COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES
APPROPRIATIONS COMMITTEE BUDGET HEARING
DEPARTMENT OF LABOR & INDUSTRY
STATE CAPITOL HARRISBURG, PENNSYLVANIA ROOM 140, MAJORITY CAUCUS ROOM
WEDNESDAY, FEBRUARY 22, 2017 1:00 P.M.
BEFORE: HONORABLE STANLEY SAYLOR, MAJORITY CHAIRMAN HONORABLE JOSEPH MARKOSEK, MINORITY CHAIRMAN HONORABLE KAREN BOBACK HONORABLE JIM CHRISTIANA HONORABLE SHERYL DELOZIER HONORABLE GEORGE DUNBAR HONORABLE GARTH EVERETT HONORABLE KEITH GREINER HONORABLE SETH GROVE HONORABLE MARCIA HAHN HONORABLE SUE HELM HONORABLE WARREN KAMPF HONORABLE FRED KELLER HONORABLE JERRY KNOWLES HONORABLE NICK MICCARELLI HONORABLE JASON ORTITAY HONORABLE MIKE PEIFER HONORABLE JEFF PYLE HONORABLE MARGUERITE QUINN HONORABLE BRAD ROAE HONORABLE JAMIE SANTORA HONORABLE CURT SONNEY HONORABLE KEVIN BOYLE HONORABLE TIM BRIGGS HONORABLE DONNA BULLOCK HONORABLE MARY JO DALEY HONORABLE MADELEINE DEAN HONORABLE MARIA DONATUCCI HONORABLE MARTY FLYNN HONORABLE EDWARD GAINEY 2
1 (CONT'D.)
2 HONORABLE PATTY KIM HONORABLE STEPHEN KINSEY 3 HONORABLE LEANNE KRUEGER-BRANEKY HONORABLE MIKE O'BRIEN 4 HONORABLE MARK ROZZI HONORABLE PETER SCHWEYER 5
6 MAJORITY NON-COMMITTEE MEMBERS:
7 HONORABLE DARYL METCALFE HONORABLE CRIS DUSH 8 HONORABLE KRISTIN PHILLIPS-HILL HONORABLE TOMMY SANKEY 9 HONORABLE JEFF WHEELAND HONORABLE BRETT MILLER 10 HONORABLE ERIC NELSON HONORABLE BOB GODSHALL 11 HONORABLE CRAIG STAATS HONORABLE TOM MURT 12 HONORABLE ROB KAUFFMAN HONORABLE ED NEILSON 13 HONORABLE KATE HARPER HONORABLE JOHN TAYLOR 14 MINORITY NON-COMMITTEE MEMBERS: 15 HONORABLE ISABELLA FITZGERALD 16 HONORABLE MARK LONGIETTI HONORABLE DAN FRANKEL 17 HONORABLE MORGAN CEPHAS HONORABLE MATT BRADFORD 18 HONORABLE JASON DAWKINS HONORABLE JOHN GALLOWAY 19 HONORABLE MIKE SCHLOSSBERG HONORABLE BILL KELLER 20 HONORABLE PERRY WARREN
21 COMMITTEE STAFF:
22 DAVID DONLEY, EXECUTIVE DIRECTOR (R) RITCHIE LAFAVER, DEPUTY EXECUTIVE DIRECTOR (R) 23 MIRIAM FOX, EXECUTIVE DIRECTOR (D) TARA TREES, CHIEF COUNSEL (D) 24
25 TRACY L. MARKLE, COURT REPORTER/NOTARY PUBLIC 3
1 INDEX TO TESTIFIERS
2 NAME PAGE
3 KATHY MANDERINO, SECRETARY DEPARTMENT OF LABOR & INDUSTRY 4 4
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1 ---oOo---
2 (THE TESTIFIER WAS DULY SWORN.)
3 MAJORITY CHAIRMAN SAYLOR: Madam
4 Secretary, you may begin.
5 MS. MANDERINO: Thank you, Chairman
6 Saylor, Chairman Markosek, members of the
7 Appropriations Committee, and people of
8 Pennsylvania.
9 I'm here today to talk to you about the
10 Department of Labor & Industry, and I have
11 submitted written testimony for the record. I
12 just want to highlight a few things; and that
13 is, please take a minute or two to read that
14 testimony, the highlights, the accomplishments
15 of the Department of Labor & Industry and all of
16 its divisions in workers' compensation.
17 The workforce development in the Office
18 of Vocational Rehabilitation, with the Office of
19 Unemployment Compensation, and the Safety and
20 Labor Management Divisions have been something
21 that I have been so proud of, that you can be so
22 proud of, and that the people of Pennsylvania
23 can be very proud of; and I want those to not go
24 unnoticed.
25 Having said that, for those of you who 5
1 know me, I don't believe in doing anything but
2 addressing the elephant in the room. And we
3 have an elephant in the room today, and that is
4 our wounded unemployment compensation system.
5 I very much expect a lot of questions
6 about that. I am prepared to answer them to the
7 best of my ability. The people of Pennsylvania,
8 the unemployed people of Pennsylvania, right
9 now, have an unemployment compensation system
10 that isn't working for them. They deserve
11 better, and I'm here to give you every bit of
12 information that I can so that we can get that
13 system up and operating the way it should to
14 serve the needs of the citizens of Pennsylvania.
15 And with that, Mr. Chairman, I am ready
16 for questions from the Committee.
17 MAJORITY CHAIRMAN SAYLOR: Very good.
18 First Representative is Representative Pyle.
19 REPRESENTATIVE PYLE: Madam Secretary,
20 always a pleasure to see you. How have you
21 been?
22 MS. MANDERINO: Very good.
23 REPRESENTATIVE PYLE: That's excellent.
24 Chairman's doing some different things this
25 year, and I have your printed testimony and much 6
1 appreciative.
2 One of the things I wanted to pose to
3 you is the Governor's proposal to hike the
4 minimum wage to 7.25 to $12 an hour. I only
5 have two questions: The first is, the last time
6 we looked at doing this, I believe, was 2010.
7 Is that -- I'm not sure about that. But it was
8 sometime around then. And when we did this --
9 or pardon me, 2014 -- the Congressional Budget
10 Office estimated that raising the minimum wage
11 to 10.10, less than the 12 that's being
12 proposed, would decrease nationally about
13 500,000 jobs and in the Commonwealth about
14 20,000 jobs.
15 Have you done a study on job losses that
16 would occur if we went from 7.25 to $12 per hour
17 as a minimum wage?
18 MS. MANDERINO: Thank you,
19 Representative Pyle. As you mentioned, the
20 Governor has proposed that in the past that we
21 go to 10.10. This year he's proposing that we
22 go to $12 an hour. The Department very much
23 supports that initiative.
24 With regard to the impact, there are a
25 lot of different ways to measure that. I know 7
1 that you're not unfamiliar with that. There
2 have been a lot of measurement over the years.
3 I did not personally do a study at the
4 Department of Labor & Industry; although, our
5 Minimum Wage Advisory Board does do a report on
6 minimum wage and that report is actually coming
7 out in the next week.
8 It doesn't directly address your
9 question, but there are a lot of national
10 reports that are out there on the impact of
11 raising the minimum wage. I think we can all be
12 honest and say that you can find a study that
13 will support minimum wage, whatever your
14 position is.
15 But it's the position of this
16 Administration, which I support, that raising
17 the minimum wage so that families who work hard
18 can provide for their needs is an important
19 thing to do.
20 And I know you heard from the Revenue
21 Secretary with regard to the impact that the
22 Governor's Office has estimated that will have
23 on budget revenues, as well.
24 I do know that in Pennsylvania, we have
25 in the past, raised the minimum wage. We 8
1 haven't done it since 2007. But every time
2 Pennsylvania has raised the minimum wage, as
3 well as every other state has raised the minimum
4 wage, the arguments about job loss get made; and
5 after a short-term adjustment, usually the job
6 growth continues and that's what we're expecting
7 will happen here.
8 REPRESENTATIVE PYLE: Second question,
9 Chairman: You serious?
10 MS. MANDERINO: I am.
11 REPRESENTATIVE PYLE: You don't think
12 that when we raise the minimum wage from the
13 7.25 to $12, given the inference of the
14 Affordable Care Act, which is cutting down small
15 business, like me mowing grass -- we are losing
16 small businesses by the slew, to use the
17 technical phrase. And you don't think taking
18 the minimum wage from 7.25 to $12 an hour is
19 going to result in job losses?
20 And in all honesty, ma'am, and I know
21 you, if you tell me you think that's a correct
22 statement, I'll believe you.
23 MS. MANDERINO: Okay. As I said, I
24 believe there will be short-term adjustments.
25 It happens in the economy no matter what kind 9
1 of changes are made. But in the long-term, I
2 think it will be good for people, it will be
3 good for family, it will be good for businesses,
4 and it will grow our economy.
5 REPRESENTATIVE PYLE: Thank you.
6 Chairman, that will conclude my questions.
7 MAJORITY CHAIRMAN SAYLOR:
8 Representative Flynn.
9 REPRESENTATIVE FLYNN: Thank you, Madam
10 Secretary. As Pennsylvanians and as
11 Representatives, we're all very focused on jobs
12 and we want more good-paying jobs here in
13 Pennsylvania. You know, it's often a lot easier
14 to keep jobs than create them. You know, saving
15 jobs and preventing losing jobs avoids layoffs
16 for families.
17 And the Strategic Early Warning Network
18 or SEWN is a federally-funded program that's
19 designed to provide help for businesses that are
20 having problems, particularly manufacturers,
21 kind of help them turn things around and solve
22 problems before layoffs occur.
23 If we can get the help to businesses and
24 avert layoffs, we all win. SEWN has been very
25 effective, particularly out in southwestern 10
1 Pennsylvania, but also across the state.
2 Can you give us an update of the layoff
3 aversion services like SEWN, and do we
4 anticipate any changes to the program in this
5 coming year?
6 MS. MANDERINO: Thank you very much,
7 Representative Flynn. You are absolutely
8 correct in terms of the value of the Strategic
9 Early Warning Program. It is federally funded;
10 it allows states to get in there when they hear
11 of potential layoffs or business closings or
12 even just disruptions in business that could
13 have a negative effect and really provide the
14 resources that company needs to transition their
15 workers, if you can't turn it around; but more
16 importantly, get in there early and try to help
17 them with resources, save jobs and strengthen
18 their company.
19 Just in the last year, the SEWN program
20 has worked with a number of different referral
21 services in Pennsylvania; 14 new companies of
22 the 56 total referrals were referred by private
23 sources. The industrial resource centers are
24 working with folks, the local economic
25 development agencies; our unions and local 11
1 companies are all feeding information to SEWN.
2 SEWN works not just through the funds
3 that we get from the feds at Labor & Industry
4 but also with our partners over at DCD and
5 really tries to bring all of the resources of
6 state government to bear on the issue.
7 In the last year, 92 total manufacturers
8 were served; that was up from 78 the year
9 before; 56 new clients were served; 1500, almost
10 1600 total job losses averted and 27 different
11 counties were touched by the good work of the
12 SEWN process.
13 So we see the SEWN program, the
14 Strategic Early Warning Program, as something
15 that really benefits Pennsylvanians,
16 Pennsylvania employers, and Pennsylvania
17 workers; so thank you for recognizing that good
18 work.
19 REPRESENTATIVE FLYNN: And do you
20 anticipate any changes in the upcoming year?
21 MS. MANDERINO: Well, the SEWN program
22 is administered by -- we put out a request for
23 proposals and RFP for the operator of the SEWN
24 program. For the last three years, the Steel
25 Valley Authority has been the operator of the 12
1 statewide SEWN program.
2 That RFP is actually out on the streets
3 now for renewal; and so whether or not the same
4 vendor will be chosen during the RFP process is
5 too early to tell, but we do expect the program
6 to continue.
7 We haven't heard anything at this point
8 from Washington that the program is vulnerable
9 to going away. We don't know what will be
10 appropriated and come to the states for the
11 operation of it at this point.
