Pittsburgh Worker's Compensation Audit Released

Pittsburgh City Controller Michael Lamb has released an audit of the Worker's Compensation program showing reduced costs. Lamb says recommendations he made when he took office have produced the savings. Improving safety procedures has reduced the overall number of claims, and legacy claims have gone down 36%. The city has hired a firm to negotiate one-time settlements in today's dollars for claims that would otherwise go on for years and years.

The city outsources all worker's compensation legal services, but Lamb says the provider (O'Brien, Rulis and Bochicchio) has been receiving $25,000 a month without providing any itemization of legal services performed or rates charged as required in the contract. Lamb says itemization should be required as a "sound basis for assessing the economy of the current contract, especially if the number of legacy claims continues to be reduced."

Lamb also thinks worker's comp should be included in the budget for each city department as a further incentive for department heads to get people back to work as soon as possible. He thinks the worker's compensation provider is doing a good job of getting injured workers the care and rehabilitation they need to get back to work or managing their claims when unable to work.

Capital Cash Might be Hiding

Pittsburgh City Controller Michael Lamb went before City Council Tuesday to talk about the 2011 budget and wound up giving the members a lesson in how the city could find millions of dollars hiding in old accounts. It was the first of three post agenda meetings focused on city finances sponsored by City Councilman Bill Peduto.

The city has been using old bond money and end-of-year balances to fund capital projects since a pay-as-you-go system was adopted in 2006. It was an effort to bring down the city’s debt load. The 2011 budget calls for $25 million in capital spending but Controller Lamb says there is only about $13 million in the account. However, he says there could be a few million floating around from projects that came in under budget or were never started. “We are not diligent enough, our departments are not diligent enough, in reporting back to the finance department, ‘this project is closed, we don’t need these funds any more, we’re done with this project,’ and so we need to enforce that and maybe it will require legislation to do so,” says Lamb.

Council members reported that the finance department is rejecting some capital expenditures that are in the budget because it feels the funds have not yet been placed in the proper budgets.

Lamb also noted that there could be a budget surplus at the end of the year that could be used for capital needs. “We just finished the first quarter of 2011 and in the first quarter we have outpaced that same quarter, from a revenue standpoint, from 2010,” says Lamb. “We have seen increased revenues come in in the property tax and in most of our other major tax sources.”

Helping matters on the capital side of the budget is the decision by the ICA last week to free up gambling revenues for urgent capital needs including paving and police equipment purchases. Lamb says there could be some other funds on the way as well. “If we receive the 5 million or so in state and federal reimbursements that we are due and then also receive the 9 million from the sale of the municipal court building, then that might be enough for this year,” says Lamb.

The second budget post agenda meeting will focus on the budget over then next six years, and the final meeting will look at longer-range issues.

Council, Mayor Debate Action on Financial System

City officials debated the future of Pittsburgh’s outdated financial data system in Council Chambers today, with much of the discussion hinging on the receipt of state funds.

Everyone agrees that Pittsburgh’s PeopleSoft financial system has been outdated for as long as ten years, but there is no consensus on how to replace that system.

One option is for the city to merge its system with Allegheny County’s. Controller Michael Lamb says that deal would cost about $5 million up front, but the administration estimates an immediate $8 million plus $4 million in annual fees.

Mayor Luke Ravenstahl says Pittsburgh should pursue a less expensive choice if the city doesn’t receive $9 million from the state, which has been pending since the 2008 sale of the Municipal Courts Building.

Ravenstahl says if the city doesn’t receive that money, he’d prefer to issue a request for cheaper proposals.

“Is that going to take longer? Of course it is. The other alternative would be to identify the $8 million needed now, the additional $4 million over the next 5 years in annual costs, and identify that $12-13 million in the budget, and move along, paying for this out of city taxpayers’ pockets,” says Ravenstahl.

Councilwoman Theresa Smith says regardless of state funding, the city should pursue the cheapest option it can, rather than the county deal.

Lamb says he signed a 2008 contract with the County to merge systems, but also that it was contingent on the receipt of $9 million from the state, which hasn’t happened yet.

“There’s obviously been a change in administrations in Harrisburg, and they’re examining everything. I’ve yet to hear anything other than that money is coming through, but I do have the same concerns that the mayor and his administration have, in that ‘Why don’t we have it yet?’ because it’s been years,” says Lamb.

The mayor urged council to join him in requesting the $9 million from state government.

Audit: Customer Service Lacking at PWSA

For the first time since taking office, Pittsburgh City Controller Michael Lamb has audited the Pittsburgh Water and Sewer Authority and found it is doing a good job of dealing with its money but not as good of a job dealing with its customers. Controller Lamb says he found very few incidents where proper bidding procedures were not followed or documentation could not be found, but he says customer service is lacking at the PWSA. Workers in his office tried to contact the authority to get questions answered or complaints taken care of as part of the audit. He points to their effort to get a billing issue taken care of via email. “We sent them and email, three months went by without a response. We sent them an email again and even to this day… they have yet to respond,” says Lamb. Lamb says what makes that situation worse is when you are waiting on the customer service phone line the message tells you to send an email to get help. Lamb says phone calls complaints were treated with only slightly better care. The executive director of the authority acknowledges the customer service problem and asked the controller to make sure that was part of his audit. PWSA Executive Director Michael Kenney says he is working with the board to improve the situation.

