►
Description
City of Philadelphia
Public Hearing Notice
February 18, 2020
The Committee on Fiscal Stability and Intergovernmental Cooperation of the Council of the City of Philadelphia will hold a Public Hearing on Tuesday, February 25, 2020, at 10:00 AM, in Room 400, City Hall, to hear testimony on the following items:
200039 Resolution authorizing the committee on Fiscal Stability and Intergovernmental Cooperation to conduct hearings to determine the City of Philadelphia’s preparedness for the possibility of an economic recession and the strength of the reserve stabilization funds.
Immediately following the public hearing, a meeting of the Committee on Fiscal Stability and Intergovernmental Cooperation, open to the public, will be held to consider the action to be taken on the above listed items.
Copies of the foregoing items are available in the Office of the Chief Clerk of the Council, Room 402, City Hall.
Michael A. Decker
Chief Clerk
A
Good
morning
we're
gonna
get
started.
This
hearing
is
called
to
order
and
to
my
immediate
right
is
councilmember
Cathy
Gilmore
Richardson
to
my
immediate
left,
this
councilmember
Derek
green.
This
is
the
public
hearing
of
the
Committee
on
fiscal
responsibility.
Intergovernmental
cooperation
purpose
of
this
public
hearing
is
that
your
testimony
and
resolution
to
zero
zero,
zero,
three
nine
sponsored
by
councilmember
Gilmore
Richardson,
the
clerk
will
now.
Please
read
the
title
of
the
resolution
before
the
committee
today
authorizing.
C
B
D
Thank
You
mr.
chair
good
morning,
I
want
to
thank
you,
mr.
chair
and
our
vice
chair,
councilman,
O'neill
and
Councilman
green
and
all
of
our
colleagues
here
this
morning.
I
also
want
to
thank
our
panel
of
witnesses
who
are
here
to
share
their
experience
with
us
this
morning.
This
is
an
important
hearing
to
have
particularly
just
a
few
short
weeks
before
the
mayor's
budget
address
to
this
council.
D
What
I
hope
we
can
gain
from
the
testimony
today
is
a
sense
of
where
our
city
stands
in
regards
to
preparedness
to
weather
another
recession,
as
well
as
suggestions
for
how
the
city
can
be
ready
going
forward
last
year
at
the
end
of
the
fiscal
year
as
a
result
of
careful
budgeting
and
responsible
spending,
the
city
had
a
surplus
based
on
quarter
to
projections.
We
anticipate
having
another
surplus
this
year
and
it's
more
than
earlier
projected,
but
less
than
we
end
it
with
last
year.
D
Many
stakeholders
will
see
this
surplus
as
an
opportunity
to
explore
more
and
to
spend
more
money.
As
duly
elected
representatives
of
the
people
of
Philadelphia,
we
are
charged
with
being
responsible
with
our
city's
fine
in
2007.
The
nation
entered
into
an
economic
recession,
then
called
the
Great
Recession
Bank
stopped
issuing
loans,
businesses
failed
and
our
city's
revenue
went
abruptly
downward.
We
were
ill-prepared
for
the
ramifications
that
come
with
an
economic
recession,
and
it
is
our
responsibility
now
to
learn
from
our
past
mistakes
and
ensure
that
our
city
is
prepared
to
weather.
D
Whatever
comes
to
us,
particularly
from
the
standpoint
of
how
we
spend
and
save
our
city's
revenue
since
2007,
we
have
taken
steps
to
prepare.
The
city
has
for
reserve
funds
which
we'll
hear
more
about
later,
and
while
it
is
important
to
ensure
that
we
allocate
funding
for
the
essential
functions
of
running
our
city,
it
is
our
role
to
ensure
that
we
prepare
for
the
event
of
an
economic
downturn
and
on
a
point
of
personal
privilege.
I
just
want
to
mention
that
I
was
a
legislative
aide
here
in
City
Council
during
the
last
recession
and
I.
D
Remember
a
lot
of
the
tough
choices
we
had
to
make
during
that
time
and
looking
at
the
services
we
provide
as
a
city
and
how
we
were
going
to
continue
to
be
responsive
to
our
constituents
and
I
never
want
to
have
that
feeling
ever
again.
I
remember
having
to
do
a
bill
at
the
very
last
minute
in
June,
I
believe
for
the
district
around
30
million
dollars
during
that
time,
for
the
School
District
of
Philadelphia
and
I.
D
Think
now
that
we
have
a
surplus,
it's
a
great
opportunity
for
us
to
talk
about
how
we
prepare
for
any
potential
economic
recession.
That
may
come
our
way.
So
thank
you
all
so
very
much
for
being
here.
Thank
you
for
the
opportunity
to
have
this
discussion.
I
mean
use
this
as
a
framework
as
we
go
into
our
budget
hearings
and
I.
Look
forward
to
the
outcome
of
this
hearing
and
sharing
that
information
with
all
of
my
colleagues
from
Philadelphia
City
Council.
Thank
you
very,
very
much.
A
B
A
E
Although
the
city
is
on
better
fiscal
footing
than
it
has
been
for
years
or
maybe
even
decades,
mica
does
not
believe
it
is
in
the
strongest
financial
position
to
weather
a
severe
economic
downturn.
As
you
know,
pike
annually
reviews
and
approves
the
city's
five-year
plan
and
our
staff
report
on
the
five-year
plan.
We
identify
key
risk
that
can
impact
the
city's
plan
over
the
next
five
years.
E
In
our
staff
report
on
the
current
five-year
plan,
we
identified
economic
growth
or
a
potential
lack
thereof
as
a
key
risk
that
might
impede
the
city's
ability
to
realize
the
projected
revenues.
Fortunately,
to
date,
the
economy
is
continuing
as
expansion
and
therefore
city
tax
revenues
are
coming
in
as
projected
it's
not
even
higher.
However,
we
all
know
this
good
fortune
will
not.
E
Last
forever
and
city
officials
have
been
taking
measures
to
protect
our
city
from
any
possible
future
decline
in
revenues
due
to
an
active
economic
slowdown,
mica
has
long
advocated
for
a
rainy
day
fund
to
prepare
for
an
economic
slowdown.
As
such,
we
were
pleased
when
City
Council
adopted
the
budget,
stabilization
reserve
fund
or
rainy
day
fund
back
in
2011.
E
Unfortunately,
it
took
another
nine
years
to
initiate
the
funding
of
the
reserve
as
part
of
the
current
20
to
24
five-year
plan.
The
city
made
its
fur,
never
deposit
of
30
4.2
million,
with
an
additional
one
hundred
and
forty
six
point,
five
million
projected
to
be
deposited
by
the
end
of
the
five-year
plan
for
a
total
of
180
million.
However,
even
this
five-year
projection
would
only
pay
the
city's
payroll
for
a
matter
of
weeks
should
revenue
plummet
during
a
significant
economic
downturn.
E
Additionally,
there
is
a
possibility,
as
we
have
seen
in
the
past,
that
the
BSR
contributions
may
not
be
funded
as
originally
projected,
for
instance,
in
past
plans,
where
the
city
has
projected
contributions
to
the
BS.
Our
other
contingencies
have
taken
precedent
which
ultimately
eliminated
contribution
to
the
BS
r.
Furthermore,
we
are
concerned
that
the
expiring
labor
contracts
for
all
eight
labor
unions,
upcoming
at
the
end
of
June
2020,
might
result
in
more
for
grown
BS,
our
contributions
and
future
in
the
future
plan.
Hopefully,
we
will
see
this
commitment
to
fund
the
BS.
E
Our
continued
in
the
FY
21
2005
five-year
plan.
Plica
is
also
advocated
for
voluntary
contributions
to
the
BS
r.
Even
if
the
revenue
threshold
that
would
trigger
deposit
is
not
met.
Another
factor
to
be
considered
when
assessing
the
city's
preparedness
for
an
economic
downturn
is
the
general
fund
balance
an
FY
2019.
The
year-end
fund
balance
was
four
hundred
and
thirty
eight
point:
six
million
dollars
or
nine
point
two
percent
of
general
fund
obligations.
E
Despite
the
recent
larger
fund
balances
since
2018
and
higher
projected
fund
balances
in
the
twenty,
twenty
four
five-year
plan
fund
balances
remain
below
the
government,
finance
Officers
Association,
the
GFO,
a
recommendation
of
17
percent
of
obligations,
as
mentioned
previously,
the
city
is
an
eternal
target
fund,
balance
of
6
to
8%
of
obligations.
In
the
current
2024
plan,
the
city
projects
fund
balances
to
range
from
4
per
4.2
percent
of
obligations
in
FY
20
to
a
low
of
two
and
a
half
percent
in
FY
22.
E
Therefore,
if
an
economic
downturn
occurred,
fire
fund
balances
would
help
the
city
lessen
the
impact
on
city
services
in
the
short
term
recognizes
the
city's
efforts
to
ensure
larger
fund
balances
in
the
current
plan
and
hopes.
The
city
will
continue
this
direction
by
increasing
fund
balances
to
meet
GFO
a
recommendations
in
recent
five-year
plans.