12 REPRESENTATIVE FLYNN: Thank you.
13 MAJORITY CHAIRMAN SAYLOR: We've been
14 joined by Representative Murt and by
15 Representative Neilson. With that, we go to
16 Representative Grove.
17 REPRESENTATIVE GROVE: Thank you, Mr.
18 Chairman. Madam Secretary, good to see you.
19 Question one: In the Governor's budget
20 book, it reflected a decrease in the amount of
21 surplus from the Unemployment Compensation
22 Contribution Fund. Normally, it's about $300
23 million of surplus; it's down to about $165
24 million.
25 With the implement of Act 144 of 2016, 13
1 the UC fix of last session, it was supposed to
2 expedite solvency by two years. Can you explain
3 what's happening within that fund?
4 MS. MANDERINO: Okay. Thank you. If I
5 understand the question correctly, and if I
6 don't, you can help clarify, but at the end of
7 last session the changes that were made to the
8 UC law, both to allow an additional 44,000 folks
9 who were not eligible for unemployment to come
10 on, there were also some changes in terms of the
11 amount of benefits and all of those things.
12 The projection for the Unemployment
13 Compensation Fund, we want to get to 250 percent
14 of kind of what you need in the trust fund; and
15 that's considered solvent. So in aiming to get
16 to 250 percent, we were, prior to the Act -- I
17 guess it was Act 44, the most recent
18 legislation, we were projecting solvency at
19 2025. If we had just added the seasonal workers
20 or the -- I don't like that term -- but if I say
21 that, everybody knows what I mean -- if we had
22 just added the additional folks for eligibility
23 and made no other changes, we would have pushed
24 solvency off for a year, to 2026.
25 But because of the additional changes 14
1 the General Assembly has, right now it looks
2 like we will hit that 250-percent solvency two
3 years earlier or one year earlier, depending on
4 how you want to calculate it, in 2024.
5 The one thing I do want to caution
6 folks, this is something that we monitor on a
7 regular basis. Looking at what does solvency
8 mean and how are we, it's really a snapshot in
9 time.
10 So as we look at the snapshot today,
11 based on all of the assumptions that we were
12 using today, which I think are very reasonable
13 assumptions and the same assumptions the General
14 Assembly has been using, adjusted for whatever's
15 happening in the economy, we are anticipating
16 reaching solvency in 2024.
17 Now, anything else could change that,
18 could either accelerate that timetable or push
19 it back, economic changes or others. But right
20 now, we're looking at 2024, which I think is
21 good news.
22 REPRESENTATIVE GROVE: So we're still on
23 track? That was just basically a snapshot in
24 time?
25 MS. MANDERINO: Yes. 15
1 REPRESENTATIVE GROVE: Okay. And then
2 part of the government, that work section of the
3 Governor's budget book, the Governor is
4 proposing changes to Acts 534 and 632,
5 specifically workers' comp, some kind of old
6 laws that were put into place prior to workers'
7 compensation.
8 Can you explain what changes you're
9 looking for and the exact amount of savings
10 we'll see with making those changes?
11 MS. MANDERINO: Okay. I'm not familiar
12 with the Act numbers, but I think I understand
13 what it is that you're referring to. We have
14 made a lot of -- the workers' comp system -- a
15 little primer, the workers' comp system, again,
16 which is actually most of what Labor & Industry
17 does, is not paid for by General Fund dollars
18 but paid for either by federal funds user fees,
19 etc.
20 So the Workers' Comp System and what it
21 takes to operate and administer that, is paid,
22 basically, in terms of by a surcharge or a
23 premium on the amount of workers' comp -- or
24 from workers' comp insurers. So every year, we
25 take a look at what it takes us to operate and 16
1 then decide kind of what adjustments we need in
2 terms of how much the workers' comp fund folks
3 are assessed for the premium to run that.
4 We have done a lot of efficiency
5 measures in workers' comp over the years that
6 have allowed us to charge less some years. This
7 year, I think we're asking for the amount of the
8 surcharge as it normally is because there are
9 some anticipated regular computer upgrades and
10 things that have to happen. And if I am
11 answering this incorrectly, someone will tell
12 me; but I think that's what you were asking.
13 REPRESENTATIVE GROVE: You are. So Acts
14 534 and 632 -- well, I definitely know Act 534.
15 They were put into statute prior to workers'
16 compensation. It provided workers' comp
17 benefits to individuals within certain
18 corrections and certain special needs homes.
19 MS. MANDERINO: Yeah. I'm not -- can I
20 get back to you? Because I also know the only
21 other thing in the budget under workers' comp
22 that's kind of like -- that's dropping it, are
23 the Black Lung payments, which is kind of a
24 small class of folks that -- and that is
25 actually state dollars that were taken on as a 17
1 state obligation like, many, many moons ago; and
2 there aren't that many people left, quite
3 frankly, to collect those benefits; and so that
4 number's decreasing.
5 But I'm going to ask if I can get back
6 to you with more specificity, if I didn't answer
7 that correctly.
8 REPRESENTATIVE GROVE: I appreciate
9 that. Thank you, Mr. Chairman.
10 MAJORITY CHAIRMAN SAYLOR: Very good.
11 Representative Gainey.
12 REPRESENTATIVE GAINEY: Madam Secretary,
13 how are you?
14 MS. MANDERINO: Good. Thank you.
15 REPRESENTATIVE GAINEY: Always good to
16 see you. I have a question. I want to
17 piggyback sort of on the U.S. call centers. Do
18 you believe you have adequate staff to continue
19 to the performance that you've been doing
20 throughout the past? And if not, what is it
21 going to take to make sure that you're
22 adequately staffed throughout the state to run
23 an efficient system?
24 MS. MANDERINO: Yeah. Thank you very
25 much for that question. And this is a very 18
1 serious dialogue that I think all of us, General
2 Assembly and Administration together, have to
3 have.
4 Let me start by saying that, from the
5 Department's position, we believe that we were
6 running a very effective, efficient system that
7 was delivering quality customer service to the
8 unemployed people of Pennsylvania up to and
9 including December 18th.
10 We were able to do that because the
11 General Assembly had, through legislation,
12 provided additional state resources through the
13 SIIF Fund to supplement the declining federal
14 dollars that states all across the country have
15 been getting from the federal government.
16 From my perspective, as close as we can
17 get back to where we were on December 18th, is
18 where we need to be. I do want to remind folks
19 that the pain that you're seeing visibly from
20 the people of Pennsylvania -- and I have been to
21 not only our service centers but also our tax
22 collection offices and the other components of
23 our Unemployment Compensation System -- I have
24 been to our Career Links in the past couple of
25 weeks that have been inundated with folks who 19
1 are trying any way to get access to their
2 benefits; and so I know that we are not
3 delivering the kind of service that we need.
4 And so while we are starting to see a
5 sliver of light in the short-term in terms of
6 what our customers are experiencing, it will
7 boomerang back up in April when we have another
8 quarter change and a lot more people are
9 eligible. So I look forward to working with you
10 to figure out how we solve this.
11 And if I can, Mr. Chairman, I know there
12 will be more questions; but let me take this as
13 an opportunity to explain a little bit broader
14 perspective in terms of what's happening around
15 the country. Pennsylvania was not, by far, the
16 only state that was supplementing its
17 Unemployment Compensation Administration with
18 state dollars.
19 At least the last survey of the National
20 Organization of the State Workforce and
21 Unemployment Administrations, their last survey
22 counted 39 states that have been supplementing
23 their unemployment compensation delivery system
24 with state dollars in order to deliver good
25 customer service to their constituents. 20
1 Ohio is anticipating putting -- I can't
2 think what their base is -- they're anticipating
3 putting another 25 million in this year.
4 California puts in 140-some million additional
5 state dollars and their estimates in their
6 budgets this year is another 50 million on top
7 of that.
8 That is not to say that's what I think
9 we need in Pennsylvania, but the $57 million
10 that we were using at the end -- in 2016, was
11 very much needed; and I hope that we will get
12 back as much as we can to that place, where we
13 can deliver the services.
14 We have had wait times on our telephone
15 calls as high as a disgusting six hours, if
16 people can get through. We have had folks
17 dialing and dialing and dialing and not getting
18 through, which causes even more jams in the
19 system.
20 And the bottom line is, these are folks
21 who have paid in the Unemployment Compensation
22 System; and they deserve to be able to get their
23 money out when they need it.
24 REPRESENTATIVE GAINEY: Madam Secretary,
25 I just want to say thank you. And I agree; I 21
1 received a lot of calls, as well, from
2 Pennsylvanians and I agree they definitely have
3 to have a process that they can utilize to help
4 get their benefits.
5 Again, thank you.
6 MAJORITY CHAIRMAN SAYLOR:
7 Representative Sonney.
8 REPRESENTATIVE SONNEY: Thank you, Mr.
9 Chairman. Madam Secretary, good to see you.
10 MS. MANDERINO: You too, Curt.
11 REPRESENTATIVE SONNEY: We're going to
12 stick on unemployment for a few more minutes
13 here. You know, as you're aware, Act 34 was put
14 in place. And as a former Legislator, you're
15 very well aware that, you now, we oftentimes do
16 legislation that has a sunset. And usually when
17 we do that, there was a specific purpose for
18 that money to be used within that timeframe.
19 So could you explain to me what you
20 believe that specific purpose was under Act 34
21 and why you didn't fulfill that purpose within
22 the timeframe?
23 MS. MANDERINO: Thank you for the
24 question. I will -- no surprise to you, I won't
25 accept your premise; but let me just say that 22
1 the purpose is very clear. I don't have to say
2 what I think it is, because it was written in
3 the legislation.
4 And in the legislation it said the
5 purpose of the SIIF Fund was to improve services
6 -- delivery of Unemployment Compensation to the
7 consumers and make improvements in the
8 infrastructure as the Department thought
9 necessary. And I believe that the Department
10 has been a very good steward of those dollars
11 and has accomplished a lot in both of those
12 areas.
13 Let me first talk about service
14 improvements: During the course of the four
15 years that we had the SIIF dollars, the
16 Department, at the same time while reducing
17 complement by about 23 percent, was able to,
18 through better work processes and efficiencies,
19 better training of our staff, and the
20 implementation of some new technologies,
21 greatly improved our customer service to the
22 unemployed people of Pennsylvania. We went from
23 not meeting our federal benchmarks in terms of
24 how the US Department of Labor measures state's
25 effectiveness in serving their unemployed 23
1 customers, to meeting our significant
2 benchmarks. Going from first-time pays, which
3 was probably one of our most important measures
4 that you have to have the money out the door to
5 folks within 14 days after they apply, we went
6 from -- and I stink with numbers as my staff
7 knows -- I know I've given it to the General
8 Assembly before.
9 REPRESENTATIVE SONNEY: Well, Madam
10 Secretary, if I may?
11 MS. MANDERINO: Please.
12 REPRESENTATIVE SONNEY: You know,
13 there's no doubt that you were doing a great job
14 until this year, obviously; and that was
15 financial concerns, the layoffs, you know; so
16 today we're not doing a very good job at all.
17 Do you believe that any of those
18 efficiencies that you are able, you know, to
19 implement during that four-year period, do you
20 believe that they are really showing to the
21 constituent who is trying to access the system
22 today? In other words, you know, I've seen a
23 lot of people come into my local district
24 offices, both unemployment claims and TRA
25 claims, and they're different. 24
1 MS. MANDERINO: Yep.
2 REPRESENTATIVE SONNEY: But a TRA claim
3 demands personal attention; it cannot be taken
4 care of, you know, online.
5 MS. MANDERINO: No.
6 REPRESENTATIVE SONNEY: You know, it
7 demands personal attention. And, also, when it
8 comes to the regular unemployment, if you don't
9 answer the questions just quite right, you know,
10 on the computer, there again, you are triggered
11 into a slot where it demands personal attention.
12 You know, how come these types of things
13 weren't -- or can they be made more automated?
14 And, if so, you know, are we heading in that
15 direction of making this a lot of more
16 automated?