The audit also found that there were problems with tracking overdue bills and placing liens on properties. Lamb says that could potentially lead to money not being collected if a delinquent customers moves. He says he feels that issue will be corrected when the P-W-S-A begins using new billing software later this year.

The audit also looked at the controversial line protection insurance offered by the PWSA through a contract with a third party. Many were angered when the new program was put in place. It used an opt-out configuration rather than an opt-in configuration as had been used in the past. Others complained that the contract to offer the insurance was given to a firm with ties to the PWSA’s executive director. Lamb says his audit did not explore those issues but it did look at the quality of the line insurance compared to its price and he says city water customers are getting a good deal.

On the financial side, Lamb says the audit found a few instances where contracts were amended rather than rebid as they should have been and a few instances where bid documents could not be found. He says he does not think any of the incidences were efforts to defraud. The audit recommends that all bid documents be kept in one place in the future and that a check list of needed documents be created to make sure the record keeping is robust.

Pittsburgh Finances Simplified

City Controller Michael Lamb presented the first ever “Popular Annual Financial Report” for the year 2009—a more easily understandable summary of Pittsburgh’s financial condition than the comprehensive report already released.

Lamb says revenues exceeded expenditures again, and long-term debt has declined from a high of almost a billion dollars to less than $650 million, so the city has surpassed all Act 47 expectations since 2003.

Lamb sees significant challenges, however. One is declining population, because residents and property owners provide most of the revenues needed to run city government. He urges a continuation of revitalization efforts to attract new people.

Lamb says the austerity measures that have improved the city's fiscal health have deferred critical maintenance of aging infrastructure: roads, stairs, sidewalks storm sewers, etc. He estimates that the city should pave 80 miles of roads a year but notes barely 40 are being done this year. $25- to $30 million went to capital projects in 2009, but Lamb estimates $40- to $45 million would be necessary just to keep up, much less catch up.

Lamb expects a debate this fall on the mayor's proposal to lease parking garages or some other way the city can come up with $220 million dollars for its pension fund before the end of the year to avoid a state takeover. Although he thinks the state should eventually consolidate the 3100 pension plans that exist, he says Pittsburgh residents could not possibly afford to meet state demands under the Pennsylvania Municipal Retirement System's current guidelines.

The report is available online.

City Lobbyist/Contractor Database

In order to a pay-to-play attitude in Pittsburgh, City Controller Michael Lamb is implementing a database where contractors and lobbyists will need to register in 2010. Lamb says the ultimate goal in mind is to provide transparency to the public. On OpenBookPittsburgh.com, lobbyists who spend more than 30 hours within three consecutive months talking with at least one city official to push legislation for someone else will need to register. Exceptions are volunteers who are doing an act of civil duty rather than a job. Lamb says the city also has the right to know if a contractor is using lobbyists for city business.
City Councilman Bill Peduto says citizens will be easily able to “connect the dots” with the database. This reform package was passed by City Council in May.

Performance Audit of Mayor's Office

Pittsburgh City Controller Michael Lamb says more city departments have to make greater use of the city's 3-1-1 help line and the performance management system known at PittMAPS. Lamb says a lot of data that is received through many city departments doesn't flow through the 3-1-1 Response line and into PittMAPS and therefore city does not have accurate data to ensure that city operations are effective and efficient.
Lamb today released what he says is the first performance audit that anyone can remember of the Office of the Mayor. Lamb says the city charter requires audits at least once every 4 years of all city departments but apparently his predecessors "didn't consider the mayor's office a department." Lamb says Mayor Ravenstahl's office was very cooperative in the audit.
Lamb says because a lot of the data does not flow through the system a lot of work that is done is not reflected. He says if a resident calls to report a pothole on his street and a public works crew is dispatched to repair it, that information is in the system. But if the crew spots a pothole and fills it, that information does not make its way back into the system.
"If our data is accurate, we can ensure that city services are distributed equally...some neighborhoods are treated differently than other neighborhoods. What we're trying to get to is not just the most efficient way of doing things, but a way that equitably distributes the resources of the city to all neighborhoods in the city."

Pittsburgh Housing Authority Audit Results

The Pittsburgh Controller's Office looked into Housing Authority spending and saw few things that were out of line, after the mayor requested they investigate. However, City Controller Michael Lamb says spending in some sectors could be more cost efficient. Lamb cites employee training, which can be done in-house and in a group, and utilities as their primary areas for improvement. He says spending accounts for approximately 20 percent of their entire budget. He says they did not look into things like capital spending or personnel spending simply because those things were not in the scope of the Mayor Luke Ravenstahl's request.