The
city
has
also
established
a
contingency
for
federal
funding,
cuts
which
represents
money
set
aside
in
the
event
of
potential
federal
cuts
to
grant
money,
Hika
advocated
for
such
a
contingency
planning
at
the
beginning
of
the
current
presidential
administration.
E
However,
although
the
risk
of
funding
cuts
from
the
federal
government
has
been
minimal
to
date,
the
city
continues
to
set
aside
money
in
this
reserve,
going
forward
the
city
plans
to
use
its
reserve
as
a
contingency
for
a
recession
or
economic
downturn.
We
must
keep
in
mind
that
this
reserve,
along
with
the
provision
for
future
labor
costs,
are
included
in
the
year-end
fund
balance.
E
In
conclusion,
although
the
city
has
made
cynic
significant
strides
towards
short-term
fiscal
stability
overall,
it
is
not
sufficient
to
weather
a
severe
recession
or
economic
downturn
will
continue
to
monitor
the
city's
commitment
to
higher
fund
balances
and
contributions
to
the
city's
BSR
to
better
prepare
us
for
an
economic
downturn.
Thank
you
for
allowing
me
to
testify
and
I
in
vailable
to
answer
any
questions
that
you
may
have.
Thank.
A
A
Does
not
represent
in
the
neighborhood
of
sixteen
to
seventeen
percent
of
the
annual
budget,
yes,
and
if
that
was
funded,
how
much
would
that
represent
of
the
annual
budget?
It
was
fully
funded.
What
would
be
the
actual
percentage
of
the
annual
budget?
I
I'm,
not
sure
that
I
have
to
check
that
okay
and
then
last
but
not
least,
as
they
worked.
Where.
E
We
we
just
started
to
look
into
that
dirt
within
just
a
few
weeks.
So
I
really
don't
have
an
opinion
on
that
yeah
we
I
mean,
there's
always
that
that
once
an
asset
is
sold,
and
you
have
that
money's
then
used
and
gone
so
we
have
to.
We
have
to
weigh
that.
What
we
also
think
is
I
think
counsel
has
talked
about.
This
is
pilots
with
nonprofits
and
and
institutions
that
maybe
something
like
that
could
help
generate
more
revenue
into
the
revenue,
but.
A
Yes,
what
I'm
talking
about
I
think
other
states
have
done
this?
They
pledged
assets
instead
of
making
payments
against
the
obligation
that
frees
up
the
cash
and
I
guess
my
point
in
bringing
this
up
is
that
could
be
a
contingency
plan
in
case
we
did
have
a
downturn
or
we
can
even
look
at
it
now,
but
that
could
be
one
of
the
contingency
plans.
Yes,
and
we
could
put
in
place
as.
E
B
Your
testimony
echoes
some
of
the
information
that
we
talked
about
a
few
months
ago
when
we
had
the
one-day
conference
with
Pugh
and
I.
Think
your
testimony
information
you
presented
a
once
again
reinforces
the
need
to
make
sure
that
Piko
stays
in
existence,
as
we
all
know
that
Pike,
the
enabling
legislation
for
pike
looks
by
2023
will
be
continuing
a
conversation
that
I
started
regarding
the
future
of
Pike
go
through
hearings.
We
also
know
the
impact
of
what
would
occur
to
the
city
of
Philadelphia.
B
Of
that
enable
legislation
were
to
not
stay
in
existence
further,
as
I
stated
in
the
past,
and
I
still
believe.
We
need
to
have
a
independent
fiscal
office
in
the
city
of
Philadelphia.
Some
would
call
that
a
local
congressional
budget
office
I
see
that
as
a
possible
role
for
Pike
in
the
future.
As
we
look
forward
to
reauthorizing
the
legislation,
that's
a
conversation
for
another
day,
but
I
want
to
focus
a
little
bit
more
on
your
testimony
today
and
you
may
reference
to
a
couple
key
points.
B
One,
the
federal
contingency
that
we've
been
caring
for
about
30
million
dollars
for
the
past
couple
years,
since
this
current
administration
came
into
office.
One
of
my
questions,
considering
that
our
fund
balance
has
been
higher
than
in
the
past
years,
but
still
not
at
the
level.
It
should
be
based
on
cities
of
our
side
or
size
or
based
on
Gao.
B
Not
necessarily
recessionary
reserve,
all
those
could
be
used
for
that
if
we'd
run
get
to
a
recession
by
considering
the
fund,
balance
has
been
higher
than
it's
been
in
past
and
you
know
this
has
come.
You
know
we
have
a
need
to
put
more
money
into
the
rainy
day
fund
or
the
stuff
of
stabilization
reserve.
By
the
same
point,
you
don't
want
to
put
something
in
there,
then
taking
it
out,
but.
E
B
E
B
Do
you
have
you
any
thoughts
on
what
that
additional
amount
should
be
I
haven't
I'm
gonna
have
it.
We
haven't
looked
at
that,
yet,
okay,
maybe
as
soon
as
you
continue
to
look
at
the
five-year
plan,
that's
something
that
you
may
want
to
apply
on
it
at
some
point
in
the
future.
Also
in
reference
to
the
PSR,
what
a
budget
Stabilization
Reserve
a
rainy
day
fund.
Do
you
think
that
the
trigger
for
that
should
be
changed?
B
E
If
the
city
would
have
put
two
million
more
dollars,
it
would
have
triggered
a
contribution,
the
BSR,
so
if
they
would
have
lessened
the
federal
reserve
by
two
million
or
raised
the
revenue
projections,
so
we
would
have
had
at
that
year.
We've
had
a
contribution
to
be
sr,
but
I
haven't
looked
at
where
that
what
level
would
be
a
good
level.
B
B
Workforce
is,
is
aging,
as
my
father
would
say
is
seasoned,
and
so,
when
you
look
at
all
those
factors,
do
you
have
any
concerns
in
reference
to
the
ability
to
address
some
of
the
issues
in
our
labor
contracts,
as
well
as
all
the
fiscal
concerns
we
have
and
from
a
global
perspective?
In
fact,
in
Philadelphia,
even
though
we're
not
right
out
of
recession,
we
could
be
in
a
short
time
period.
B
E
When
I
first
was
appointed
executive
director
of
pike,
I
think
the
first
plan
that
we
I
saw
there
was
no
reason
there
was
no
labor
reserves.
There
was
no
money
for
labor
contracts
and
so
working
with
the
city,
we
said
this
is
not
acceptable.
You
need
to
you,
know
at
least
give
put
something
in
there
understanding
the
dynamics
of
how
much
do
you
put
in
and
and
then
what
becomes
the
starting
point
for
any
labor
negotiations
in
this
plan.
E
I
think
there's
a
hundred
and
forty
million
over
the
life
of
the
for
labor
cost,
and
we
projected
a
conservative
that
a
240
million
over
the
life
of
the
plan-
that's
a
2%
conservative,
raise
so
that
would
be
like
102
million
more
than
what
the
city
has
already
in
his
reserve.
So
I
would
use
that
as
a
starting
point.
B
And
that
becomes
pretty
large
in
the
out
years
right
and
that
impact
it
will
have
on
the
city
of
Philadelphia
from
our
ability
to
deal
with
both
the
labor
contracts,
as
well
as
trying
to
increase
our
fund
balance
and
also
provide
more
dollars
into
the
rainy
day
fund,
as
well
as
maintaining
the
federal
contingency?
Yes,.
E
We,
the
school
district
situation
in
the
out
years,
going
forward,
was
a
risk
that
we
saw
when
we
analyze
the
current
five-year
plan
and,
if
should
are
reporting
it
because
it
shows
deficits
in
2022
of
seventy
six
point:
four
million
rises
to
186
and
23,
and
almost
three
hundred
and
twenty
four.
So
that
and
with
the
city's
commitment
to
fund
the
school
district
and
local
control,
we
saw
that
as
a
risks
to
the
plant.
A
Thank
You,
councilmember,
Greene
and
I
want
to
recognize
some
council
members
that
have
joined
us
to
my
immediate
right,
councilmember,
Cindy
bass
thank
and
to
my
left,
councilmember
marks
quillo
and
the
vice
chair
of
the
committee
councilmember
Brian
O'neill.
Thank
you.
Thank
you
for
your
testimony
and
appreciate
it,
and
thank
you
for
your
work
at
mica
today.
Thank
you
very
much.
Well,
the
clerk.
Please
read
the
next
panel.
A
C
Hicks
good
morning,
chair
person,
Tom
and
members
of
the
committee
on
fiscal
stability
and
intergovernmental
cooperation,
my
name
is
Marisa
Goren,
Waxman
and
I'm
the
budget
director
for
the
city
of
Philadelphia.
Thank
you
for
the
opportunity
to
come
before
you
today
to
talk
about
the
city's
fiscal
health
with
me
is
Rob
debo,
the
city's
finance
director
I'll
cut
right
to
the
chase.
We
are
better
prepared
for
the
next
recession
than
we
were
for
the
last
one,
thanks
to
intentional
actions
by
the
administration
and
City
Council,
but
we
still
have
tremendous
weaknesses
in
our
fiscal
health.