17 MS. MANDERINO: Yes and no. Let me be
18 very clear about that. I won't go into the
19 numbers. I finished with the service. Let me
20 also -- the second part of that was
21 infrastructure improvement. The infrastructure
22 improvements that we made to telephone systems,
23 as well as, finishing and continuing the
24 implementation of the tax services and the other
25 databases, were accomplished. 25
1 With regard to the benefits, the part of
2 the system that delivers the benefits, the part
3 of the system that was what everyone refers to
4 as the failed IBM contract that was canceled in
5 2012, and thus, was on the heels of the SIIF
6 funding.
7 And since you acknowledged that we both
8 live in the General Assembly, I'll acknowledge
9 something I learned in the General Assembly; and
10 that is, people hear what's important to them to
11 hear. So if it was important to somebody to
12 hear that with the passage of these SIIF dollars
13 we were going to get more people in chairs to
14 answer the phones so that the call wait times
15 and the lines at the CareerLinks went down,
16 that's what people heard. And we did that.
17 If it was important to people to hear
18 that we were going to modernize the computer
19 system, that's what people heard; and we have
20 not completed that process, so I will
21 acknowledge. I don't know why people thought
22 that process was going to be completed by the
23 end of 2016. We sunset a lot of things around
24 here. It's a chance to look at it again with
25 fresh eyes and decide whether the need still 26
1 exists. That's where we are right now with --
2 REPRESENTATIVE SONNEY: Madam Secretary,
3 and I know my time's up, but just, you know, yes
4 or no, do you believe that sometime in the
5 future, okay, that we can do a computerized
6 modern efficiencies that can, you know, reduce
7 the need for these call centers and allow the
8 constituents to be able to do much more of this
9 online?
10 MS. MANDERINO: The purpose of benefit
11 modernization, Ladies and Gentlemen, is not so
12 that we can take the human factor out of
13 delivering Unemployment Compensation Benefits to
14 our system.
15 We're operating a 40, almost 50-year-old
16 legacy system that is put together with chewing
17 gum and duct tape. The reason to modernize our
18 computer system is so that it doesn't fail and
19 we literally can't get the checks out the door.
20 REPRESENTATIVE SONNEY: Thank you.
21 MS. MANDERINO: In modernizing our
22 system --
23 MAJORITY CHAIRMAN SAYLOR: Madam
24 Secretary.
25 MS. MANDERINO: Sure. 27
1 MAJORITY CHAIRMAN SAYLOR: I've got to
2 cut you off there.
3 MS. MANDERINO: You know me, Stan.
4 MAJORITY CHAIRMAN SAYLOR: Sure. I
5 appreciate your passion, Madam Secretary. But I
6 will ask you, as I ask members, to try and keep
7 your answers short because members only get 5
8 minutes. That time flies by very quickly.
9 At this point, I'd like to recognize
10 Representative Boyle.
11 REPRESENTATIVE BOYLE: Great to see you,
12 Secretary Manderino, you know, as a fellow
13 Philadelphian.
14 Speaking for a lot of Democrats and for
15 a lot of progressives, probably the most
16 exciting part of Governor Wolf's budget was the
17 increase in the minimum wage. And I'm a strong
18 advocate of increasing the minimum wage, as I
19 think basically every Democrat in the State
20 House and the State Senate.
21 So that's why I couldn't not respond to
22 my esteemed colleague from across the aisle from
23 Armstrong County when he openly questioned
24 whether an increase in the minimum wage would
25 lead to a lack of job growth. I would point out 28
1 to my Republican colleagues that, right now,
2 Pennsylvania, we are bottom. We are the worst
3 state in the northeastern United States for job
4 creation. And, oh, by the way, we also have the
5 lowest minimum wage. So I think any sort of
6 connection between a low minimum wage and job
7 creation is a faulty one.
8 So I wanted to point that out. And
9 then, also, my question to you was, certainly as
10 a State Legislature, the two big issues that
11 relate to workers and to labor that we're
12 dealing with this term, I know Senator Scott
13 Wagner is a strong advocate, State Rep Daryl
14 Metcalfe is a strong advocate in the State
15 House, is right to work and also paycheck
16 protection.
17 I just want to make sure that you were
18 aware of all the studies out there that show
19 even adjusting for inflation, for metropolitan
20 areas, adjusting for basically every metric that
21 people -- workers in labor unions make more and
22 receive better benefits and work under safer
23 worker conditions than do people who are not
24 unionized. I just wanted to make sure that
25 you're aware of that. 29
1 Thank you.
2 MS. MANDERINO: Thank you.
3 MAJORITY CHAIRMAN SAYLOR: Okay. I
4 wanted to recognize Representative Rader who has
5 joined us, as well. And the next questioner is
6 Representative Hahn.
7 REPRESENTATIVE HAHN: Thank you, Mr.
8 Chairman. Good afternoon, Madam Secretary. How
9 are you?
10 MS. MANDERINO: Good. Thank you.
11 REPRESENTATIVE HAHN: Good. I want to
12 follow up on Representative Sonney's with the
13 unemployment compensation. So you talked about
14 the computer systems and being upgraded.
15 A lot of people are coming into the
16 office, and I have to tell you I am not an IT
17 person or have filed things online, but it's not
18 my thing. So we have people coming in, they've
19 worked; they filed out their unemployment
20 online. They wait the number of weeks, whatever
21 they think, and then they get nothing. And then
22 they're told, well, we don't have any record of
23 that. Did you take a screen shot of that? I
24 can tell you most of the people in my district,
25 including me, probably don't know how to take a 30
1 screen shot.
2 So they're learning. They come back.
3 So there's no recourse for them is what I'm
4 told. And do you feel there is a recourse for
5 them? I have people, they're losing six weeks
6 of unemployment because what we're told by the
7 Legislative office is, the computers are not
8 syncing. Do you find that to be a problem with
9 your computer system?
10 MS. MANDERINO: Yeah. We have a very
11 old system; that is true. And the screens and
12 the questions, the way they're asked, are not
13 customer friendly; and we're very aware of that.
14 And the reason we can't change those is
15 going back to what I talked about with the gum
16 and the duct tape. We have a system that's
17 built 40, 50 years ago, a COBOL. And over the
18 decades, we have had six or seven layers put on
19 top of them that don't really talk to each
20 other. So every time you try to change
21 something on the screen, you can break six other
22 things in the system; so we don't change a lot.
23 Our modernized system will solve a lot of that.
24 Having said that, does somebody want to
25 whisper in my ear? Because I don't think what 31
1 you're saying is accurate, and I don't have the
2 best way to explain it.
3 (CONFERRING WITH STAFF.)
4 Thank you. My understanding is that we
5 have not received any complaints, so if you
6 actually have one, please get it to my
7 Legislative office --
8 REPRESENTATIVE HAHN: I have several.
9 MS. MANDERINO: -- because in all of the
10 years, the people get something back out of the
11 system. We do know that folks will put
12 something in and not be able to know at the time
13 they put it in whether or not they're
14 automatically eligible. That is correct.
15 But they do get something back from the
16 Department then telling them what their
17 determination is. They do get a determination
18 letter back from the Department.
19 Now, with a more modernized system, some
20 of the stuff that has to be done manually now
21 will be able to be done through a more modern
22 system.
23 MAJORITY CHAIRMAN SAYLOR: Madam
24 Secretary, I've got to again ask you to please
25 keep your answers just shorter, only because 32
1 members' time is limited.
2 REPRESENTATIVE HAHN: Sorry. But what
3 is their recourse? So you just said people
4 think they're not going to get -- do they get
5 something that says you filed and you'll hear
6 something in X number of weeks?
7 So the average person thinks they filed
8 their benefit and they haven't. And they wait
9 the time, and then we get the answer back from
10 the unit that we have gone through. And they
11 will say, We don't have documents of them
12 filing. Can you give me something to prove they
13 filed? Well, they don't have that. And is
14 there a recourse? What can they do? Is there
15 an appeal process? Is there something that they
16 can do?
17 MS. MANDERINO: Yeah. Thank you. Can I
18 ask a follow-up question? Because now I think I
19 understand what you're saying. Are these recent
20 incidents that you're talking about, or they
21 historic incidents?
22 REPRESENTATIVE HAHN: Recent. Since,
23 you know, December, January.
24 MS. MANDERINO: Okay. So here's where
25 we are: On December 18th, I had 234 people in 33
1 call centers taking claimants. Now I have 124.
2 So we have (indicating), literally, a stack of
3 those things that we are getting through; and
4 that is the backlog that has been created.
5 So I don't think that it is that we
6 don't have anything --
7 REPRESENTATIVE HAHN: But they're being
8 told the computers aren't syncing. So the
9 paperwork is not there. So that's the problem
10 we're having. But do you understand? So the
11 people think they filed the claim and haven't.
12 MS. MANDERINO: Yeah, I do understand.
13 It's not that the computers aren't syncing.
14 There's a mismatch in the information that is
15 currently in our system versus what they put in
16 the system; and so therefore, it takes manual
17 intervention in order to solve that issue, and
18 that's where you're stuck in the backlog.
19 So the backlog isn't just, I finally got
20 through on the phone. The backlog is all the
21 work that has to happen after you get off the
22 phone.
23 REPRESENTATIVE HAHN: All right. Thank
24 you.
25 The other thing that I had, someone 34
1 filed for Unemployment Compensation, had their
2 determination notice they were approved, and
3 their payment was being delayed. Why would that
4 happen?
5 MS. MANDERINO: Delay in payment could
6 happen for a lot of different reasons. So what
7 I'd like to do -- I mean, it could happen in
8 terms of what comes back from an employer, in
9 terms of information that comes back later; so
10 what I would like to do is get that specific
11 instance from you and get you a specific answer,
12 because there are a myriad of different reasons
13 that that could happen.
14 REPRESENTATIVE HAHN: Thank you.
15 MAJORITY CHAIRMAN SAYLOR: Madam
16 Secretary, I've got to put in a little question
17 here, as well. I know Leader Reed, as well as
18 my office, has received complaints that they
19 didn't get their checks in a timely fashion as
20 was mentioned, as well as, a screen issue from
21 constituents in my district, as well, and Leader
22 Reed's district. So I just wanted to make the
23 Department aware that that seems to be a
24 consistent problem, where people fill things out
25 and then it's lost in the computer system. 35
1 MS. MANDERINO: Mr. Chairman, we are
2 operating a wounded system.
3 MAJORITY CHAIRMAN SAYLOR: I understand
4 that.
5 MS. MANDERINO: The patient is bleeding
6 out on the gurney.
7 MAJORITY CHAIRMAN SAYLOR: And I
8 understand that.
9 MS. MANDERINO: So the best way we can
10 fix that, is to get that patient into the
11 operating room and get him healed.
12 MAJORITY CHAIRMAN SAYLOR: I don't
13 disagree with you, Madam Secretary.
14 MS. MANDERINO: Okay.
15 MAJORITY CHAIRMAN SAYLOR: I just wish
16 we could do it a lot faster.
17 MS. MANDERINO: Okay. Thank you.
18 MAJORITY CHAIRMAN SAYLOR: With that,
19 we're going to move to Representative Schweyer.
20 REPRESENTATIVE SCHWEYER: Thank you, Mr.
21 Chairman. To your point, Mr. Chairman, about
22 doing it a lot faster, House Bill 34 has been
23 introduced in the House, which mirrors the
24 legislation that we had passed last year that
25 would immediately restore the funding for the 36
1 remainder of this calendar year, which is what
2 we needed to do so that we can continue moving
3 up and running. And so any and all help that I
4 can get from my colleagues in moving forward
5 that legislation that was passed in an
6 overwhelmingly bipartisan fashion at the end of
7 last year, would certainly be very welcome.