Lamb also suggests that there be better cooperation between agencies, perhaps between the city and the Housing Authority.

Audit Finds Big Costs Coming at ALCOSAN

The city and county controllers are hoping a newly released audit of ALCOSAN will shed light on a looming crisis. The audit looked at the authority’s efforts to comply with a federal consent decree forcing it to end sewage overflows by 2026. The audit found the authority is facing $10 to $50 billion in infrastructure upgrades to make that happen. County Controller Mark Flaherty says that would be the largest municipal project ever undertaken in Southwestern Pennsylvania. He calls the numbers “mind boggling.” City controller Michael Lamb says if a fairly conservative number of $21 billion dollars is used, residential rate-payers will see an increase of $1,760 a year. He says people do not usually think about their sewer bills but they will when that happens. He says he hopes the audit will serve as a “siren” to elected officials to start lobbying Harrisburg and Washington for help. Without government help the full cost will land on the ratepayers. ALCOSAN Executive Director Arletta Williams says she agrees with the numbers. She says it is hard to make any solid estimates because they are still trying to get a handle on the extent of the problems and the best way to fix them. Williams says the authority cannot save up funds to cover the capital costs, so ratepayers will see big jumps once ground is broken for the upgrades. She says that will come some time after 2016. The audit also looked at ALCOSAN’s contracting practices. The report found the authority has solid policies in place but when there was a deviation from the policy there was often not enough substantive documentation. Flaherty says when the board stepped away from the policies it usually had good reason. Thos reasons were relayed to the auditors but they were often not written down at the time the contract was awarded. Williams says that will be remedied going forward.

PGH Controller: Inspection Bureau Needs to Prioritize

The Pittsburgh City Controller’s office says the Bureau of Building Inspection needs to implement a new system to prioritize the way complaints are handled. Controller Michael Lamb’s audit found 16%, or a little more than 5,000 complaints from 2006 and 2007 remained unresolved. He says many of them are “serious complaints such as those involving fire prevention and unsafe building conditions.” Lamb says right now which complaint is handled seems to have more to do with geography than importance. Lamb says the bureau also needs to look at ways to use more technology for its permit issuance function including the use of an on line application form for smaller projects including home improvements. Lamb says with a few changes the bureau should be able to deal with its workload using its current staffing level.

City and County Controllers Audit ALCOSAN

Allegheny County Controller Mark Flaherty and his counterpart in Pittsburgh, Michael Lamb, have announced a joint audit of the Allegheny County Sanitary Authority. ALCOSAN is under a consent decree that requires it to comply with new environmental standards. Upgrading the region's sewer system is expected to cost several billion dollars. The controllers say they want to ensure that the bidding process for contracts is fair. They also say they want to make sure that consumers are aware of how the project will affect their rates. ALCOSAN is not receiving any federal or state assistance for the project, and it's warned customers that their bills will jump in the future.

The controllers also say the cooperative efforts that helped ALCOSAN communities negotiate their consent decree supports the idea of more communities sharing services. The controllers would not say yet whether they support a proposed merger of Pittsburgh and Allegheny County.

City announces 2008 audit schedule

On Thursday March 13th, Pittsburgh Mayor Luke Ravenstahl and City Controller Michael Lamb announced the city's audit schedule for 2008. The city charter states the controller is to perform audits of all the cities agencies, trusts, councils, and units of government at least once every four years. There are currently three audits being conducted, with at least five scheduled for this year.
Audits are being conducted on the City of Pittsburgh Police Property Room, the Office of Municipal Investigations, Bureau of Building Inspection, and Emergency Medical Services.

Audits to be conducted throughout the remainder of the year are: Pittsburgh City Council, City of Pittsburgh Employee Worker's Compensation procedures, Housing Authority of the City of Pittsburgh, Finance Department, and the Allegheny Regional Asset District.

The mayor also requested an audit of the Public Works Department which will be broken up into separated audits because of the size of the department. The Mayor's Office is to be audited in early 2009.

Controller Michael Lamb Takes oath of office

The last Allegheny County Prothonotary has crossed the hall in the city county building and has become the newest Pittsburgh controller. Michael Lamb was sworn in Monday. After welcoming all the dignitaries in the room and thanking his supporters Michael Lamb promised to bring integrity back to the Controller’s office and return to the basics of auditing every department at least once every four years. He says he is not sure what he will find but he thinks having someone look at the numbers on a regular basis will be good for the health of the city. Lamb plans to make looking at workman’s comp claims a priority. He says most payments go to fire fighters and maybe there is a training or rehabilitation issue that needs to be addressed. Staffing levels in the controller’s office have been the subject of recent court battles but Lamb says he will work with what he has to get the job done.