C
These
weaknesses
will
put
it
further
risk
vulnerable
philadelphians,
who
rely
upon
city
services
in
the
next
recession
when
demand
for
those
services
can
be
expected
to
grow.
Given
this
reality
about
our
current
fiscal
condition
and
the
needs
of
Philadelphians,
it
is
essential
that
we
continue
to
be
intentional
about
improving
our
fiscal
health
as
a
city.
C
Right
now,
we
are
in
a
prolonged
period
of
economic
expansion
allowing
the
city
to
recover
from
the
last
recession
by
investing
more
in
city
services,
while
at
the
same
time
shoring
up
our
long-term
fiscal
health
by
creating
reserves
for
future
needs.
The
city's
economic
consultants
expect
the
national
and
local
economic
expansion
to
continue
a
bit
longer
with
just
a
25%
chance
of
a
recession
in
2021,
but
our
chances
of
making
it
through
the
entire
FY
21
through
25
five-year
plan.
C
Without
a
downturn
more
slimmer
in
a
recession,
we
can
expect
that
revenues
will
decrease
our
fixed
costs
for
service
or
our
fixed
costs.
Already,
a
significant
portion
of
the
city
budget
would
stay
the
same
or
even
grow
and
demand
for
city
services
will
grow
with
our
high
poverty
rate.
Weak
tax
base
and
large
fixed
cost
Philadelphia
remains
to
a
recession.
C
When
evaluating
our
most
recent
general
obligation
bond
issue
in
November
2019,
you
tease
noted,
quote
some
persistent
weaknesses
like
the
city's
very
high
poverty
and
above-average
unemployment
rate,
two
of
our
biggest
fixed
costs,
debt
service
and
pension
payments
account
for
over
20%
of
our
budget.
That
means
if
we
have
to
make
choices
about
how
to
react
to
a
recession,
a
fifth
of
our
budget
will
be
untouchable,
even
with
those
high
fixed
costs.
The
city
is
better
positioned
for
the
next
recession
compared
to
the
last
one.
We've
taken
a
number
of
steps
to
get
here.
C
These
include
stress
testing
our
budget
increasing
pay.
As
you
go
capital
spending,
increasing
our
fund
balance
and
setting
aside
reserves
in
late
fall.
We
analyze
the
impact
on
revenues
during
the
last
three
recessions
to
assess
the
scale
of
losses
we
could
expect
under
different
conditions,
given
our
current
level
of
reserves.
If
revenues
grow
half
as
much
after
FY
20,
what
we
currently
anticipate
through
FY
24
Philadelphia
would
lose
263
million
dollars
in
revenue
compared
to
the
adopted
five-year
plan.
C
Our
pay
as
you
go
capital
funding
for
capital
projects
with
operating
dollars,
rather
than
by
issuing
debt,
avoids
borrowing
costs
while
addressing
critical
infrastructure
needs.
We
have
increased
the
fund
balance
in
recent
years,
meaning
and
even
slightly
exceeding
the
administration's
goals
of
6
to
8
percent
of
expenditures.
The
city
ended
FY
19,
with
a
fund
balance
of
439
million
nine
percent
of
the
budget.
Well,
this
is
a
significant
improvement.
I
must
point
out
that
it
falls
far
short
of
what
other
major
cities
do
and
of
the
government.
Finance
Officers
Association.
C
Recommendation
of
17
percent
of
fund
balance
enough
to
pay
2
months
of
City
bill
Philadelphia
has
set
aside.
Other
reserves
for
specific
costs
or
scenarios
in
the
future.
This
has
included
more
than
50
million
per
year
in
the
FY
20
to
24
five-year
plan
as
a
reserve
against
reductions
in
federal
funding.
The
city
has
also
reserved
funds
for
upcoming
labor
contracts
and
made
a
34
million
dollar
payment
into
the
budget.
C
Stabilization
reserve
fund
aka
the
rainy
day
fund,
also
the
higher
than
anticipated
ending
fund
balance
in
FY
19
enabled
setting
aside
another
20
million
into
a
recession
reserve.
These
reserves
cushion
us
so
that
new
costs
are
unexpected
revenue
losses.
Don't
immediately
require
service
reductions
in
spending
cuts.
The
improved
fund
balance
has
also
allowed
us
to
put
additional
money
into
the
pension
fund,
which
will
help
the
fund
get
to
full
funding
more
quickly.
C
In
a
December
2019
report
on
the
recession,
readiness
of
the
25
largest
cities
rating
agency,
Moody's
acknowledged
our
progress,
noting
that
Philadelphia
like
17
other
cities,
is
moderately
prepared
for
the
next
recession.
Six
cities
were
rated
stronger
and
two
were
rated
weak
moody
said
that
Philadelphia
is
better
prepared
than
it
was
in
the
last
recession
because
we
have
begun
building
up
a
fund
balance.
We've
made
contributions
to
the
rainy
day
fund
and
began
the
recession
preparedness
planning.
C
Despite
this
progress,
when
we
evaluated
the
impact
of
different
recession
scenarios
on
Philadelphia,
this
past
fall
we
found,
but
they
found
that
on
all,
but
the
mildest
scenarios
Philadelphia's
current
fund
balance
would
not
be
enough.
Moody's
also
highlighted
our
weaknesses.
Our
fund
balances,
a
percent
of
revenues
ranked
second
worst
24th
out
of
25
of
the
largest
US
cities
dissipate
the
significant
progress.
C
Moody's
recommends
that
Philadelphia
grow
its
reserves
and
maintain
fund
balance
percentages
at
levels
equal
with
its
peers,
which
was
twenty
four
point:
three
percent
in
2007,
going
into
the
last
recession
and
thirty
two
point:
four
percent
in
2018
they
shared
that
Philadelphia
is
the
only
city
in
the
top
25.
It
didn't
have
an
FY
18
fund
bounce
that
was
larger
than
the
decline
in
its
fund
balance.
C
During
the
last
recession,
Philadelphia
has
made
progress
but
remains
and
weaker
fiscal
health
than
we
should
be
next
week
on
March
5th
mayor
Kenney
will
propose
the
administration's
FY
21
budget
and
FY
21
through
25
five-year
financial
plan.
As
with
past
plans
and
budgets,
it
will
seek
to
balance
the
trade-offs
between
a
seeing
immediate
service
demands
and
maintaining
stable
finances
so
that
we
can
continue
to
meet
the
needs
of
Philadelphians
in
each
year
of
the
plan
and
beyond.
C
A
D
C
Certainly,
first
we
have
the
budget
Stabilization
Reserve
or
the
rainy
day
fund.
That
is
one
that
has
a
trigger
having
to
do
with
the
percent
of
the
amount
of
revenues
that
come
in
and
then
a
certain
percentage
getting
deposited
when
there
is
enough
revenue
available
and
that
has
sort
of
the
strictest
rules
in
terms
of
when
money
can
come
out.
So
the
very
first
payment
ever
came
in
during
FY
20,
that
was
34
million.
The
current
five-year
plan
anticipates
deposits
into
the
budget,
Stabilization
Reserve
throughout
the
current
plan.
C
The
second
Reserve
we
have
is
the
budget
as
the
federal
funds
reserve,
starting
in
2016
with
the
current
presidential
administration,
the
administration
thought
it
was
prudent
to
create
a
reserve
against
the
potential
for
lost
federal
funding
and
that
is
funded
in
the
ground.
That's
over
fifty
million
dollars
in
each
year
of
the
current
plan
at
the
end
of
FY
19,
given
the
larger
than
expected
fund
balance,
we
were
able
to
deposit
20
million
dollars
into
a
recession
reserve
we're
actually
beginning
to
sort
of
those.
C
Last
two:
the
federal
funds
reserve
in
the
recession
reserve
combined
those
in
rebrand
as
a
recession
reserve
to
hedge
against
lost
revenues,
whether
that's
from
federal
sources,
revenue
sources,
whether
that's
policy,
decisions
or
economic
conditions,
and
then
the
fourth
is
the
labor
reserve,
as
was
mentioned
during
the
last
testimony.
All
four
city
contracts
are
expiring
at
the
end
of
June
and
we
anticipate
there
will
be
and
additional
costs,
and
so
the
current
five-year
plan
and
foods,
140
million
dollars
anticipated
against
those
increased
labor
costs
going
forward.
So
those
are
the
four
reserves
we
have.
D
Quickly,
yesterday,
there
was
an
article
in
The,
New,
York,
Times
CNN
and
a
bunch
of
other
publications
around
how
the
spread
of
the
pandemic
of
coronavirus
has
impacted
our
economy
and
increased
fears
for
an
economic
downturn.
Can
you
talk
about
our
city's
preparedness
around
that
issue?
Certainly.
C
And
so
that's
something
that
obviously
us
in
The
Economist's
that
the
city
consults
with
are
looking
at
and
when
we
actually
started
our
recession
planning,
obviously
something
that's
always
on
our
mind,
but
in
November
we
started
to
really
stress
tests,
and
at
that
moment
it
was
an
inverted
yield
curve
and
a
trade
war
with
China
that
we
were
concerned
that
that
economic
break
with
China
would
have
an
impact
on
us
now.
