Friday, August 1, 2014
Inquirer Daily News

City Controller says PICA should reject five-year-plan

City Controller Alan Butkovitz today called on the Pennsylvania Intergovernmental Cooperation Authority (PICA) to reject the City's Five Year Plan.

City Controller says PICA should reject five-year-plan

Here's the press release:

Butkovitz Calls on PICA to Reject City’s Five Year Plan

Controller issues adverse opinion based on unreasonable assumptions by City

PHILADELPHIA – City Controller Alan Butkovitz today called on the Pennsylvania Intergovernmental Cooperation Authority (PICA) to reject the City’s Five Year Plan. As required by the PICA Act, Butkovitz examined the City’s Forecasted General Fund Statements of Operations for the fiscal years ending June 30, 2013 through June 30, 2017 (The Five Year Plan) and found that the City’s assumptions did not provide a reasonable basis for the City’s forecast.

“There is no reasonable basis for the City to assume a favorable outcome in its appeal of the Firefighters (IAFF) award,” said Butkovitz. “There is also no reasonable basis for the City to assume that there will be no added costs resulting from ongoing negotiations with unions representing the City’s non-uniformed workers. That is why I am forced to issue an ‘Adverse Opinion’ on the City’s Five Year Plan.”

The FY13-17 Forecasted General Fund Statement of Operations is prepared by the City’s Finance Office and then submitted to PICA.

“The City has already lost two decisions on the IAFF interest arbitration award in front of the same arbitration panel, and even if they are successful on the appeal, the interest arbitration award will be remanded back to the same arbitration panel,” said Butkovitz.

“It is not reasonable to assume that the non-uniformed represented employees who have gone without raises for four years will go without a contract for another five years, especially in light of recent settlements between the City and other labor unions that have resulted in salary increases."

“If the arbitrator’s award to the IAFF is upheld, the City is facing a benefit payment of approximately $66 million in the current year and if the ongoing negotiations with the non-uniformed workers results in agreements requiring additional retroactive wage and benefit payments, the City under the Five Year Plan as presented would lack the necessary funding to make the payment,” said Butkovitz.

In addition, other questionable forecasts and uncertainties were highlighted:

-The Plan overstated expenditures for debt service over the life of the Plan by approximately $90 million.

-Forecasted FY13 revenue includes a $9 million request to PICA for design work for a new Police Department headquarters, city morgue and health offices in the City’s general fund. These expenditures should be budgeted and recorded in the City’s capital projects fund.

-The probability of additional large funding requests by the Philadelphia School District (District) in future years. The District’s current year deficit is approximately $282 million; a staggering amount which has it on the brink of insolvency.

“Regarding the School District’s financial situation, I want to reiterate my recommendation that the School District prepare a five year plan of its own which would require the approval of an independent authority,” said Butkovitz.

“I urge PICA to reject the City’s Five Year Plan as presented because the assumptions are not reasonable.”

To view a copy of the City Controller’s Adverse Opinion of the Forecasted General Fund Statement Operations for FY2013-FY2017, please visit the Controller’s website at www.philadelphiacontroller.org

About this blog
Chris Brennan, a native Philadelphian and graduate of Temple University, joined the Daily News in 1999. He has written about SEPTA, the Philadelphia School District, the legalization of casino gambling, state government, the mayor, the governor, City Council and political campaigns. E-mail tips to brennac@phillynews.com
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Jenny DeHuff is a 2005 graduate of the University of Rhode Island, where she cut her teeth in journalism. A South Philly transplant from New England, she joined the Daily News City Hall Bureau in 2013. For the past several years, she has worked as an investigative reporter exposing corruption in suburban politics, covering sometimes ghastly criminal court cases and following the people’s money and how its spent. In addition to being a dogged news hound, she enjoys reading and writing about travel, animals, Irish whiskey and aviation. E-mail tips to dehuffj@phillynews.com
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Sean Collins Walsh is from Bucks County and went to Northwestern University. He joined the Daily News copy desk in 2012 and now covers the Nutter administration. Before that, he interned at papers including The New York Times, The Dallas Morning News and The Seattle Times. E-mail tips to walshSE@phillynews.com
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