in your Five-Year Plan book, you talk2 about having a thirty-year review period3 of the amortization payment.4 Could you explain the City's5 role in funding the pension plan? because6 you say in the testimony that we are --7 we are -- you have required payments into8 the Pension Fund now in order to support9 the pensions of current and future10 workers, so I need you to explain that.11 And also, through the years and12 how far back, maybe beyond the thirty-13 year period have we had issues with the14 City's contribution to the pension plan?15 Could you talk about the performance of16 the pension plan?17
Which is a19 separate entity, but also the unfunded20 part, and it's the unfunded part -- and I21 think just for the record to be very22 clear, what we're talking about is, where23 is the unfunded portion of the pension24 plan coming from?25 58 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Okay. So the way2 the Pension Fund is funded, there are two3 primary and then some smaller funding4 sources for the Pension Fund.5 The biggest sources are the6 City's contribution, our annual7 contribution, and investments earnings on8 the fund. It also gets State9 contributions and contributions from10 employees, but they're smaller.11 The fund is about 47 percent12 funded, which means that the -- and if13 you look at the assets, it has -- they're14 able to only pay about 47 percent of the15 fund's liabilities.16 So our actuary does a schedule17 for us that shows -- that essentially18 treats that unfunded portion of liability19 as a loan and has it paid off like a20 thirty-year mortgage. And so, that's the21 amortization payment that we make.22 Our funding percent was very23 low through the late '90s; it was in the24 40s. And then the City did a pension25 59 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 obligation fund, which essentially was2 borrowing from capital markets to money3 into the Pension Fund. That took the4 funding percent up to around 80 percent.5 But mostly because of losses in6 the market, two big stretches -- one7 earlier last decade and then the one two8 years ago. We've seen our funding9 percent go from in the high 70s about a10 decade ago to the high 40s now.11 (Timer bell rings.)12
And that13 portion of that the City has to make up14 through its General Fund?15
Yes, yes. And the16 amount that we've had to pay through the17 General Fund has gone from over18 200 million to well over 400 million and19 over will get to be over 600 million20 during the course of the Five-Year Plan.21
Okay. So22 how does it go from 200 million to23 600 million?24
Well, for example,25 60 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 when -- if the two main sources of2 funding are General Fund contribution and3 the earnings, if the earnings miss --4 there's an assumption that we'll earn5 8.15 percent. If we miss that earnings6 assumption, the General Fund has to7 compensate for it.8
Two years ago, when10 the markets collapsed, we lost, I think11 it was about, 17 percent.12
So we missed the14 mark by 25 percent, missed our assumption15 by about 25 percent. And we were talking16 about investments on almost $4 billion;17 that's a lot of money. And then we have18 to make that up over time.19 And so, that's why our20 payment's gone up so much over the last21 few years.22
Mm-hmm.23 In terms of the new program where24 employees have a choice, how is that25 61 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 progressing?2
So that has been in3 place for about a year for Police and4 Fire.5
It was awarded in7 the two arbitration awards. New8 employees have a choice of staying in9 their current plans and increasing their10 contribution from 5 percent of pay to11 6 percent of pay or going into a new12 hybrid plan that combines the typical13 defined-benefit plan with the 401(K.14 In the first police class, all15 of the members of that class decided to16 go -- decided to increase their17 contributions from 5 to 6 percent. And18 we haven't had another class or a fire19 class since then.20
Okay.21 COUNCIL PRESIDENT VERNA:22 Councilwoman, your time is up.23
Oh, it is?24 Time goes fast.25 62 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
Thank4 you, Madam President.5 Some of these -- some of my6 questions may have been asked -- I'm not7 really sure -- while I was out of the8 chambers.9 But I just wanted to know, how10 did you lower -- or what happened to the11 1600 positions that are no longer --12 where people are no longer working? Were13 they layoffs? How did that number14 decrease? And are those jobs still15 vacant or not going to be filled? What's16 the status?17
A very small18 portion of that were actually layoffs.19 When we -- the majority of those -- of20 the decrease is not filling vacancies.21 And a portion -- there are22 vacancies in the City's government that23 can be filled, but there is -- there has24 been some downsizing of the City's25 63 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 workforce as part of just dealing with2 the financial crisis and the impact on3 the City.4 But we have -- at least there5 haven't been that many layoffs; there's6 very few. Most people we place within7 other departments of the City.8