8 But going to my notes here, Madam
9 Secretary, first and foremost, thank you for all
10 of your help to all of our offices. I think I'm
11 the only one here in this room that has the
12 unique situation of actually watching one of
13 those call centers being closed and watching
14 people moving furniture out. Because that
15 happened in the 100 block of Hamilton Street in
16 downtown Allentown back on December 19th. And I
17 know the date, because I met with the employees
18 on the 16th about -- you know, trying to offer
19 any and all recourse my office, officially or
20 unofficially, could provide to them. And we
21 lost 87 employees in Allentown alone.
22 And my colleagues, to the credit of both
23 sides of the aisle, have done a nice job, I
24 think, today of outlining the impact it's had to
25 those beneficiaries across the Commonwealth in 37
1 terms of the incredible amount of wait time that
2 we have, the incredible amount of delays that
3 folks are getting in terms of actually receiving
4 their benefits. And there's been mention about
5 what the real-life implications are for those
6 beneficiaries in terms of missing rent payments,
7 missing mortgage payments, not being able to
8 send their kids to the doctor, etc., etc., etc.
9 So we've talked about that.
10 Now, so what I want to do is sort of
11 change the subject just a little bit and ask a
12 very specific question. Were you, as Secretary
13 of the Department of Labor, happy with the
14 performance of the employees at the Allentown
15 center, the Altoona center, and the Lancaster
16 center, the three that were closed?
17 MS. MANDERINO: Yes.
18 REPRESENTATIVE SCHWEYER: So there was
19 no major management issues there? They were
20 performing their tasks well; they were
21 delivering services to the folks of
22 Pennsylvania? And so, ultimately, those centers
23 were performing at a good level?
24 MS. MANDERINO: Absolutely. Every one
25 of our centers were doing exactly what they were 38
1 supposed to do. There were no good choices in
2 terms of how to reduce $57 million out of our
3 budget overnight.
4 The decisions that were made reflect not
5 a single iota on the quality of the work that
6 our employees did to deliver good services to
7 the people of Pennsylvania.
8 REPRESENTATIVE SCHWEYER: Okay. So to
9 be clear, because the legislative action or
10 inaction, depending on your perspective, we
11 drained $57 million out. As a result, 500
12 Pennsylvania employees are out of work who were
13 otherwise doing exceptional work for the
14 Commonwealth of Pennsylvania, and the result is
15 all these problems. Okay. Thank you.
16 Now, getting back to the issue about the
17 employees, if we were able to fund these centers
18 tomorrow and we have a joint session tomorrow,
19 the Governor signs the legislation, how quickly
20 could you ramp back up in terms of hiring people
21 and getting folks back on the payroll for the UC
22 centers?
23 MS. MANDERINO: First of all, it's not
24 just the customer service centers. We did
25 across-the-board cuts, so it's all of our other 39
1 offices, tax services, etc.
2 Having said that, here's my
3 reality: The Lancaster lease is broken; the
4 keys have been handed in. The Allentown lease,
5 keys will be handed in on the 28th of this
6 month. The infrastructure is out of all of
7 those locations.
8 The Altoona office, we own that
9 building; so that building is our most immediate
10 location that can be ramped back up.
11 Additionally, I have empty seats, meaning room
12 for more people to work, in Scranton and in
13 Harrisburg.
14 How soon can we get back up? To be
15 perfectly honest, it's probably somewhere
16 between three and six weeks, based on recall
17 notices and all that kind of stuff. So it would
18 probably be phased in, and it probably will
19 take, I'm pretty sure, three to six weeks to get
20 there.
21 REPRESENTATIVE SCHWEYER: Okay. So best
22 case scenario -- Mr. Chairman, I'll wrap up very
23 quickly, sir; and I appreciate your leeway. So
24 best case scenario, we pass the legislation.
25 We're still looking to a month to a month and a 40
1 half to be able to start reducing those call
2 times, start getting checks processed sooner;
3 and that is still just phase one of a multiphase
4 implementation for getting the centers --
5 MS. MANDERINO: Yes. Significantly,
6 again, if we can act tomorrow, we can get action
7 done before April 1st, which is the next quarter
8 change and another big influx of people, number
9 one.
10 Number two, I just want to caution folks
11 that -- I very much appreciated where we were at
12 the end of the session, but it was a stopgap
13 measure. I understand that folks want the
14 information that they are hoping that they will
15 see, to assure themselves on how effectivity we
16 were running the system, and that that may not
17 come until the Auditor General's report is done.
18 Having said that, I have no interest in
19 putting a band-aid on a problem and ripping it
20 back off in another couple of months. That
21 won't serve the people of Pennsylvania well and
22 that certainly won't serve our employees well.
23 So a short-term solution followed by a long-term
24 solution is what we need.
25 REPRESENTATIVE SCHWEYER: Duly noted. 41
1 Thank you, Madam Secretary. Thank you, Mr.
2 Chairman.
3 MAJORITY CHAIRMAN SAYLOR:
4 Representative Knowles.
5 REPRESENTATIVE KNOWLES: Thank you, Mr.
6 Chairman. And it's always good to see you,
7 Madam Secretary. I want to go back to the
8 closing of the centers. And you stated how --
9 what a great job they were doing and how
10 wonderful they were, and I don't disagree with
11 that.
12 My first question is: What criteria
13 then was used in -- because there's all kinds of
14 accusations being made as to why the centers
15 were closed, strategically; and I think you
16 probably know about that.
17 Can you tell me, specifically, why those
18 three centers were selected to be closed?
19 MS. MANDERINO: First of all, since
20 Representative Schweyer acknowledged that a
21 center in his district was closed, let me debunk
22 -- rumor number one is that the closures were
23 based on the politics of where they were
24 located. That is just not true. As I said,
25 there were no good choices. 42
1 Do we have performance measures for the
2 metrics for the centers? Yes. Was that the
3 criteria that I used? Only in part. Do we have
4 costs for operating the centers? Yes. Was that
5 a metric I used? Only in part. Do we have
6 considerations about which side of the state the
7 centers are located in, and was that a metric I
8 used? In part. Did I have information about
9 what the economic climate of the regions were
10 where I was going to have to be laying off
11 employees? Yes. That was a criteria I used, in
12 part.
13 In the end, quite frankly,
14 Representative Knowles, it was a crummy decision
15 that I had to make. And I take it totally on
16 myself, because I didn't want anyone else to own
17 it because there were no good choices. It was
18 literally a combination of how the money matched
19 up. And if I closed -- if I downsized all the
20 centers, I still had big infrastructure costs.
21 REPRESENTATIVE KNOWLES: Okay. Madam, I
22 have a lot of questions I want to ask.
23 MS. MANDERINO: Go ahead.
24 REPRESENTATIVE KNOWLES: Okay. The
25 second question is: Can you remind me of what 43
1 the amount was in terms of the four-year -- the
2 yearly transfer that was made into the Service
3 and Infrastructure Improvement Fund? How much
4 was that annually?
5 MS. MANDERINO: It varied. The first
6 year, I think it was 40 million; the second year
7 it was 30 million; and then the legislation was
8 written that in years three and four, it was the
9 difference between what the feds gave us and
10 $190 million.
11 And so in the third year, that figure
12 was, I can't remember, 50 something; and then in
13 the fourth year, it was 57 million.
14 REPRESENTATIVE KNOWLES: Can you give
15 me, off the top of your head, or provide us with
16 a breakdown on how much of that money was used
17 to make improvements on the system and how much
18 was used to pay people?
19 MS. MANDERINO: Well, I can give you,
20 off the top of my head, exactly how it was used.
21 The Service and Infrastructure Fund, combined
22 with the federal dollars that we got to
23 administer, as far as the Department was
24 concerned, was one pot of dollars that we had to
25 administer the Unemployment Compensation System. 44
1 Those two sources together had to do the
2 job and deliver it. And every year, the
3 decision was made, in terms of how that was
4 allocated. Now, when I got to the Department,
5 and this is more an accounting measure, but I
6 think people need to understand that, it kind of
7 went in the pot; and I think just for accounting
8 ease, the SIIF dollars were being allocated for
9 personnel costs, but that didn't mean we weren't
10 making infrastructure improvements. We made
11 infrastructure improvements.
12 When I got there, I said, let's do our
13 accounting different and let's code things
14 different in our SAP system so that we can track
15 the money a little bit differently, and we did.
16 But in the end, they were both going for both
17 purposes.
18 REPRESENTATIVE KNOWLES: Okay. So the
19 money was not used specifically for what it was
20 intended?
21 MS. MANDERINO: It was used for exactly
22 what it was intended. It was intended to be
23 used to improve services to customers and to
24 make infrastructure enhancements as the
25 Department deemed appropriate. That's how it's 45
1 written in the legislation and that's how it was
2 used.
3 REPRESENTATIVE KNOWLES: Okay. My last
4 question, if I may, Madam Chair? The thing that
5 I just can't understand is, the Governor agreed
6 that there would be a four-year sunset. That
7 was agreed upon. Am I correct on that?
8 MS. MANDERINO: I don't know whether the
9 prior Governor agreed to that or not. I do know
10 the legislation, for example -- I'm trying not
11 to be -- but we often sunset things for the
12 purpose of reevaluation, not necessarily for the
13 purpose of falling off the cliff.
14 REPRESENTATIVE KNOWLES: Well, I guess
15 my point is: Why would you become dependent on
16 those dollars when you knew that after that
17 period of time that you weren't going to have
18 that money, so now all of a sudden we're making
19 all these dramatic, drastic changes in the
20 system that's hurting the people of
21 Pennsylvania? Thank you very much.
22 MS. MANDERINO: The system today is what
23 a system looks like running only on federal
24 dollars. If you're satisfied with what the
25 system looks like today, you're satisfied with 46
1 what a system looks like running only on federal
2 dollars.
3 If you're not satisfied with what the
4 system looks like today, then I think that we
5 need to revisit the issue of a state supplement
6 through SIIF or some other mechanism.
7 MAJORITY CHAIRMAN SAYLOR: Okay.
8 Representative Bullock.
9 REPRESENTATIVE BULLOCK: Thank you,
10 Chairman. Thank you, Madam Secretary. It's
11 great to see you today. You made some
12 references, or at least suggested, that the loss
13 of the SIIF funding had also impacted other
14 areas of the Unemployment Compensation Fund
15 System, besides the call centers.
16 Can you give us a little more detail on
17 how that impacted the operations of that system?
18 MS. MANDERINO: Well, sure. And it's
19 just -- again, to reemphasize that paying out
20 the benefits is not the only aspect of
21 delivering Unemployment Compensation Systems.
22 We have a whole division that deals with
23 the employers and making sure that we're getting
24 the tax dollars in. And that part of the UC
25 System also had significant layoffs. We have 47
1 the Audit Division that determines whether or
2 not there are overpayments, why, and tries to
3 kind of get those rectified and make sure that
4 they don't happen and get them collected if they
5 do.
6 We have the Fraud Investigation Unit
7 that makes sure, and particularly lately, it's
8 been doing a lot of work with the feds, the
9 federal government, in terms of organizing rings
10 that try to kind of syphon Unemployment Benefits
11 off of state coffers; so we have a lot of
12 different components of the unemployment -- we
13 have the judges that -- or really they're called
14 the first-line reviewers, but the folks if
15 there's a dispute between the employer and the
16 employee about whether you're eligible for
17 benefits, that's our Unemployment Compensation
18 Board of Review.
19 And all of those parts of the
20 Unemployment System were -- had significant
21 layoffs due to the loss of theses dollars.
22 REPRESENTATIVE BULLOCK: Thank you.
23 And in addition to your layoffs, I'd like to ask
24 the Secretaries to share their diversity in
25 their employment. I'm not sure you have those 48
1 numbers and how it was impacted because of your
2 loss of employees.
3 MS. MANDERINO: I do have my complement
4 numbers. I do think they were modestly impacted
5 by our layoffs. Our complement went down to
6 about 4270, so we were at a high 4900, just
7 under 5,000 and we went down to 42. We still
8 have -- we have a minority -- we're
9 predominantly female. I think 69 percent of our
10 workforce is female; about 12 percent of our
11 workforce is minority. I know that,
12 particularly, we are feeling the pain in our
13 service centers of the loss of some of our dual
14 language speakers, particularly Spanish speakers
15 and other Hispanic descent speakers because of
16 where they fell in the seniority ladder or, you
17 know, which call center they were at; and so we
18 lost some of our dual-language speakers.