Obviously,
those
concerns
have
pivoted
towards
both
the
coronavirus
and
pandemic
and
whether
that's
a
different
economic
break.
C
Different
sources
can
have
disparate
impacts,
but
what
we've
been
doing
is
trying
to
model
sort
of
various
levels
of
recession
and
what
that
means
on
our
budget
to
try
and
figure
out.
Okay,
if
it's
small,
medium
or
large,
if
it's
short
or
it's
long,
so
that
we
can
understand
a
lot
of
our
goals,
the
last
recession.
It
was
long,
it
was
deep.
C
Hopefully,
the
next
recession
doesn't
have
those
characteristics,
but
a
lot
of
what
we're
trying
to
do
by
building
up
these
reserves
is
buy
time
so
that
we
can
have
thoughtful
responses
if
it's
a
short
recession
enough
to
get
us
through.
If
it
does
turn
out
to
be
longer
and
deeper
that
we
have
some
time
so
that
we
can
make
thoughtful
decisions.
C
D
C
And
next
week
will
be
coming
out
with
the
FY
21
FY
25
plan,
with
a
new
set
of
fund
balance
projections,
but
really
there's
this
this
constant
trade-off
for
us.
We
understand
that
you
know
to
really
be
prepared
for
a
downturn
in
the
future.
We
would
want
a
higher
fund
balance.
The
government
finance
Officers
Association,
such
as
17%
to
months
of
bills
in
the
the
banking.
C
C
So
one
of
the
things
so
yesterday
we
released
the
quarterly
city
manager's
report
which
each
quarter
the
budget
office
provides
us
quarterly
update
that
looks
at
our
revenues
are
spending
our
performance
across
the
city
to
figure
out
whether
we're
on
track
and
off-track,
and
so
one
of
the
things
we
do
look
at
is
overtime
spending,
and
so
the
most
recent
quarterly
report
did
show
that
there
was
an
increase
compared
to
the
same
quarter
the
prior
year.
It's
about
13
percent
of
our
overall
spending
on
class
100,
our
wages
and
actually
helpfully
last
quarter
pike.
C
It
did
a
really
thoughtful
analysis
where
they
paired
up
the
departments
that
had
high
vacancy
rates
and
the
larger
overtime
expenditures,
and
you
can
really
see
the
interplay
there,
one
of
the
things
about
being
in
a
really
good
economy.
Right
now.
It
means
that
it
is
for
some
of
our
departments
in
some
areas
challenging
to
fill
positions
and
when
we
can't
fill
those
positions,
but
the
services
need
to
be
delivered.
Sometimes
we
need
to
rely
on
overtime.
We
the
reason
we
do.
The
quarterly
city
manager's
report,
though,
is
we.
C
We
want
to
make
sure
you're
making
the
most
effective
use
of
those
overtime
dollars,
as
we
can
and
really
monitoring
that.
So
we
look
at
it
each
quarter.
It
is
an
area
of
concern,
but
we
can
see
in
some
areas
that
there
are
certain
economic
pressures
and
trends
so
that
our
overall
class
100
spending
is
still
on
track,
but
the
break
between
straight
wages
and
overtime
that
we
see
a
shift.
D
A
A
C
So,
as
part
of
the
annual
budget
process,
the
beginning
of
December,
we
asked
all
departments
to
basically
say
tell
us,
tell
us
what
you
need
for
the
upcoming
fiscal
year.
What
more
revenues
do
you
need,
but
what
we
did
this
year
also
was
asked
for
cut
scenarios
and
what
that
means.
As
we
asked
departments,
if
you
had
you
this
year,
we
said,
spend
three
percent
less
five
percent
less.
C
What
would
you
do
and
part
of
that
for
us
was
recession,
readiness
planning,
because
we
wanted
to
make
sure
that
if
we
do
find
ourselves
in
a
recession
and
if
it
is
sudden
that
we
are
not
surprised
at
making
decisions
on
the
fly,
but
that
we
have
well-thought-out
vetted
plans,
but
as
part
of
that,
there's
also
just
that
nice
opportunity
for
reflections
that
we're
able
to
sit
down
with
departments
have
them
evaluate.
Are
there
areas
where
they
could
be
spending
less?
C
Are
there
areas
where
they
would
ship
that
that,
if
that,
maybe
they
would
stop
spending
on
this
and
start
spending
on
that,
and
so
we
have
those
conversations
with
departments
on
an
ongoing
basis
and
found
that
some
of
them
said
you
know
what
actually
we
identified
areas
where
we
are.
We
don't
need
to
spend
this
anymore
and
we'd,
rather
redirect
it
to
that.
So
that's
a
constant
process
that
we
go
through
with
departments
while
we're
evaluating
their
budgets.
Thank.
C
So
on
this
was
to
last
week
when
we
released
the
cucm
our
we
sell
that
we've
revised
our
FY
25
miles
projection
to
be
352
million.
That's
an
increase
from
the
prior
quarter.
We
had
been
at
307,
however,
still
significantly
below
the
439
that
we
were
at
last
year,
so
we
are
sort
of
just
getting
there
through
meeting
the
low
end
of
our
six
to
eight
percent
goal
and.
A
F
Sure
so,
as
you
know,
the
road
to
80%
had
several
components,
all
of
which
are
actually
in
place
now,
one
through
negotiations
with
the
unions
and
partnership
with
Council.
We
got
changes
in
both
collective
bargain
agreements
and
in
what
exemption
non
reps
do
for
pensions,
so
contributions
went
up
and
the
design
of
the
plan
changed
so
that
it's
a
combination
of
a
defined
benefit
plan
with
a
401k
plan.
That's
meant
that
assets
have
gone
up
because
of
the
increased
contributions
and
the
growth
and
liabilities
has
start
to
slow
because
of
the
change
in
the
design.
F
F
What's
meant
that
last
year,
for
the
first
time
in
decades,
the
pension
fund
was
cashflow
positive,
even
without
investment,
earnings
I'm,
and
it's
meant
that
under
actuary
by
the
end
of
the
current
five-year
plan,
will
be
about
60
percent
funded
up
from
the
mid-40s
and
that's
with
more
conservative
assumptions
about
things
like
earnings
and
mortality
and
in
when
pew
looked
at
our
pensions.
They
said
that,
even
if
we
miss
our
earnings
assumptions,
we
will
continue
to
see
improvements
in
our
funding
percent.
What.
F
A
F
We've
done
a
couple
of
things:
we've
done
refunding
across
our
credit,
so
the
general
fund,
water
for
honeybees,
well,
that
we've
looked
for
any
opportunity.
We've
also
gotten
out
of
some
of
our
interest
rate
swaps,
to
reduce
our
exposure
to
vapor
rate
over
time,
so
we've
been
both
of
those
that's
good.
Okay,
thank.
B
You
mr.
chair
good
morning,
to
both
of
you,
I
just
want
to
follow
up
with
some
questions
based
on
some
of
the
things
that
were
stated
and
also
so.
The
information
provided,
miss
waxham,
I'm
curious
in
reference
to
I'm.
Looking
at
this
article
from
Nashua
I'm,
sorry,
it's
from
Q
and
it
compares
Philadelphia
to
a
bunch
of
other
cities
and
I'm
curious.
If
you
have
any
perspective
on
where
we
are
from
our
rainy
day
fund
dollars
compared
to
cities
like
Detroit
or
Baltimore
off.
C
The
top
of
my
head
I'm,
not
sure,
where
they're
at
and
sometimes
it's
not
apples
to
oranges,
one
of
the
things
I
do
know,
as
Detroit
actually
has
a
much
higher
fund
balance
from
us,
but
that's
actually
because
their
credit
rating
is
so
bad.
They
can't
borrow
money
so
they
need
if
they
want
to
make
those
investments
to
do
that.
C
So
there
are
times
where
you
know
having
these
super
high
fund
balance
of,
say,
a
Detroit
that
actually
indicates
you've
got
other
fiscal
challenges,
that's
sort
of
a
point
in
time,
and
so
we
do
look
at
ourselves
in
terms
of
our
peers,
but
also
trying
to
be
mindful
that
sometimes
there
are
different
conditions
on
the
ground.
Okay,.
B
And
it
may
be
a
question
for
the
next
speaker,
especially
I'm
curious
about
Baltimore
Kansas,
City,
Cincinnati
and
Cleveland
in
reference
to
where
they
are
from
a
rainy
day
fund.
Some
other
questions
used
talked
earlier
that
we
now
have
a
recession
reserve
about
20
million
dollars
and
that's
on
top
of
the
federal
funding
contingency
fund.
We
were
looking
about
seventy
million
dollars.
Yeah
I
know
the
the
mayor's
gonna
give
the
budget
address
next
week
and
we'll
be
seeing
the
the
new
five-year
plan
for
FY
21
through
25.
Do
you
anticipate
that
same
70
million
dollars?
C
C
We're
trying
to
balance
a
couple
of
different
roles:
one
is
just
our
sort
of
plain
vanila
fund
balance
and
making
sure
that
that's
good.