Okay. So16 last year this time, how many employees17 did you have on City payroll, and how18 many do you have now? 'Cause I would19 assume it's even more than 1600, 'cause20 what about those folks that are just21 retiring?22
Okay. We have23 the Fiscal '11 Adopted Budget, so that24 would have been last May. It was 23,29625 64 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 positions, and now we have 22,023.2
Okay.3 And I had heard earlier that the freeze,4 the employment freeze, was potentially5 going to be lifted this year, and I don't6 know -- did you hear me?7
Okay. I10 had heard that the employment freeze was11 going to be lifted this year. What would12 happen with the state and federal budget?13
I missed a little15 bit of what you said, but I think what16 you're asking about is whether we are17 kind of loosening up on hiring people.18 We're not; we're doing the same level of19 scrutiny for each hire that we've been20 doing for the last two years.21 (Timer bell rings.)22
Go25 65 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 ahead. They had to look for information.2 You have one more question you could ask.3
Okay, all4 right. Did anyone ask you while I was on5 it, could you please explain Philly6 Rising? And where was the pilot7 neighborhood and where do you plan on8 expanding this year?9
My name is John12 Farrell Deputy Managing Director for the13 City of Philadelphia.14 Philly Rising is a pilot15 program that the Administration has been16 trying, where we're trying to do a better17 job of coordinating how the City delivers18 its resources in areas that have19 particularly high levels of crime and20 quality-of-life issues. That's kind of21 the very short version;22 There's a much longer23 explanation. We've got about 40 City24 agencies participating and about 3025 66 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 nonprofits that have been helping us with2 this too.3
Well, it4 sounds really good. So where did you5 start it? What neighborhood did you6 start in?7
Yes, we started8 in Councilman Clarke's district, in the9 Hartranft community, which is around 10th10 and Lehigh to Sixth and York. We've11 since expanded to West Philadelphia,12 right around the Haddington Library.13 We'll be starting very shortly by the14 Frankford Hospital, and we're in the15 Market East neighborhood.16
All17 right. So how do you determine which18 neighborhood to go in? Is it determined19 by crime statistics or what?20
Yes, all of the21 above.22 The process that we're using23 right now is that the Police Department24 is nominating areas that have a25 67 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 particularly high level of crime, and2 we're seeing where they need help beyond3 regular police enforcement.4 So we're really trying to find5 areas in a statistical basis that have6 high levels of quality-of-life issues.7 So that could be vacant homes, vacant8 lots, high litter rates, SWEEP9 violations, anything like that.10 And we're actually mapping it11 and looking at where the police have said12 they need the most help and seeing where13 we have a high level of coincidence14 between those different types of factors.15
So do you16 have citywide mapping or mapping per17 police district and then --18
All21 right, okay. I'm just trying to figure22 out where it can come in the Eighth23 District.24 (Laughter.)25 68 3.22.11 - COMM. OF THE WHOLE - Res. 1100611
That's an2 excellent question. And the request that3 went into the funding, Councilwoman, is4 basically to get more people doing what5 I'm doing. Essentially, I'm doing a lot6 of the coordination right now and7 partnering with folks.8 What the funding would do is9 give me a few people who would be able to10 do coordination in different parts of the11 City. The idea is that with six12 personnel under me, we could be reaching13 all different neighborhoods across --14 citywide.15
Okay. So16 if we need to talk about this further,17 who do I call, you?18
Okay, all20 right. Thank you.21 Thank you, Madam President.22 COUNCIL PRESIDENT VERNA:23 You're welcome.24 The Chair recognizes Councilman25 69 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 Goode.2
Thank you,3 Madam President.4 We began talking earlier about5 whether this is just a financial plan or6 a strategy, and I talked about7 projections for the unemployment rate.8 Before my time runs out, I'd9 like you to tell me your projections for10 the poverty rate, the graduation rate,11 and the prison population, and what12 investments are being made in the next13 five years to lower the poverty rate, to14 increase the graduation rate, and to15 reduce the prison population.16
Councilman17 Goode, we don't have projections for the18 poverty rate and a few of the other19 statistics you mentioned, but we have --20
First, if24 you have a projection for the poverty25 70 3.22.11 - COMM. OF THE WHOLE - Res. 1100611 rate, what is it? And if not, what2 investments are being made to lower it?3 Then, two, projection for4 graduation rate, if you have it. If not,5 then what investments are being made?6 And same for the prison7 population.8