19 REPRESENTATIVE BULLOCK: Thank you. And
20 that's surely a loss to Pennsylvania families.
21 I see we have a little bit more time. So I'm
22 going to ask you another question in a different
23 area. There were some questions about the
24 minimum wage increase proposals on the table.
25 Have you had any conversations with other 49
1 colleagues in other departments about the impact
2 the minimum wage increase would have on the
3 safety net, and the reduction of reliance on the
4 safety net?
5 MS. MANDERINO: Yeah. I'm going to
6 leave for Secretary Dallas, some real numbers,
7 A, because I stink at numbers; but, B, yes, we
8 are very aware both, you know, at Labor &
9 Industry, at Department of Human Services, in
10 the Department of Revenue, at the Department of
11 Aging, in the Department of Community and
12 Economic Development of all of the different
13 aspects that an increase in the minimum wage
14 would have; and there very much is an
15 expectation that the reliance on public benefits
16 for such things as SNAP, food assistance, and
17 perhaps even medical assistance will decrease as
18 people's earnings increase.
19 REPRESENTATIVE BULLOCK: Thank you,
20 Madam Secretary. Thank you, Mr. Chairman. I
21 have no further questions.
22 MAJORITY CHAIRMAN SAYLOR:
23 Representative Dunbar.
24 REPRESENTATIVE DUNBAR: Thank you, Mr.
25 Chairman. Welcome, Secretary. And, 50
1 unfortunately, I want to continue on the same
2 line. And, double unfortunately, I do love
3 numbers; so hopefully we can reach some type of
4 agreement here.
5 First off, as Representative Sonney
6 said, everything apparently seemed to be going
7 relatively swimmingly and well. And as
8 Representative Schweyer said, you know, we had
9 the bill that ran out, which I voted for and
10 supported it and will continue to support.
11 MS. MANDERINO: Thank you.
12 REPRESENTATIVE DUNBAR: But I guess the
13 real question is: Where were we going? Did we
14 just accelerate the inevitable? Because I'm
15 looking at the different numbers that I'm
16 seeing, and most of these are coming from the
17 four-year closure and spending plan for UC call
18 centers that the Governor's Office had put out.
19 And as I look at this, your average
20 quarterly spending was about $47 million a
21 quarter with all the call centers open, which is
22 about 188 million a year, plus the 15 million
23 for the UC Ben Mod contract, which is about 203
24 million a year to keep the present level that we
25 had. 51
1 With the 57 million, if we would have
2 passed it, you would have had approximately 231
3 million, which would have got us through this
4 year. But the '17-'18 year, we would have been
5 right back here anyhow. So what was the plan?
6 And, secondly, how much are you actually
7 saving every time we close a UC center? Because
8 the savings, I don't think, are even going to
9 get us close to where we need to be. So we want
10 to get back to where we were, what
11 Representative Sonney said. But how?
12 MS. MANDERINO: Well, let me answer that
13 in two stages: The 15 -- or the House Bill -- I
14 keep calling it 2375, but the House Bill that
15 the House passed that didn't make it across the
16 finish line, was what I would call a stopgap.
17 It was not going to solve the problem;
18 it was going to allow the status quo to continue
19 until the General Assembly, along with the
20 Administration, figured out what kind of system
21 do we want in the future and what do we want it
22 to look like.
23 REPRESENTATIVE DUNBAR: And I will agree
24 with that wholeheartedly looking at the numbers,
25 but I think the failure on all our parts was 52
1 understanding that it was just that, a stopgap.
2 MS. MANDERINO: Yes. As I mentioned in
3 my earlier remarks, this is not a situation
4 unique to Pennsylvania. Thirty-nine other
5 states are on an ongoing basis using state
6 dollars to administer their Unemployment
7 Compensation System, including at the high, in
8 California this year, expecting to be 175
9 million state dollars put in.
10 So what I guess I would turn back to you
11 is, what kind of system do we want for the
12 citizens of Pennsylvania? I want a system that
13 is as similar as it was on December 18th. And
14 what I think that is going to cost is probably
15 in the short-run what it was costing us on
16 December 18th.
17 In the long-run, I think with the
18 computer modernization, that we will see some
19 efficiencies. The efficiencies won't be that we
20 won't need to rely on state dollars. The
21 efficiencies will be probably about ten percent
22 in personnel that we think we can handle through
23 attrition.
24 If we want a different kind of system
25 than what we had last year, I think we should 53
1 figure that out together. Because, as you know
2 now, you're the ones that get the calls even
3 more than I do when the system isn't working the
4 way our citizens expect it to.
5 REPRESENTATIVE DUNBAR: Yeah. So not to
6 put words in your mouth or numbers either, so
7 you're saying $50 million a year?
8 MS. MANDERINO: Well, I think in the
9 short-run, and when I'm saying the short-run,
10 not next year but in the next four years, if you
11 looked at those charts that we put together for
12 the Appropriations Committees -- now, there are
13 a lot of assumptions in those charts.
14 The assumptions are that pretty much
15 everything stays the same, meaning our federal
16 dollars stay flat. They could go down, or if
17 there's a big recession and unemployment goes
18 way up, they could go up.
19 It makes a lot of assumptions. But it
20 painted a very dire picture, which was, by the
21 end of the four years, assuming nothing changed,
22 we would not have any call centers where people
23 can call in.
24 REPRESENTATIVE DUNBAR: So what is the
25 cost savings by closing the call centers? 54
1 MS. MANDERINO: Can you rephrase that,
2 so I can understand what you're trying to get
3 to?
4 REPRESENTATIVE DUNBAR: Understandably,
5 how much annually do we save in expenditures by
6 closing a call center? We've closed three of
7 them. So what would be the annual savings from
8 closing those three --
9 MS. MANDERINO: Well, --
10 REPRESENTATIVE DUNBAR: -- or every
11 additional one the Governor's proposing?
12 MS. MANDERINO: You know what, without
13 having that chart in front of me, I don't really
14 know because every call center is a different
15 size and a different monetary configuration.
16 You know, if it's in a state office building, if
17 it's privately leased, if it's in an expensive
18 urban area or less expensive rural area, if --
19 we have some that have 120 people; we have some
20 that have 80 people. And then the people who
21 work in those, if it's a younger workforce,
22 their salaries are less expensive; so it's kind
23 of hard for me to answer that.
24 MAJORITY CHAIRMAN SAYLOR: Madam
25 Secretary, as the rules that I set up, I need to 55
1 have that answered to the Committee within 48
2 hours, what each of the call centers that were
3 shut down cost; what the state is saving per
4 call center; what the Lancaster center saved;
5 what the Altoona center saved; what the
6 Allentown center saved the Department of Labor;
7 what those real costs were. So we need those
8 within 48 hours. Okay?
9 MS. MANDERINO: Yep.
10 REPRESENTATIVE DUNBAR: Thank you. My
11 time's up. Thank you.
12 MAJORITY CHAIRMAN SAYLOR:
13 Representative Daley.
14 REPRESENTATIVE DALEY: Thank you, Mr.
15 Chairman. Madam Secretary, it's good to see
16 you. I have a question on a completely
17 different topic, and I have a lot of information
18 I want to put out about it. So my question will
19 be short, my explanation a little bit longer;
20 but I need to stay within my 5 minutes.
21 So the Pennsylvania Assistive Technology
22 Foundation is actually sited in the district
23 next door to mine, but the executive director is
24 in my legislative district.
25 They provide financing for 2,931 56
1 Pennsylvanians, with more than $35 million they
2 put out in loans. This means that people can
3 buy hearing aids, adaptive vehicles, tablets,
4 seat lifts, chairs, stair glides. They can make
5 home modifications, such as roll-in showers,
6 ramps, lowered kitchen counters. The foundation
7 helps people work and live in their own homes
8 and not be forced into a nursing home and also
9 to be active in their community.
10 So the line in the budget, which is
11 Pennsylvania Assistive Technology devices, is
12 flat funded in the budget and I believe it's
13 been flat funded since the Corbett
14 administration. But if $50,000 was added, that
15 additional funding could be leveraged to another
16 $200,000. An additional $100,000 in their
17 budget could be leveraged to 400,000 additional.
18 So that increase of a hundred thousand,
19 would take that line item back to the time
20 before Governor Corbett's cut of a hundred
21 thousand.
22 So what I want to ask, Is this an area
23 that the Department can advocate for an
24 increase?
25 MS. MANDERINO: Thank you, 57
1 Representative Daley. And you must have a
2 corner of my old district, because the director
3 was in my legislative district when I was in the
4 General Assembly.
5 REPRESENTATIVE DALEY: I think it got
6 moved into mine.
7 MS. MANDERINO: There you go. Having
8 said that, they do fabulous work and I'm a big
9 supporter of everything that they do. And I
10 would suggest, politely to you, as well as to
11 our friends of Assistive Technology, that the
12 advocacy forum right now is in the General
13 Assembly and I will attest to the good work they
14 do.
15 REPRESENTATIVE DALEY: So I appreciate
16 that. I had a feeling that might be your
17 answer. The only other question I have is, Do
18 you have any insight on identifying how the line
19 item name can be changed so that it's not
20 devices? Because it's called Assistive
21 Technology Devices; that's not what it is. It's
22 Assistive Technology Financing. And I'm only
23 asking, it sounds like nitpicking, but I think
24 when you look down, you want to be called the
25 right thing. Any ideas? 58
1 MS. MANDERINO: I have no idea how those
2 line items get named, so --
3 REPRESENTATIVE DALEY: So maybe I can
4 ask the Budget Secretary.
5 MS. MANDERINO: Yes, or Chairman
6 Markosek or Saylor.
7 REPRESENTATIVE DALEY: All right. Thank
8 you very much, and thank you for your responses.
9 I stayed away from the unemployment. I know
10 you're getting a lot of questions. Your staff
11 has been helpful when my office has called, but
12 it has -- it's clearly been just a mess. So
13 thank you for what you are doing. And I do get
14 your IT issues, because I had an old IT legacy
15 system once and it was a mess. So some sympathy
16 there. Not much. We need to get our people to
17 get their checks. So thanks.
18 MAJORITY CHAIRMAN SAYLOR:
19 Representative Santora.
20 REPRESENTATIVE SANTORA: Madam
21 Secretary, thank you for being here. Couple
22 questions: When did you receive the federal
23 funding?
24 MS. MANDERINO: I'm sorry. Which
25 federal funding? 59
1 REPRESENTATIVE SANTORA: The 133
2 million.
3 MS. MANDERINO: I think --
4 REPRESENTATIVE SANTORA: 134 million.
5 MS. MANDERINO: No, I understand your
6 question now. You're talking about UC dollars.
7 I believe it comes to us in quarterly payments,
8 or is it biannually? The federal -- let me --
9 the federal fiscal year is different than the
10 state fiscal year. It comes to us --
11 REPRESENTATIVE SANTORA: To September.
12 MS. MANDERINO: Yes, October 1 through
13 September 30th; and we get it quarterly.
14 REPRESENTATIVE SANTORA: Okay. So at
15 133 million, you made some decisions based on
16 $56 million of state funding to layoff
17 approximately 500 people?
18 MS. MANDERINO: Yes, I believe, if I'm
19 following your question.
20 REPRESENTATIVE SANTORA: I'm trying to
21 understand why we didn't go with the 133 million
22 that was going to be coming in. Back of a
23 napkin math, I got -- I have 8 months. If it
24 started in September and you laid off in
25 December, I'm just confused on that matter. 60
1 MS. MANDERINO: Yeah. When we ran the
2 -- I think I understand your question. When we
3 ran the numbers, actually starting back in
4 August but continually on a practically weekly
5 or bi-weekly basis from August until November
6 18th when we had to do the layoff notices, once
7 we hit April of this year, April of 2017, we ran
8 in the red and we never recovered from it, based
9 on when our quarterly payments were coming in.