We
also
look
at
those
recession
reserves
at
the
same
time
trying
to
balance
that
with
our
labor
reserves
and
then
the
service
needs
and
making
sure
that
we're
able
to
invest
in
services
in
our
community.
So
we're
sort
of
balancing
all
of
those
and.
B
Similar
to
the
counter
had
for
mr.
rice,
we'll
be
talking
about
Paikea
and
independent
fiscal
office
in
a
future
conversation,
but
wants
to
revisit
the
questions
I
had
for
him
for
both
of
you
and
regarding.
Do
you
think
that
the
trigger
for
the
budget,
Stabilization,
Reserve
or
rainy
day
fund
should
be
changed
as
well?
No.
F
B
Basically,
the
flexibility
to
be
able
to
make
deposits
at
different
times,
based
on
what's
happening
from
your
projections
and
projections
versus
actual
yes,
our
numbers.
Okay,
mr.
Deveaux,
you
also
talked
a
little
bit
about
the
pension,
and
the
chair
had
a
colloquial
reference
to
where
we
are
from
a
pension
funding
bounds
that
will
be
at
about
60%
if
I
ended
by
my
25.
F
So
we've
actually
been
funding
the
pension
fund
according
to
something
called
the
revenue
recognition
policy,
which
is
an
amount
that's
higher
than
the
state
required
minimum
municipal
obligation.
So
it's
that
MMO,
plus
the
contributions
that
employees
may
agree
to
make
during
part
of
the
last
collective
bargaining
process,
plus
the
additional
sales
tax.
In
addition,
the
last
couple
years
when
our
fund
balances
come
in
at
higher
amounts,
I'm
anticipated
we've
put
in
additional
funding
over
those
amounts
into
the
pension
fund
and.
F
B
B
Think
there's
been
a
that
focus
are
not
doing
as
much
hiring
and
that's
put
more
of
a
pressure
on
overtime
which
I.
In
fact,
when
you
talked
about
that
tension,
there's
a
way
we
can
kind
of
change
that
perspective
and
I
know.
Now,
because
we're
that's
been
a
pop
unofficial
politic
for
a
period
of
time,
but
now
one
in
a
very
robust
employment
perspective,
and
so
that's
cause
ability
an
inability
to
hire,
because
many
more
people
are
employed.
B
Although
we
still
have
a
high
unemployment
rate
here
in
the
city
of
Philadelphia
and
all
specially
for
people
of
color,
so
I
guess
the
question
is:
how
do
we
start
to
try
to
change
that
dynamic
I
mean
I,
know
we're
going
to
labor
contracts.
Also,
we
part
a
conversation,
someone
to
get
question
on
it.
C
So
you're
I
think
you
sort
of
are
noting
that
tension
there
about
not
wanting
to
hire
wanting
to
hire
and
I.
Think
that,
as
you
see,
when
we
move
forward
with
the
FY
21
to
25
plan
that
we
are
putting
an
emphasis
on
trying
to
hire,
there
are
certain
areas
where
we
are
doing
more
to
try
and
broaden
the
base
of
folks
who
sort
of
come
into
the
hiring
pool
reach
out
more
broadly,
particularly
to
reach
out
to
communities
of
color,
to
make
sure
that
our
recruitment
is
really
robust
and
and
wide.
C
But
we
know
that
there
are
certain
areas
that
right
now,
particularly
skilled
trades,
that
we
are
having
a
very
hard
time
simply
because
we
can't
commit
in
certain
areas.
One
of
the
things
we
have
already
tried
to
do
is
push
up
the
salaries
in
certain
hard
to
fill
areas
so
that
we
could
attract
more
folks
when
we're
really
trying
to
get
folks.
You
know
who
might
have
other
opportunities
elsewhere.
Also,
the
chief
administrative
officer
office
is
working
with
Ohr
to
figure
out
different
ways.
How
do
we
reduce
the
time
to
hire?
C
How
do
we
streamline
that
process?
How
do
we
make
sure
that
also
our
retention
is
there
so
that
once
people
are
on
board
with
us,
they
stay
and
so
we're?
There
are
a
number
of
different
opportunities
where
we're
trying
to
bring
folks
on
board
and
make
sure
that
that
is
an
inclusive
and
successful
process.
Then
we'll
be
able
to
talk
more
about
that
throughout
the
budget
process.
B
I
think
that's
actually
a
good
idea
to
start
to
do
that,
and
not
only
do
it
in
a
recessionary
context,
but
it's
been
conversations
over
the
years
about
zero
based
budgeting
and
it's
been
stops
and
starts
in
that
regard.
Can
you
give
some
perspective
on
how
we
get
to
that
concept?
And
does
this
an
issue
that
you
started
as
budget
director
help
us
to
move
in
that
in
that
path
and.
C
B
Me
just
correct
the
record
right
now.
Mr.
de
bellas
has
done
that
as
well,
but
although
we've
had
to
do
that
because
we
weren't
facing
very
significant
financial
perspectives,
this
is
one
a
few
times
when
the
first
and
I'm
remember
hearing
that
you've
asked
departments
to
make
those
presentations
on
reductions
when
we
have
not
been
such
dire
straits
did.
C
Not
make
me
super
popular
I
right
now.
This
city
use
this
program
based
budgeting,
which
is
really
focused
on
tying
performance
with
the
budget,
but
also
making
sure
that
you
understand
every
bit
of
that.
I
think
that
that
there
really
is
a
bridge
between
that
zero
based
budgeting,
the
program
based
budgeting,
because
when
you
start
looking
at
a
department
spending
and
breaking
it
down
into
meaningful
chunks
that
are
actual
services
we
deliver.
This
is
the
sanitation
program.
This
is
you
know
what
we
put
into
inspecting
restaurants.
That
gives
you
that
opportunity
to
figure
out
okay.
C
This
is
the
level
of
service
we're
providing.
Is
it
not
enough
too
much
just
the
right
size
and
so
going
through
those
cut
scenarios?
One
of
the
ways
that
we
ask
departments
to
think
about
this
is,
and
we
ask
for
a
3%
to
5%
3%,
who
said
it's
fine
sort
of.
If
you
want
to
look
at
those
incremental
reductions,
if
you
want
to
snip
a
little
here,
snip
a
little
there,
but
when
looking
at
those
five
percents,
we
ask
them
to
think
more
about
other
lines
of
service
that
you
would
discontinue
that.
C
Maybe
instead
of
a
scenario
where
you
do
five
things
not
nearly
up
to
snuff,
would
you
want
to
look
at
doing
four
things,
but
doing
them
all
really
well,
and
so
that
creates
that
opportunity
to
sort
of
think
in
both
frameworks,
both
the
incremental
cuts,
as
well
as
changing
just
sort
of
generally
what
services
we
provide
and
part
of
the
thought
process
around?
That
is
thinking
about,
say
we
work
out
to
go
into
a
recession.
You
know
if
it
is
long
and
deep,
you
might
really
need
to
think
about.
C
You
know
what
services
do
we
as
a
city
provide
if
it's
short,
we're
looking
to
just
sort
of
get
through
till
we
get
back
to
normal,
then
maybe
you
don't
need
to
have
those
conversations
so
we're
trying
to
have
both
so
that
I
think
that
second
area,
the
the
deeper
and
thinking
through
what
do
we
do
and
not
do,
gets
closer
to
that.
Zero
based
budgeting
and
the
other
is
more
of
that
incremental
approach,
and
we
really
like
to
on
both
those
of
those
approaches.
C
B
C
B
But
no
prior
to
the
influx
of
the
coronavirus
and
also
some
of
the
concerns
regarding
trade
and
tariff
wars
with
China.
Most
economists
projected
a
very
low
possibility
of
a
recession
in
this
year
going
into
next
year.
On
that
main
change,
but
based
on
the
conversations
we've
had
today,
and
even
with
the
possibility
of
even
a
future
recession,
most
economists
have
said
that
risk
recession
would
not
nearly
be
as
challenging
as
the
prior
recession.
We
came
out
of
a
couple
years
ago.
It
would
be
a
quicker
or
not
as
impactful.
B
However,
we
have
for
lack
of
better
word.
A
school
district
recession
horizon
I'd.
Ask
the
question
to
harbor
rice
about
his
concerns
regarding
the
financial
conditions
of
a
school
district,
especially
now
that
we
have
local
control
and
when
you
look
at
that
issue,
plus
the
labor
contracts
that
were
kind
of
negotiating
now,
and
also
the
need
to
have
a
better
fund
balance
based
on
a
number
of
indicators
that
we
need,
as
well
as
trying
to
maintain
the
reserve
and
federal
funding
contingency.
What
are
your
thoughts
on
that
going
forward?
So.
C
The
current
five-year
plan
includes
a
historic
level
of
funding
from
the
city
to
the
school
district
over
1.2
billion
dollars,
and
this
and
and
your
question
really
gets
to
the
heart
of
those
trade
offs-
we're
trying
to
constantly
balance
the
immediate
needs.
Clearly,
our
school
district
has
immediate
needs
with
making
sure
that
we
also
have
reserve
so
that
we
can
continue
to
provide
services
this
year
throughout.
