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Business & Developmentby Mark Reutter and Fern Shen1:10 pmJul 25, 20130

Mayor defends extension of consultant’s contract

The PFM Group has been awarded more than $1 million for financial consulting.

Above: Finance Director Harry Black and Mayor Stephanie Rawlings-Blake defend payments to the Philadelphia-based PFM Group.

Mayor Stephanie Rawlings-Blake defended a fresh award of $423,000 to a consulting group that helped prepare her 10-year financial plan, saying the consultant has already saved the city “tens of millions of dollars.”

“My hope is that when objective reporters talk about what we’re spending, that they – what I believe makes it a good story – would just put it in context and also talk about what we’re saving,” Rawlings-Blake said yesterday at a press briefing following the award of $423,730 to Public Financial Management (PFM Group) of Philadelphia.

The Brew reported Tuesday night that the city planned to extend the consultant’s contract until September 2014, making for a total of $1,009,672 awarded to PFM since it was hired in 2011.

In a prepared statement, Rawlings-Blake said, “So far, the 10-year financial plan has already saved us tens of millions of dollars by helping us do complex pension and and health care reform, make changes to our vehicle fleet, and much more.”

The health care and pension overhaul, which the mayor referred to, was instituted on January 1 prior to the release of the 10-year report.

They were based on recommendations by PFM – and other consultants, such as the Hay Group and Walker Benefit Services – to charge higher out-of-pocket costs to city employees. The mayor has said these changes will save the city $20 million a year.

The city has also decided to lease, rather than buy, future vehicles for police and other agencies, an arrangement that PFM forecasts will save several million dollars over time.

“Righting the Ship”

“My goal is to run the city more like a business,” the mayor said yesterday. “Every major company in America and across the world hires outside independent experts to figure out new ways to cut costs, to find efficiencies and to save money. We’ve done the same thing.

“I don’t want to end up, unfortunately like too many cities, because we don’t have experts helping us to right the ship,” she added.

Asked why the city still needed consultants after the financial plan was completed, Director of Finance Harry E. Black said, “[We] want to tap into their services and support as it relates to the implementation phase of the project. What this amendment to the contract does, it basically extends it to another year and makes it available to us as needed and to provide various sorts of analytical support.”

Black continued, “One thing with ongoing pension reform clearly as we go through that legislative process, people are going to want us to consider other options. So basically we don’t necessarily have those in-house actuary services, so something like that would be typical of what we would utilize them for. If we want to do something on capital program side of the house, we would not necessarily have it [the expertise].”

Previous Consulting for the City

PFM was retained in 2007 as the in-house consultant to the Blue Ribbon Committee on Taxes and Fees appointed by then-Mayor Sheila Dixon.

Many of the committee’s recommendations to increase local fees and taxes were subsequently adopted by the Rawlings-Blake administration.

In addition to the consultants, the city recently allocated $100,000 to create a new position in the Finance Department to implement the 10-year plan’s recommendations.

With funding for the position presumably to continue over the life of the plan, the new job would commit the city to about $1 million in salary obligations through 2023.

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