10 And so the longer I delayed any kind of
11 layoff, the more I would have to layoff to get
12 out of the red and back into the black. And
13 that was the decisions that were being made all
14 along, is the longer we delayed, the sooner we
15 ran the red ink that we couldn't get out of.
16 But based on the -- what we had in
17 federal dollars and the end of state dollars on
18 December 30th, come April of this year, we ran
19 red ink that we couldn't recover from.
20 REPRESENTATIVE SANTORA: So could we
21 have laid off less and made it to June?
22 MS. MANDERINO: No. If we laid off
23 less, we would have ran red ink before April.
24 REPRESENTATIVE SANTORA: Before April.
25 Okay. So my other question then reverts to -- 61
1 the state funding was $56 million, 500 people.
2 Are all these people making over a hundred
3 thousand dollars a year?
4 MS. MANDERINO: No. The average cost of
5 our workers in our complement is in terms of --
6 what they make is 49,7, I believe; and I don't
7 -- and it's probably a little lower in UC, just
8 based on the pay grades of the folks in there.
9 REPRESENTATIVE SANTORA: Okay. So you
10 also mentioned you have a group that was part of
11 the layoffs that was responsible for delinquent
12 receivables and -- what were the delinquent
13 receivables prior to the layoffs, total
14 delinquent receivables?
15 MS. MANDERINO: I do have a figure.
16 I'll make sure I provide it to folks. I know we
17 provided it in the past. It's a high number. I
18 think one of the things you have to understand
19 about that high number is, it's kind of like
20 court costs and fees. There's a lot of what
21 I'll call folks on the books that will never be
22 able to be recovered from. The business went
23 out of existence. The person is no longer
24 there.
25 REPRESENTATIVE SANTORA: You're not 62
1 allowed to write those off after you know that
2 the business is gone?
3 MS. MANDERINO: Yeah, we do not write
4 them off and I don't know if that is a policy
5 decision of us or the US DOL.
6 (CONFERRING WITH STAFF.)
7 MS. MANDERINO: It's our policy
8 decision, at this point.
9 REPRESENTATIVE SANTORA: So if I
10 refreshed your memory on some of these numbers,
11 would you be able to give me the percentage that
12 should be written off?
13 MS. MANDERINO: I would rather you ask
14 the question and me get you those answers in
15 writing.
16 REPRESENTATIVE SANTORA: So I understand
17 delinquent receivables as of June to be about --
18 from the employer side -- to be about $197
19 million. I understand that the delinquent
20 employee withholding receivables was about 2
21 million in change; the interest receivables, $97
22 million, $97.4 million; penalty receivables,
23 over $8 million; fee receivables, 1.9, for a
24 total of $307 million.
25 What are we doing to collect this money? 63
1 That's a lot of money and would solve a lot of
2 problems.
3 MS. MANDERINO: Yeah. Thank you. We
4 are very aggressive in our collections. And if
5 you look at how Pennsylvania stacks up, someone
6 will correct me if I'm wrong, but I'm thinking
7 that that's 4 percent of our -- why do I have
8 that 4-percent number stuck in my head? Well,
9 let me do this: I know that as we compare to
10 other states we are not out of the norm in terms
11 of what happens there; so let me get all that
12 information to you.
13 REPRESENTATIVE SANTORA: Okay. But I'm
14 worried about Pennsylvania. I'm not worried
15 about other states.
16 MS. MANDERINO: Okay.
17 REPRESENTATIVE SANTORA: $307 million
18 seems like a lot of money. And I'll give you
19 the benefit of the doubt that a percentage of
20 those companies are gone and you're never going
21 to see that money. However, the money that's
22 still available, we have to get much more
23 aggressive on, because these numbers solve your
24 problems.
25 MS. MANDERINO: Actually, thank you for 64
1 that question. But let me -- they don't solve
2 my problem, and here's why: Those numbers,
3 every penny that is recovered there, goes into
4 the trust fund. The trust fund dollars are not
5 allowed to be used to administer the
6 Unemployment Compensation System.
7 The feds give you different money for
8 administering the Unemployment Compensation
9 System.
10 REPRESENTATIVE SANTORA: Okay. Thank
11 you for that answer.
12 MAJORITY CHAIRMAN SAYLOR: Very good.
13 Representative Kim.
14 REPRESENTATIVE KIM: Thank you, Chairman
15 Saylor. Good afternoon, Secretary. I'm going
16 to go back to the minimum wage. The Federal
17 Reserve Chair and many economists have said that
18 wage stagnation is one of the last factors
19 before we head into a full recovery from the
20 recession.
21 In 2016, which I'm sure you know, the
22 inflation adjustment wage was one-third below
23 the 1968 level, even though productivity has
24 doubled since 1968. And just a reminder, 7.25
25 an hour full-time is only $15,000 a year. 65
1 I believe raising the minimum wage to a
2 liveable wage is so important for a number of
3 reasons, but one is to increase the purchasing
4 power of low-wage workers, which in return helps
5 the local economy and local businesses.
6 Most of the northeastern states have
7 already raised the minimum wage; in fact, four
8 states that surround Pennsylvania: Maryland,
9 Ohio, New Jersey, and New York all have a high
10 minimum wage and a lower unemployment rate. I
11 think that's important to note.
12 As policymakers, we need to make these
13 changes, too, with our neighboring states. If
14 we could agree on a higher minimum wage,
15 whatever that magic number is, how important to
16 you is it to attach it with a cost-of-living
17 adjustment and would you be open and think it's
18 more helpful if it's a graduated minimum wage,
19 anything higher than 7.25?
20 MS. MANDERINO: Yeah. Thank you very
21 much, Representative Kim, for your advocacy for
22 increasing the minimum wage; and I really don't
23 want to speak out of school. It is the
24 Governor's, kind of position, to set the policy
25 for our Administration. You know he supports 66
1 the minimum wage. I don't know if he has come
2 out publicly for -- with a position with regard
3 to an automatic cost-of-living escalator, so I
4 will reserve that answer for the Governor.
5 If I may, Chairman, get back to the last
6 question, too? I misspoke with regard to what
7 goes into the trust fund. And the bulk of the
8 dollars that I was being asked about do go into
9 the trust fund, Representative. The penalties
10 and interest, should penalties and interest be
11 able to be recoverable in those instances,
12 penalty and interest does not have to go into
13 the trust fund.
14 So to the extent that there could be
15 penalties, additional penalties and interest
16 captured, that amount could go into the actual
17 administration of the fund. And I didn't mean
18 to deceive; I just misspoke.
19 MAJORITY CHAIRMAN SAYLOR:
20 Representative Kim, were you done? Okay. I
21 wanted to make sure you were done.
22 MS. MANDERINO: Oh, I'm sorry, Patty.
23 I'm sorry.
24 MAJORITY CHAIRMAN SAYLOR: Okay.
25 Representative Quinn. 67
1 REPRESENTATIVE QUINN: Thank you, Mr.
2 Chairman. Good to see you again.
3 MS. MANDERINO: Good to see you.
4 REPRESENTATIVE QUINN: The Governor's
5 executive budget proposes loan forgiveness of
6 the $4 million provided in the Uninsured
7 Employers Guaranty Fund, UEGF, from the
8 Workmans' Compensation Fund that occurred in
9 2015-'16.
10 Without that loan forgiveness, this fund
11 would likely have a $4-million deficit. This is
12 on top of the $6.1 million that was statutorily
13 transferred in '15-'16. The budget also calls
14 for the enactment of legislation to sustain the
15 fund on a long-term basis.
16 In your opinion, what legislative fixes
17 are necessary to make this fund solvent and less
18 reliant on loan transfers?
19 MS. MANDERINO: Thank you very much for
20 that question. The Uninsured Employers Guaranty
21 Fund, quick primer, was created by the General
22 Assembly to make sure that workers who were
23 injured and whose employers were not carrying
24 workers' compensation coverage could get
25 coverage for their injuries. 68
1 The mechanism the General Assembly set
2 up was kind of a small surcharge on premium. So
3 the administration of the Workers' Comp Fund,
4 that's a fund that surcharges premiums and then
5 UEGF did, too. The Workers' Comp Admin Fund has
6 a very healthy surplus. The UEGF Fund surcharge
7 has never, since its inception, been adequate
8 enough to cover the costs that are coming into
9 that system.
10 Now, on our end, from the Department, we
11 made a major change last year that's saving
12 administration -- cost of delivering the
13 services. That use to be farmed -- that used to
14 be paid out on an external contract to
15 administer that fund. We brought it internally,
16 internal last year, and have our State Workers'
17 Insurance Fund, which also knows how to process
18 workers' claims doing that. That's saving
19 $500,000 a year.
20 But in order to get it done correctly,
21 we need to adjust what it is that is allowed to
22 come into the UEGF Fund from employer surcharge.
23 REPRESENTATIVE QUINN: Okay.
24 MS. MANDERINO: And it's also a
25 snapshot. I'm sorry. I know you want me to 69
1 give short answers, and it's very hard for me.
2 I'm not -- but the -- what comes into that fund
3 in terms of claims is very unpredictable. It's
4 on a claim-by-claim basis.
5 So we can have a catastrophic claim next
6 year that can totally throw it out of whack and
7 we just don't know that.
8 REPRESENTATIVE QUINN: So what I wanted
9 to ask is, In addition to having more money come
10 into that fund, I'd like to see some measures
11 being taken for reforms. For example, a 2014
12 Labor & Industry audit showed an alarming 87
13 percent of the claimants hadn't filed a tax
14 return, and nearly a third could not prove the
15 wages that they've earned.
16 Are you willing to work with us to try
17 and find a combination, of not just new
18 assessments coming in, but from reforms from
19 those who are eligible for the fund?
20 MS. MANDERINO: Thank you,
21 Representative Quinn. We are always available
22 and anxious to work with the General Assembly.
23 I know there's legislations out there. There's
24 actually a couple of different proposals out
25 there. I do think that you -- as you know, it's 70
1 a little bit complicated, for example, when you
2 get to the wage issue; because if somebody's
3 employer wasn't carrying workers' compensation
4 coverage, they probably weren't doing a lot of
5 things correctly on the books with regard to
6 their business; but you still have an injured
7 worker.
8 REPRESENTATIVE QUINN: I'm going to
9 quick look back to your Department of Labor &
10 Industry here. Of your line items, you've got
11 an increase in the GGO and then a slight
12 increase in the transfer to the Vocational
13 Rehabilitation Fund.
14 My neighbor here in Montgomery County is
15 always keen and a wonderful Legislator with
16 regard to these. But is that increase -- are
17 you going to be able to deliver the same level
18 of services or are you having more people come
19 in to a very slight increase of $5,000? What do
20 you intend that to be used for?
21 MS. MANDERINO: Thank you. We do
22 believe with what the Governor is asking for
23 with regard to OVR that that will allow us to
24 continue to maximize federal drawdown into that
25 program. That's a 2179 matching program. And 71
1 thanks to the General Assembly for getting us up
2 to that level. And we believe what we've asked
3 for will keep us at the level of maximizing, and
4 we have been serving more people. We've served
5 an additional, particularly in terms of young
6 people with preemployment transition services,
7 we're really expanding our outreach to younger
8 populations.
9 REPRESENTATIVE QUINN: Thank you.
10 MAJORITY CHAIRMAN SAYLOR: Very good.
11 Representative Krueger-Braneky. Thank you.
12 REPRESENTATIVE KRUEGER-BRANEKY: Thank
13 you, Mr. Chairman; and thank you, Secretary, for
14 joining us here today. I first became
15 acquainted with the Department of Labor &
16 Industry as a nonprofit executive director
17 working in economic development. And through
18 that role, I helped to launch an industry
19 partnership.
20 It was focused on Green Stormwater
21 Infrastructure. And the small amount of seed
22 funding that was received through the state has
23 now helped to create over $14 million in revenue
24 growth for the companies participating,
25 projected supporting about a thousand jobs a 72
1 year in the southeastern region.