F
And
think
that
what
you've
gone
through,
it
was
a
really
good
way
of
highlighting
all
the
challenges
we
face,
as
we
attempt
one
put
the
plan
together
and
to
to
prepare
for
a
recession.
All
of
those
are
major
issues
and
that's
what
we're
grappling
with
as
we
try
to
put
a
plan
together
for
next
week.
Okay,.
B
G
G
G
F
G
You
know
a
continuation
maintenance
of
effort,
an
agreement
between
when
I
should
have
said
an
mo
e
maintenance
of
effort
agreement
between
the
school
district
and
the
city
of
Philadelphia.
At
the
time
it
made
a
lot
of
sense,
particularly
during
the
years
in
which
I
think
what
we
found
is
that
the
school
districts,
in
my
opinion,
seem
to
see
like
a
lagging
indication
from
the
impact
of
the
recession.
So,
while
the
recession
may
have
hit
most
cities,
businesses
during
I
think
Mike.
G
My
colleague
would
have
said,
maybe
between
the
years
of
28
2008
to
2011
the
district's
devastating
budget
through
the
state
really
hit
between
2012.
We
closed
down
the
24
public
schools
in
January
of
2013
September
of
2013
opened
with
4,000,
less
staff
schools
closed
and
then
that
continued
through
until
we
started
reversing
that
most
recently
in
2016
so
and
2017.
So
have
you
thought
about
how
I
know
that
there's
going
to
need
to
be
ongoing?
Dialogue
and
I?
G
Do
think
that
we
need
to
make
sure
that
the
school
district
school
district
itself
is
included,
but
have
you
thought
about
the
impact
of
like
a
recession
plus
a
lagging
potential
for
a
lagging
kind
of
impact
on
one
of
the
most
significant
entities
that
cannot
raise
its
own
money
unfortunately
relies
heavily,
and
probably
too
much
so,
but
increasingly
more
on
local
funding.
What
that
might
look
like,
because
it
actually,
in
my
opinion,
drags
out
the
length
of
time
that
we
might
have.
G
It
also
be
curious
if
you
agree
that
you
think
that
the
district
somewhat
lag,
whereas
we
saw
investments
continued
at
a
at
a
marginal
rate,
certainly
not
robustly,
but
not
the
kinds
of
severe
cuts
that
we
saw
that
really
frankly
devastated
a
lot
of
communities
had
tremendous
impact
on
children
and
neighborhoods
across
the
city.
So.
F
The
school
district
definitely
lagged
last
time.
I.
Think
part
of
the
reason
for
the
lag
was
the
influx
of
stimulus
money
that
the
district
used
to
make
investments
in
to
hire
staff
and
I
think
the
big
hit
they
took
was
when
that
stimulus,
money
went
away
and
the
new
governor
decided
not
to
try
to
replace
those
funds.
So
I'm
not
sure
that
in
a
new
recession
that
they
would
lag
again,
I
think
that
they
might
take
a
hit.
G
Okay
and
then
do
you
have
opinions
about
where
you
would
be
on
maintenance
of
effort
should
should
that
be
a
situation
in
which
you
know
like
again,
the
district
cannot
raise
its
own
funds.
We,
a
lot
of
our
delivery
to
the
district,
is
delivered
through
grants.
So
it's
not
necessarily
through
like
it's
relatively
I
mean
it's,
you
know
we're
committed.
Obviously
they
have
a
five-year
plan.
We
have
a
five-year
plan.
G
F
So
being
broadly
the
state,
it
should
be
the
prime
funder
and
the
city
should
provide
reliable
funding
to
strict
and
together
that
should
be
a
sufficient
amount
of
funding
for
the
district
to
provide
the
services
it
needs
to
provide
I.
Think
the
maintenance
of
effort
was
kind
of
a
plus
Anna.
It
was
a
plus
in
that
you
know
they
gave
the
district
some
security,
that
they
knew
that
the
city
funding
wouldn't
go
down
the
other
hand.
It
made
us
much
more
cautious
about
providing
funding
to
the
district.
Something,
for
example,
was
a
one-time
thing.
F
It
was
much
harder
to
do
that
because
you
couldn't
give
you
can
give
there
was
you
want
to
give
50
million
dollars
for
a
specific
item?
The
issue
was:
how
do
you
get
around
the
maintenance
of
effort,
and
so
it
was
actually
in
some
in
some
cases,
a
bar
to
giving
money
to
the
district,
so
I'm
not
sure
that
it
would
actually
help
the
district
in
the
long
run
as
much
as
the
city
and
the
state
living
up
to
commitments.
I.
G
Think
my
one
of
the
questions
would
be
that
I
think
that
the
ability
to
do
large-scale
grants
at
different
points
in
time
like,
for
example,
if
we
wanted
to
fund
you,
know
a
big
schools.
Investment
for
example,
that
might
Sun
sunset
at
some
different
point
in
time
down.
The
road
is
a
much
different
financial
scenario.
I
mean
what
you
know.
G
I
I
am
curious
about
where
you
would
be
someone
on
a
maintenance
of
effort
through
a
recessionary
period,
because
actually
you
don't
really
I,
think
what
the
district
has
consistently
said
to
us
about
its
problems,
particularly
with
the
state
and
with
the
federal
government,
which
can
withdraw
money
actually
because,
again,
a
lot
of
the
money.
A
lot
of
the
district's
money
is
dependent
upon
grants
and
negotiated
delivery,
as
opposed
to
do
right,
which
is
really
what
we
should
be
moving
towards.
G
I
think
what
we
heard
repeatedly
from
them
was
that
stability
and
predictability
is
their
main
interest,
even
when
that
may
not
be
like
incredibly
generous,
but
that
in
times
of
downturn
and
economic
downturn,
stability
and
predictability
are
more
important
than
whether
or
not
they
can
get
like.
Like
us
sort
of
I,
don't
know
like
I,
wouldn't
call
it
a
windfall,
but
you
know
like
a
break
in
case.
Something
like
goes
horrific
ly
bad
yeah.
F
I
can
completely
hear
what
you're,
saying
and
I
would
not
want
us
to
reduce
funding
to
the
district
in
a
recession,
because
then
we're
just
gonna
doubling
down
on
their
problems.
I
think
our
putting
money
in
each
year
of
the
five-year
plan
gives
them
some
stability
because
they
can
see
what
we're
planning
to
do
so,
the
combination
of
meaning
in
some
ways
that
gives
them
some
assurance
that
they'll
get
that
money.
F
F
Think
it
is,
we
have,
you,
know,
regular
meetings
with
CFO
at
the
school
district.
We
go
to
their
finance
and
Facilities
Committee
meetings.
There
are
regular
discussions
between
the
school
districts
chief
of
staff,
mayor's
chief
of
staff
between
the
superintendent
and
the
mayor
and
between
the
board
in
the
mayor's
office.
So
there's
a
lot
of
dialogue.
I
think
the
relationship
is
very
strong
and.
G
F
G
G
Traditionally,
you
know
they
they
might
be
delivered
through
the
commerce
department
and
others,
and
we've
done
legislation
that
requests
that
there's
some
feedback
on
subsidies
is
when
it's
specifically
related
to
job
growth,
job
development.
That
kind
of
thing
does
anyone
ever
do
any
like
evaluation
of
economic
subsidy
grants
in
terms
of
like
how
they
contribute
back
to
budget
revenues
or
to
tax
tax
revenue
or
growth,
and
overall,
is
that
your
department?
That
actually
does
that.
C
So
what
I
would
say
is
actually
there
was
somewhat
recent
legislation
that
put
in
place
looking
at
job
incentives,
and
so
the
Commerce
Department
took
the
lead,
but
with
help
from
the
revenue
department,
the
budget
office,
the
finance
office
doing
an
evaluation,
starting
with
some
of
the
incentive
and
subsidy
programs
for
when
businesses
are
granted
funds.
And
so
they
completed
an
analysis
and
delivered
recommendations
on
a
number
of
programs.
But
it's
sort
of
a
rolling
basis.
C
So
different
programs
will
get
evaluated
each
year
and
that's
actually
what
then
led
to
the
inclusive
growth
strategy
that
was
released
by
the
Department
of
Commerce.
Talking
about
how
we
could
sort
of
pivot
and
make
some
adjustments
based
on
how
our
current
sort
of
suite
of
programs
were
performing
against
sort
of
expectations
and
job
growth,
but
also
in
terms
of
inclusivity
and
other
factors,
and
also
compared
to
what
the
market
was
for.
Incentives
from
other
jurisdictions.
G
G
C
F
A
You,
council,
member
Kim
I
have
one
comment:
just
let
you
hear
your
thoughts
on
it
and
that
is
I
bought.
I
know
that
we
have
a
very,
very
large
percentage
of
our
economy.
That's
Ed's
and
meds
educational
institutions
and
medical
institutions,
and
while
there
and
boom
times
were
always
complaining,
they
don't
pay
real
estate
taxes
or
business
taxes
in
downturns
thank
God.
We
have
them
because
they
are
very
stable
in
our
economy
very
stable.
A
So
we
don't
have
the
big
downs,
as
other
cities
do
and
now,
with
even
the
cell
therapy,
that
the
University
of
Penn
is
doing
the
tremendous
cell
therapy.
I
actually
think,
in
my
opinion,
that
if
we
experienced
a
downturn
in
Philadelphia,
it
may
not
be
as
severe
as
it
will
be
in
other
areas,
which
I
think
is
a
positive
I
just
like
to
hear
your
thoughts
on
that.
C
So
one
of
the
things
that
we
did
with
our
stress
testing,
the
late
fall,
was
actually
looked
back
to
the
past
three
recessions
and
looked
by
tax
type,
and
one
of
the
things
we
found
was
our
wage
tax,
which
you
know
with
our
very
large
Ed's
and
meds
sector.
Even
in
the
last
recession,
which
was
the
largest
of
the
three
we
looked
at
in
terms
of
depth
and
length,
our
wage
tax
receipts
were
paused
as
opposed
to
declined,
and
that
was
a
really
interesting.
C
Finding
I
think
speaks
to
to
what
you're
talking
about,
whereas
our
tax
types
that
are,
for
you
know
on
for-profit
businesses,
particularly
the
net
income
portion
of
the
bert,
saw
tremendous
amounts
of
volatility,
and
then
there
are
some
some
tax
types
that
are
more
of
all
at
all,
based
on
the
market
that
is
sort
of
a
mix
of
the
nonprofit
and
the
for-profit,
our
Realty
transfer
tax.
And
so
we
do
see
that
there
is
a
certain
steadiness
in
there's.
An
interplay.
C
A
F
D
C
D
Sure
so,
in
in
my
studies
and
in
grad,
school
and
I
went
applied
to
a
ph.d
program
around
program
based
budgeting
and
different
municipal
budgeting
models.
So
it
is
an
interest
area
of
mine.
Typically
after
year
three
or
year,
four,
you
have
realized
savings
and
your
change
in
the
budgeting
model.
Have
we
seen
any
realized
savings
as
we
change
our
municipal
budgeting
model
in
the
city,
I
think.
C
That
one
of
the
things
that
it
has
really
allowed
us
to
do
is
figure
out
where
we
want
to
direct
those
resources.
Unfortunately,
Philadelphia
our
needs
are
still
up
here
and
our
resources
are
down
here,
and
so
what
it'll
lets
us
do
is
sort
of
figure
out
where
we're
getting
the
biggest
bang
for
our
buck.
So
one
of
the
I
would
say
success
stories
that
we've
really
seen
through
program
based
budgeting
was
the
health
department
came
and
showed
us.
C
You
know
you
know,
we've
got
it's
a
long
lag
I
think
it
was
up
to
17
or
18
months
between
restaurant
inspections
and
to
make
sure
that
Philadelphia
residents
and
visitors
are
eating
and
healthy
and
clean
establishments.
They
really
wanted
to
get
to
a
much
shorter
window
and
what
they
were
able
to
say
was
you
know
if
you
give
us
X
amount
of
dollars,
we're
gonna
translate
that
into
resources,
we'll
be
able
to
show
you
through
this
measure
that
now
we're
actually
getting
to
those
their
goal.
C
They
said
themselves
was
12
months
and
actually,
with
those
extra
resources,
they
were
able
to
start
a
rotation
where
they
were
getting
on
average.
Every
11
months,
and
so
what
the
program
based
budgeting
is
really
allowing
us
to
do,
is
make
sure
that,
when
we're
investing
dollars,
we're
getting
results.
So
it's
less
about
you
know,
figuring
out.
You
know
where
we've
been
spending
too
much
but
figuring
out
where
we
can
spend
to
get
the
biggest
impact.
D
Quickly
around
the
increase
in
pay,
as
you
go
capital
spending
now,
with
our
interest
rates
being
at
a
historic
low
and
thinking
about
our
capital
needs
over
time.
Have
you
all
been
having
discussions
around
on
how
we're
planning
our
capital
needs
relative
to
what
we're
able
to
do
based
on
the
funds
that
we
have
now
and
then,
if
and
when
something
occurs,
the
interest
rates
obviously
would
go
up.
How
are
we
planning
for
that
relative
to
our
capital
needs
so.
C
We
we
try
and
be
very
thoughtful
understanding
one
what
what
our
infrastructure
needs
and
we
are-
we
are
in
old
city.
We
are
city
built
for
a
lot
more
people
than
currently
live
here.
There's
a
lot
to
maintain,
and
we
know
that
including
those
investments
in
existing
and
new
facilities.
The
need
is
here.
One
of
the
things
we've
been
doing
is
we
do
our
capital
program
is
actually
a
six
year
program
and
so
similar
to
the
five
year
plan.
We
do
try
to
be
strategic
in
terms
of
understanding.
C
First
of
all,
you
know
what
dollars
we
can
put
in
without
actually
having
to
borrow,
and
so
one
of
the
things
we
were
able
to
do
during
the
last
minier
transfer.
Ordinance
process
was
allocate
47
million
dollars
for
pay,
as
you
go
capital
investments,
and
so
what
that
does
for
us
is
one
it
lets
us
address,
needs
that
were
unmet
that
you
know
cuz.
Clearly
there
needs
that
are
unmet,
also
other
things.
C
So
that's
where
we're
putting
a
lot
of
our
attention
and
in
terms
of
looking
forward,
we
look
a
lot
at
that
interplay
between
the
capital
program,
how
much
we're
borrowing
and
what
that
does
to
our
debt
service
in
the
operating
budget,
because,
as
we
mentioned
earlier
in
the
testimony
that
between
our
debt
service
and
our
pension
and
obligations,
that's
20
percent
of
our
budgets.
So
we're
constantly
trying
to
be
mindful
that
we
not
squeezed
out
the
funds
available
for
day
to
day
service
delivery
by
locking
ourselves
into
those
fixed
costs.
C
C
Another
thing,
though,
to
mention
about
interest
rates
and
what
we
do.
The
market
is
going
to
have
interest
rates
change,
but
the
control
we
do
have
is
doing
what
we
can
to
try
and
improve
our
credit
rating,
and
so
the
treasurer's
office
was
able
to
share
with
me
that
right
now
our
credit
rating
is
a
which
is,
if
we
were
one
rung
below
that
at
BBB
right
now.
The
difference
on
a
hundred
million
dollar
borrowing
in
our
interest
would
be
about
three
hundred
and
thirty
two
thousand
dollars.
F
So
the
other
thing
in
the
way
our
bonds
are
selling
not
only
they've,
been
selling
better
because
we're
rated
better
they've
been
selling
better
compared
to
the
kind
the
standard
benchmarks
for
other
jurisdictions,
rated
at
our
same
rating,
so
we're
actually
trading
even
better
than
in
a
and
I
think.
Part
of
that
is
because
of
what
the
market
sees
us
doing
with
our
fine
balance
is
what
they
see
us
doing
with
our
pensions,
so
they
like
the
progress
we're
making
and
that
kind
of
translates
into
better
results.
When
we
go
to
the
markets,
yeah.
C
We
had
enough
cash
on
hand
that
we
were
able
to
make
it
through.
What
that
did
was
in
terms
of
the
interest
savings
and
the
straight-up
borrowing
cost
saves
us
2.3
million
dollars.
That
was
the
average
cost
of
doing
that
in
the
four
years
before
we
were
able
to
not
do
that
so
being
fiscally
responsible.
That
really
does
free
up
cash
today,
and
so
those
are
the
sorts
of
trade-offs
and
and
by
paying
attention
to
our
fiscal
health
really
does
make
sure
that
we
can
address
all
of
the
needs
of
Philadelphians.
F
D
Just
really
quickly,
I
wanted
to
follow
up
on
the
line
of
questioning
for
my
colleague,
councilmember
gam
relative
to
the
school
district.
How
were
you
thoughtful
in
the
planning
of
this
upcoming
budget
around
the
increase,
not
only
capital
but
really
operating
expenses?
The
district
has
incurred
relative
to
the
lead
and
asbestos
issues
that
have
been
happening
in
the
district.
Did
you
give
any
consideration
to
that
and
your
planning,
and
could
you
just
talk
about
that?
Yeah.
F
A
part
of
our
ongoing
conversations
with
the
district
are
about
their
projections
for
their
needs
and
how
they
want
to
handle
things
like
facilities
in
their
budget
and
then
how
can
I,
how
that
reflects
back
to
what
we
need
to
do.
So
that's
definitely
been
part
of
our
conversations
with
them.
Thank.
A
A
H
H
Pew
has
done
extensive
research
on
at
the
fiscal
tool
that
we've
talked
about
today,
rainy
day
fund,
known
here
as
a
budget
stabilization
reserve
fund,
which,
along
with
other
budgetary
control
actions,
is
a
way
useful
way
for
coping
with
and
sometimes
taking
advantage
of
volatility
and
government
revenues
that
often
follow
swings
in
the
economy
in
the
tax
base.
Both
abandon
governments
use
rainy
day
funds
to
help
ensure
that
they
can
keep
providing
essential
services
and
shouldering
liabilities
if
or
when
their
revenues
fall
after
an
extreme
event
or
an
economic
slump.