2 So I was curious to see that the
3 Industry Partnership Program was being moved out
4 of the Department of Labor & Industry. Can you
5 talk about that a bit?
6 MS. MANDERINO: Yeah, sure. And I thank
7 you for highlighting the value of industry
8 partnerships and what it really has done for
9 companies and for incumbent workers, because
10 it's really an incumbent worker and business
11 growth program.
12 DCD and Labor & Industry have been
13 working extremely closely in the last two years
14 on all of our economic development and
15 employment and training initiatives. Many of
16 the businesses that were using industry
17 partnerships, we're also using WebNet; and it
18 was kind of a natural fit.
19 Plus, the DCD is really taking a lead in
20 terms of all of the agencies in being the
21 one-stop shop for kind of employers. They have
22 a real outreach, a real ability within their
23 system in terms of their advanced teams that
24 work with employers. So while this tool's being
25 moved into their toolbox, we very much expect to 73
1 be continuing to work with them on all of the
2 economic development and employment training
3 initiatives in the state.
4 REPRESENTATIVE KRUEGER-BRANEKY: So will
5 the scope of that program, the Industry
6 Partnership Program, be impacted any way by the
7 transfer to another department?
8 MS. MANDERINO: I don't think so. I
9 think, if anything, it will be enhanced; because
10 it will be able to be combined with other tools
11 that are more naturally -- have been more
12 naturally in DCD's toolbox.
13 REPRESENTATIVE KRUEGER-BRANEKY: Okay.
14 Thank you. And then second question -- I see
15 the green light is still on, Mr. Chairman. I
16 think we're learning the new system here. So
17 another question around job creation: Yesterday
18 we got into a conversation with the Independent
19 Fiscal Office around tax credits and noted that
20 there is tax credits every year that don't go
21 through the same amount of scrutiny that
22 appropriated budgets do, but it's still taxpayer
23 dollars. And, oftentimes, these tax credits are
24 going to multinational corporations based out of
25 state and not necessarily delivering on the jobs 74
1 that they promise.
2 So can you talk, from a job creation
3 standpoint, what you think we need to be doing
4 from a policy perspective to actually stimulate
5 good job creation in Pennsylvania?
6 MS. MANDERINO: From the corner that I
7 sit in terms of the workforce development, you
8 know, we like to say that we have two
9 customers: It's the employer and it's the
10 worker. But from my perspective, as I've talked
11 to employers, quite frankly, while we see the
12 worker more often, we need the employer to make
13 the system work.
14 And so I think that everything that we
15 can do and continue to do in Pennsylvania to
16 encourage job growth within our employers is
17 critical. I place particular emphasis on
18 manufacturers in Pennsylvania. We have a very
19 robust manufacturing sector in south central and
20 in other areas. We're doing a lot with them for
21 growth. We're really concentrating on sector
22 strategies, working with our industries by
23 regions to figure out which sectors are the most
24 important to grow, and connecting them back all
25 the way through the system with our Workforce 75
1 Development Boards, with our Career and
2 Technical Education School, with our secondary
3 schools in terms of career pathways for young
4 people, all feeding kind of the industry sectors
5 and the on-demand industries in Pennsylvania.
6 And I think if we continue along that
7 path, we will serve our citizens in our
8 Commonwealth well.
9 REPRESENTATIVE KRUEGER-BRANEKY: And
10 then just the flip-side of the UC conversation
11 we've been having for most of the afternoon, the
12 UC System doesn't just serve workers; it serves
13 employers, as well.
14 Have you gotten complaints from
15 employers about the breakdown in the system?
16 MS. MANDERINO: I think that one's a
17 little bit too early to tell. But it will
18 manifest itself in the backlog as we start to go
19 through it, yes.
20 REPRESENTATIVE KRUEGER-BRANEKY: Okay.
21 Thank you so much.
22 MS. MANDERINO: Right now, we've been so
23 concentrated on just trying to triage and get
24 the benefits out the door to the people who need
25 it to put food on their table, but there's the 76
1 whole fallback that comes from that in all the
2 other parts of the system.
3 REPRESENTATIVE KRUEGER-BRANEKY: Well,
4 the solution from last session had broad
5 bipartisan support in the House. I'm hoping our
6 friends in the Senate join us in solving the
7 problem this session. Thank you.
8 MS. MANDERINO: Thank you.
9 MAJORITY CHAIRMAN SAYLOR:
10 Representative Brad Roae.
11 REPRESENTATIVE ROAE: Thank you, Mr.
12 Chairman; and thank you, Madam Secretary. Okay.
13 I have a question about unemployment. If I'm
14 reading these numbers right, in 2012, you got
15 about $167 million of federal money. The
16 unemployment rate was about 7.8 percent. In
17 2016, you only got 134 million of federal money,
18 but the unemployment rate was only about 5.7
19 percent.
20 So, you know, during that time period,
21 you're getting 20 percent less money from the
22 federal government to administer unemployment;
23 but unemployment is 28 percent less than it was.
24 So I guess my question, if you could briefly
25 explain, if the unemployment rate is a lot lower 77
1 than it was before, how come you're struggling
2 so much financially?
3 MS. MANDERINO: We're struggling
4 financially because we lost the SIF Funds, but
5 that's not the answer you want me to give you.
6 REPRESENTATIVE ROAE: Hold on. Hold on.
7 In 2012, there was only federal money, $167
8 million. In 2016, there was 134 million federal
9 dollars, plus either 52 or 56 million of the
10 state money; so it was actually like 180 or 190
11 million, so it was actually more money than in
12 2012, with a lower unemployment rate.
13 MS. MANDERINO: Let me answer that in
14 two phases: The infrastructure costs remain the
15 same, regardless of your unemployment system.
16 And as a matter of fact, they grow, because
17 every year it costs us more to try to maintain
18 this legacy system as we work towards the
19 replacement.
20 So your infrastructure costs stay the
21 same and/or grow, whether it's the cost of your
22 computer, the cost of your leases, the cost of
23 keeping the lights on. Your personnel costs
24 every year grow, whether it's the cost of
25 living, the cost of health benefits, etc. 78
1 So all of those things continue to
2 increase, which is why I could say to you, we
3 had a 23-percent reduction in personnel costs --
4 excuse me -- complement, the number of people
5 working the UC system increased by 23 percent;
6 but the costs didn't --
7 REPRESENTATIVE ROAE: Excuse me. Is
8 that before or after the 500 that got laid off
9 all at once?
10 MS. MANDERINO: That was before.
11 REPRESENTATIVE ROAE: Okay.
12 MS. MANDERINO: That was before.
13 REPRESENTATIVE ROAE: Okay.
14 MS. MANDERINO: I do have the numbers in
15 terms of how much we had reduced the complement
16 before the layoffs, and we had already reduced
17 complement by several hundred. Barb, do you
18 remember the number?
19 (CONFERRING WITH STAFF.)
20 Yeah. Okay.
21 REPRESENTATIVE ROAE: I mean, it seems
22 like the funding's fairly proportional with the
23 unemployment rate, and I just -- it just seems
24 like now that unemployment is back at more
25 historical levels, historical funding, it just 79
1 seems like it would work.
2 MS. MANDERINO: That would be true if we
3 had zero growth of cost of living for absolutely
4 every aspect of the system. But I don't think
5 that's the case in your household and certainly
6 not the case in mine, and it's not the case in
7 the UC household either.
8 REPRESENTATIVE ROAE: Okay. Now, as far
9 as the call centers go, I found it frustrating
10 that before the 500 people were laid off, the
11 Labor & Industry website said people will start
12 getting slower service due to staffing cuts.
13 I would have thought that after that
14 actually happened is when that would happen.
15 But my question is: I heard, and I don't know
16 if this is true, but I'm going to ask you;
17 because you're right here. I heard that there's
18 two days a week they don't take phone calls. Is
19 that accurate?
20 MS. MANDERINO: Okay. I see where
21 you're going.
22 REPRESENTATIVE ROAE: And there's a
23 reason for that. I'm sure there is.
24 MS. MANDERINO: Yes. First of all, I do
25 not believe that there was ever anything put on 80
1 our website before the layoff.
2 REPRESENTATIVE ROAE: I can get you a
3 copy of it.
4 MS. MANDERINO: Before the layoff
5 notices. The move from -- I talked about how
6 the service center employees do much more to
7 process a claim than just answer the phone. And
8 so what we had done a couple of years ago that
9 really improved our efficiency, was moved to --
10 REPRESENTATIVE ROAE: Excuse me one
11 second. We're almost out of time. Just real
12 briefly, do you let unemployed people know what
13 two days a week it's pointless to call, so they
14 don't bother trying to call?
15 MS. MANDERINO: Yes, our no-call days
16 are posted. They've always been posted on our
17 website.
18 REPRESENTATIVE ROAE: What days are
19 they, just so we know.
20 MS. MANDERINO: Tuesdays and Fridays, I
21 believe.
22 REPRESENTATIVE ROAE: Okay.
23 MS. MANDERINO: I'm sorry. Wednesday
24 and Friday.
25 REPRESENTATIVE ROAE: That's very 81
1 helpful. Wednesday and Friday?
2 MS. MANDERINO: Yes.
3 REPRESENTATIVE ROAE: Well, thank you so
4 much. I appreciate it.
5 MAJORITY CHAIRMAN SAYLOR:
6 Representative Dean.
7 REPRESENTATIVE DEAN: Good afternoon,
8 Madam Secretary. How are you? Good to see you.
9 MS. MANDERINO: Good.
10 REPRESENTATIVE DEAN: Thanks for all
11 your information today. And just to recap
12 briefly and pivot off the UC centers, really
13 what happened, in my mind, is you inherited,
14 first of all, a computer system 40 to 50 years
15 old and yet a mission to increase efficiencies.
16 And it seems like you were chugging
17 along and doing just that at a time when, and to
18 give this body it's due, the Pennsylvania House
19 recognized the need and passed legislation; sent
20 it over to the Senate that would have supported
21 the 500 jobs and 500 Pennsylvanians who lost
22 their jobs through no fault of their own. And
23 it wasn't because they weren't needed. We still
24 needed them. And in a cruel twist of irony,
25 they were serving those who were unemployed and 82
1 they became unemployed during the holiday
2 season, so that they went home to try to figure
3 out how they're going to receive benefits, how
4 they're going to pay their mortgages and their
5 rents.
6 These are human beings that have lives
7 that were directly affected by the failure of
8 government to do what it needed to do, failure
9 of the Senate to pick up the ball, the Senate
10 leadership to pick up the ball and say, how do
11 we fix this problem so we don't cause a crisis?
12 But we caused a crisis. And so you have had to
13 spend a whole lot of time focusing on that.
14 And I thank you for that, and I admire
15 you for doing it. I hope we will right this. I
16 hope that my colleague's legislation will come
17 forward very, very fast and that you will be
18 able to invest in technology and create
19 efficiencies. And as you say, reduce
20 complement, through attrition or whatever other
21 natural means there are. But people waiting,
22 and my constituents are doing this, waiting on
23 the telephone 2, 3, 4-plus hours is insane for
24 benefits that they paid for. This is not for a
25 handout. This is not for a gift. It's for 83
1 benefits they paid for. Something grossly wrong
2 with that.
3 So let me pivot to the positive.
4 MS. MANDERINO: Thank you.
5 REPRESENTATIVE DEAN: As the Secretary
6 of Labor, I'm sure you really want to be
7 thinking about the future and progress for
8 Pennsylvania to get us off the benchmark that
9 we saw in 2013, where we were 46th in job
10 growth.
11 I think the Chairman said today that we
12 are last in job growth in the northeast, and I'm
13 sure you're a problem-solver that wants to say,
14 how do we turn that kind of statistic around
15 after we solve -- in addition to solving those
16 other larger problems.
17 So minimum wage, I think, is one way to
18 begin. The other thing we learned from the IFO
19 is that the demographics in Pennsylvania are
20 older Pennsylvanians; that older Pennsylvanians
21 are aging out of the workforce; that it's
22 estimated almost 200,000 Pennsylvanians will age
23 out of the workforce and so there will be that
24 kind of job loss.