H
This
starts
with
putting
away
a
certain
prescribed
amount
into
a
dedicated
reserve
during
good
times,
and
that
involves
picking
the
optimum
formula
and
the
timing
of
the
deposit.
Our
research
has
found
that
Philadelphia
is
one
of
18
major
US
cities
that
currently
use
this
tool
in
one
form
or
another
New
York
City
actually
is
the
latest
to
consider
joining
this
group
of
cities.
We
at
Pew
held
a
convening
on
the
topic
on
October
2018.
H
At
that
event,
an
official
from
Los
Angeles
said
that
he
sees
his
city's
rainy
day
fund
as
one
part
of
a
toolkit
for
fiscal
policy.
He
said
quote:
we
don't
want
to
be
in
crisis
management
in
the
next
downturn.
We
want
as
many
tools
as
possible
for
when
times
are
not
as
good
as
they
are
now.
There's
a
lot
to
learn
on
this
subject
from
state
governments
we're
rainy
day,
funds
are
much
more
common
than
in
cities.
H
H
What
we
found
that
they
well-designed
funds
are
codified
in
law
that
they
are
institutionalized
with
clear
goals
such
as
protection
from
a
downturn
and
that's
important
to
getting
the
most
benefit
from
it.
When
the
rules
and
goals
are
enshrined
in
law
or
formal
procedures,
they
have
a
better
chance
of
remaining
in
force
through
changes
in
elected
leadership
and
budget
priorities,
and
they
are
transparent
for
rating
agencies
and
the
public
and
Philadelphia
can
check
this
box.
Its
fund
is
codified
in
the
city
charter
deposits.
H
They
should
be
tied
to
revenue
volatility,
that
is,
governments
should
set
up
their
funds
to
take
advantage
of
growth
in
revenue
that
may
not
be
sustainable,
otherwise,
or
maybe
a
one-time
spike
Philadelphia.
Currently
deposits
a
defined
amount
based
on
projected
year-end
budget
surplus,
not
so
much
revenue.
While
this
type
of
rule
sometimes
works.
The
research
shows
in
others
in
states
generally
that
it
does
not
consistently
track
closely
to
actual
revenues
or
economic
trends
that
the
city
may
be
experiencing.
H
The
amount
of
the
money
in
the
fund
also
matters
Philadelphia's
rainy
day
fund
currently
holds
about
thirty
four
point:
three
million.
It
was
created
in
2011
by
a
ballot
measure
and
sat
empty
for
seven
years
in
2019.
After
several
years
of
a
revenue
growth,
the
Kennedy
administration,
using
those
rules,
the
same
rules
that
were
laid
out
in
the
Charter
made
the
first
deposit,
like
other
cities,
Philadelphia
has
also
other
reserves.
You've
talked
about
here
today,
set
up
for
various
purposes
and
withdrawals.
H
The
experience
of
states
shows
that
the
importance
of
clear
rules
on
withdrawals
officials
should
withdraw
money
only
when
the
indicators
related
to
their
goals
show
that
the
time
is
right,
such
as
a
measure
of
economic
slowdown
or
too
in
revenue,
and
they
should
stop
withdrawals
when
those
measures
show
that
the
economic
conditions
and
revenue
volatility
has
actually
improved
in
Philadelphia.
The
withdrawal
rules
in
the
Charter
are
pegged
to
revenues
as
well
as
expenditures.
H
They
state
that
the
city
can
make
withdrawals
when
actual
prior
revenues
came
in
at
least
one
percent
below
the
years
official
projections
or
when
necessary
in
the
current
year
to
pay
for
emergency
services
or
to
avoid
material
disruption
of
the
services.
So,
aside,
from
all
those
elements,
having
a
codified
purpose
and
having
effective
deposit
and
withdrawal
rules,
there
is
a
key
benefit
of
having
a
well-defined
rainy
day
fund,
and
that
is
credit
agencies.
H
Look
at
them
when,
judging
a
city's,
a
government's
fiscal
condition,
our
researchers
found
that
agencies
tend
to
look
favorably
on
governments
that
strictly
follow
their
rules
both
for
deposits
and
withdrawals.
In
fact,
the
leading
agencies,
everything
else
equal,
usually
do
not
penalize
the
government
for
taking
money
out
of
a
rainy
day
fund
during
downtown
as
long
as
they
do
it
in
accordance
with
the
rules
that
they
set
out.
In
other
words,
both
depositing
and
withdrawing
under
the
rules
is,
can
be
a
credit
credit
positive,
as
one
analyst
said.
H
A
You
for
your
testimony.
Thank
you.
I
have
a
few
questions.
I
wanted
to
ask.
Are
you
suggesting
one
of
two
things?
Either
we
build
it
into
our
budget.
A
certain
percentage
of
gross
revenue
goes
into
a
reserve
fund
every
year.
No
matter
what
and
or
are
you
suggesting
that
above
the
budgeted
amount
of
revenue
we
take
a
percentage
of
that
and
put
it
into
the
reserve?
Well,.
H
I,
don't
I
don't
mean
to
be
suggesting
a
particular
formula,
I'm
just
making
the
point
that
we've
found
in
our
research
that
that
the
states
that
have
had
rainy
day
funds
for
years
they
started
out
with
the
kind
of
a
formula
to
Philadelphia
has
now
which
is
measuring
your
budget
surplus
and
using
that
as
an
indicator
of
how
much
you
take.
Our
states
have
shifted
over
the
years,
more
of
a
strictly
revenue
side,
analysis
and
now,
looking
at
the
revenue
volatility
and
using
perhaps
an
average
of
past
years
cases.
H
The
instances
where,
where
actual
revenue
came
in
above
projected
revenue,
apart
from
whatever
the
budget
says,
and
when
you
focus
on
the
outside
of
it,
then
you
get
a
measure
of
a
more
accurate
tend
to
get
a
more
accurate
view
of
what's
happening
in
the
economy
and
your
tax
base.
So
the
specific
percentage
that's
up
to
each
state.
Each
government
sets
that,
through
its
own
process,.
D
Thank
you.
Thank
you
so
much
for
your
testimony
and
just
wanted
to
go
back
and
your
testimony
where
you
talked
about
deposits
as
well.
Philadelphia,
currently
deposits
a
defined
amount
based
on
projected
year
in
budget
surplus.
Can
you
talk
about
some
other
municipalities?
And/Or
states
that
utilize
the
other
format
where
they
make
contributions
throughout
the
year,
based
on
the
actual
numbers
that
come
in.
H
Some
of
our
research,
as
has
looked
at
Utah
Texas
I,
believe
has
has
district,
has
adopted
this
sort
of
process.
Now
economies
are
different
in
those
places,
of
course,
and
those
are
statewide
systems
rather
than
our
citywide,
but,
as
I
said,
I
think
around
I'm.
Sorry,
I'm
doing
this
from
memory
a
little
bit
out
of
the
48
states
states.
H
A
fair
number
now
have
moved
over
to
revenue
revenue
rules.
I
could
get
you
the
exact
list
of
states
that
actually
do
that
and
actually,
just
last
week,
ahead
of
this
hearing,
we
decided
to
start
looking
deeper
at
what
cities
do
in
that
regard.
Also,
so
we'll
dig
into
that
and
I'll,
let
you
know.
Okay,
thank.
A
Have
another
question
for
you
actually
hearing
the
budget
directors
testimony
about
the
wage
taxes
in
the
prior
recessions
that
they
were
basically
flat,
which
I
thought
was
very
positive
versus
going
I
thought
was
a
great
indicator
of
our
economy
in
a
downward
recession.
Have
we
looked
at
other
cities
to
see
any
other
indicators
that
they've
lost
further
than
Philadelphia
so
that
we
could
say
we're
actually
in
a
better
position
to
weather
a
downturn.
H
H
Generally
speaking
in
income,
taxes
are
more
susceptible
to
movement,
with
the
economy
than
save
property
taxes,
which
tend
to
be
much
more
stable
with
ups
and
downs,
and
some
of
our
analysis
has
looked
at
the
again
at
the
state
level,
and
we've
done
we
haven't
done
as
much
at
the
city
level,
but
it
goes
to
my
point
about
revenue
volatility.
Revenue
volatility
can
be
measured
and
tends
to
be.
Revenues
tend
to
be
more
volatile
when
an
area
is
more
dependent
on
income
type
of
taxes,
rather
than
property
taxes
or
some
other
stable
source.
H
Now
what
was
happening
specifically
in
the
sector
in
the
healthcare
sector
here,
which
is
our
biggest
sector,
it's
hard
to
know?
There
are
a
lot
of
other
things
in
that
sector
that
would
affect
the
the
wage
taxes
going
up
and
down
it's
by
its
nature.
It's
a
more
stable
industry,
then
pick
almost
any
other,
so
so
there
might
have
been
a
lot
of
things
going
on
there.
I
can
just
tell
you
that
our
research
has
shown
revenue.
Volatility
is
higher
in
places
that
are
hired
more
dependent
on
income
type
taxes
in.