25 How do you want Pennsylvania, through 84
1 policies, through good legislation, through
2 sound budgeting, how do you want us to grow
3 jobs, to grow our economic engine?
4 MS. MANDERINO: When I travel the state
5 and talk to employers, and I try to do that
6 literally weekly, I talk to employers who see
7 their companies poised for growth and don't feel
8 that they can get the talent that they need.
9 Pennsylvania is not losing population,
10 but we're not gaining it as quickly as other
11 states. Our migration into our state is not
12 from other states, but significantly from other
13 countries.
14 I want to say all those things to put
15 this together. We have got to make sure, from
16 cradle to grave, that we are preparing our folks
17 for the jobs that are there and where the
18 employer see their potential to grow.
19 We have a lot of work to do in our
20 education system to make sure that our young
21 people are prepared. We have to connect career
22 pathways from education to businesses so that
23 the young people are coming out with the skills
24 that they need. And the role that my Department
25 plays with that, along with the Department of 85
1 Education, is to do everything that we can to
2 make sure that those connectors are there. And
3 we cannot afford to leave anybody behind.
4 And one of the roles of our State
5 Workforce Policy when it comes down to workforce
6 development is to concentrate our resources on
7 folks who have the greatest barriers to
8 employment, because we can't write them off any
9 longer.
10 We can't write them off if they came
11 from an environment where they didn't get the
12 education that they needed in the first end. We
13 have to make sure they get it. We can't write
14 them off because they have a language barrier.
15 We have to make sure they get over that barrier.
16 We can't write them off because they had a prior
17 incarceration but now they've paid their times.
18 We have to get them past that barrier, because
19 our employers have jobs for them if we can get
20 them there; and that's the major emphasis of our
21 workforce policy: connecting education and
22 business, making career pathways, and making
23 sure we're serving people with the greatest
24 barriers to employment.
25 REPRESENTATIVE DEAN: Thank you, 86
1 Secretary.
2 MAJORITY CHAIRMAN SAYLOR: Very good.
3 Representative Helm.
4 REPRESENTATIVE HELM: Thank you, Mr.
5 Chairman and Secretary Manderino. I'd like to
6 touch on OVRs. Even though you just talked
7 about it, I have a little bit of a different
8 question.
9 So what are the current and proposed
10 funding levels for the Office of Vocational
11 Rehabilitation, including state and matching
12 federal funds? Does the Governor's proposed
13 budget allow you to continue to draw down all
14 available federal funds?
15 MS. MANDERINO: Yes. I said earlier, I
16 stink with numbers. I know they're right there
17 on the budget formula, but I know last -- step
18 back two years ago, we were not maximizing our
19 federal dollars.
20 The General Assembly gave us an
21 additional $5 million in '15-'16 in order to
22 draw down maximum federal dollars, and we did.
23 In '16-'17, you gave us another $2 million in
24 order to maximize federal dollars, and we did.
25 That enabled us to serve a lot more folks and 87
1 particularly to spend about $20 million on
2 preemployment transition services for young
3 people with disabilities while they're still in
4 school to make their transition to work.
5 With what the Governor's asking for in
6 this budget, we believe we will continue to be
7 able to maximize our federal dollars and draw
8 everything in to serve all the people of
9 Pennsylvania with disabilities and get them into
10 working towards competitive integrated
11 employment.
12 REPRESENTATIVE HELM: Thank you. Also,
13 a question: Can you give a brief update on the
14 Governor's executive order on Employment First,
15 issued last year, in an effort to increase
16 employment opportunities for people with
17 disabilities?
18 MS. MANDERINO: Yes. I'm very pleased
19 to say that the Governor has us all working very
20 hard within the cabinet on Employment First. As
21 a matter of fact, I was just on a phone
22 conference led by Secretary Dallas, who's
23 heading our team. I think the first report on
24 the executive order will be coming out next
25 month. But all of the agencies are working 88
1 together to see how we can maximize our
2 resources and move forward with that.
3 OVR has always -- our mission has been
4 very much in sync with what Employment First is
5 all about, because we serve -- our goal is to
6 serve people and get them into employment in the
7 community.
8 And so from that perspective, we've been
9 lending a lot of resources to the Governor's
10 initiative on Employment First. And I really
11 don't want to kind of steal any thunder about
12 the progress, and I'd rather let the report,
13 which I think is expected out in a couple of
14 weeks, give a fuller picture of what all the
15 agencies are doing.
16 REPRESENTATIVE HELM: Thank you, Mr.
17 Chairman. Thank you, Madam Secretary.
18 MS. MANDERINO: Thank you.
19 MAJORITY CHAIRMAN SAYLOR:
20 Representative Galloway.
21 REPRESENTATIVE GALLOWAY: Thank you, Mr.
22 Chairman. Good afternoon. Good to see you
23 again, Kathy.
24 MS. MANDERINO: Good to see you.
25 REPRESENTATIVE GALLOWAY: First, I want 89
1 to start off by thanking you and your staff.
2 It's been very -- you know, since I took over as
3 the Democratic Chairman of Labor here in the
4 House, it's been great communication between you
5 and your staff, anything I've asked for, and
6 I've asked for a lot, and I understand that. So
7 I appreciate you, and I'd like to pass onto your
8 staff that that they're -- you've got a
9 top-notch staff.
10 MS. MANDERINO: Thank you.
11 REPRESENTATIVE GALLOWAY: Second, you
12 know, a little over 35 years ago, I started my
13 own business in IT as a COBOL programmer. It
14 was the first, you know -- maybe I shouldn't
15 date myself like that -- that was the first
16 programming language I used. You know, it's
17 hard to believe there are still some places out
18 there that still use COBOL.
19 But it's 2017. You know, it's been a
20 long time coming and, you know, people have to
21 understand that technology has moved forward and
22 the upgrade of that technology saves money. And
23 the focus, you know, I understand the focus --
24 your focus on keeping the lights on, on keeping
25 the checks coming; but certainly an upgrade in 90
1 hardware and infrastructure has a savings
2 component that shouldn't be underestimated.
3 Third, the UC fix, I want to thank you.
4 You nailed it. We need a short-term fix to buy
5 us time for a long-term solution. You said it
6 in 10, 12 words. That's exactly what we need,
7 and I thank you for bringing that to the table
8 and saying it so succinctly.
9 I'll finish on one thing, something I've
10 asked often. Enforcement: Enforcement is a big
11 part of what you do. We pass laws all the time.
12 We pass these bills.
13 Governor puts out all kinds of
14 procedures. And enforcement oftentimes comes
15 down to, specifically, concerning things like
16 misclassification and prevailing wage, but
17 specifically misclassifications.
18 We've been receiving complaints -- you
19 know, we passed a huge misclassification bill a
20 couple years ago, mainly because of the amount
21 of money, you know, the millions and millions of
22 dollars we were losing in an underground
23 economy; and the enforcement of that bill came
24 to your office. Are you receiving a spike in
25 the last year or so in the amount of complaints 91
1 from individuals and businesses of others that
2 are breaking the law as it relates to
3 misclassification and prevailing wage?
4 MS. MANDERINO: Thank you, Mr. Chairman.
5 If I may just again reemphasize that we do need
6 a long-term fix on unemployment. And you said
7 that number --
8 REPRESENTATIVE GALLOWAY: I did mention
9 that. Short-term fix first for a long-term
10 solution. Thank you.
11 MS. MANDERINO: Number two,
12 misclassified workers touches the Department in
13 two ways. But one is just misclassified workers
14 when it comes to UC and workers' comp
15 collections, and that's not what you're asking
16 me about. You're asking me about misclassified
17 workers in terms of Act 72 and the construction
18 of the --
19 REPRESENTATIVE GALLOWAY: I'm asking
20 about from a user standpoint. Someone calls the
21 Department and says, I know somebody's doing
22 something wrong. I want to know the process
23 from there on out. And I want to know if
24 there's a spike in the amount of reported calls,
25 and what does it look like for an end user? 92
1 What happens in the Department? As far as
2 enforcement and as far as an end user, what
3 communication goes back to the end user as far
4 as whether or not this complaint was valid?
5 MS. MANDERINO: Okay. Let me stay with
6 Act 72, which is misclassified construction
7 workers, because that's a specific act of
8 authority.
9 We didn't -- in the last year, we had
10 185 new investigations opened. And as a result
11 of that and a few that were open prior to that,
12 we had 187 entities that were found to have
13 violated the Act. The Department collected 383
14 million in administrative penalties in 2015.
15 But after that, we've collected over 600,000 --
16 I'm saying that wrong. We collected 383 in
17 penalties in 2015; 600,000 between 2015 and
18 2016; and that was a huge spike, because prior
19 to 2015, only $12,000 worth of penalties were
20 collected from 2011 to 2015.
21 Then what happens with that, let me get
22 back to you with an answer to that, because I
23 don't know how to answer that correctly. I see
24 the red light. Okay, Mr. Chairman.
25 MAJORITY CHAIRMAN SAYLOR: Yes. Thank 93
1 you. Representative Delozier.
2 REPRESENTATIVE DELOZIER: Thank you, Mr.
3 Chairman. Hello. Over this way (indicating).
4 Make you go back and forth. I have a couple
5 questions on two separate issues. So quickly,
6 the first one deals with an issue with two
7 committees that I've served on with Consumer
8 Affairs and Labor & Industry.
9 The one call system that we have in the
10 legislation that has been proposed back and
11 forth, just want to take this opportunity to try
12 and ask a few quick questions about that
13 particular proposal and your views on that.
14 One, to start, is, Do you support the
15 transfer over to the PUC and does the Governor,
16 as well?
17 MS. MANDERINO: Yes, the Governor
18 supports the transfer of the PA One Call to the
19 UC. And the Department will continue to
20 administer that system's enforcement of PA One
21 Call as aggressively as we can, so long as the
22 Department has PA One Call within our
23 responsibility.
24 I do know that there have been a couple
25 of hearings on that in the last session, and I 94
1 just want to urge the General Assembly to take
2 up seriously the issues that we have raised
3 during those hearings. Because regardless of
4 whatever agency enforces PA One Call, it is
5 paramount that the enforcement agent have
6 comprehensive data about the utility strikes
7 that happen in Pennsylvania in order to be able
8 to do its job.
9 Under the current law, there's no
10 requirement that facility owners, operators,
11 excavators, the folks who might have a hit, have
12 to report those hits to our agency. As a matter
13 of fact, the biggest collector of whether those
14 hits happen and what happens is PA One Call
15 themselves.
16 And despite repeated requests since I've
17 gotten into the Department, they are not willing
18 to share the information about the hits with the
19 Department. And if they're not willing to share
20 with the enforcement agent where the hits are
21 happening, we can't properly enforce. So
22 whatever you do with regard to legislation and
23 whoever you put enforcement with, you have to
24 make sure that the enforcing agency is required
25 to receive the information about the hits so 95
1 that they can make sure that they are keeping
2 the public and the workers safe.
3 REPRESENTATIVE DELOZIER: Okay. And
4 what do you believe will be the impact on Labor
5 & Industry if we switch that out and move it
6 over to the PUC?
7 MS. MANDERINO: We will continue to
8 enforce all the other labor laws that we
9 enforce.
10 REPRESENTATIVE DELOZIER: So there's
11 minimal impact then necessarily with -- how many
12 employees do you have working with the
13 enforcement and oversight of this?
14 MS. MANDERINO: Yeah, because the
15 underground utility law is an incident-based
16 issue, we use our inspectors that do a lot of
17 other labor law, labor compliance work in the
18 field for that purpose. We have 69 -- why's 69
19 sticking in my head? I'm looking for Shawn.
20 (CONFERRING WITH STAFF.)
21 Oh, we have 32. I was combining BOIS
22 and labor law. We have 32 labor law compliance
23 investigators and we have other investigators in
24 our Bureau of Occupational and Industrial
25 Affairs that we had started some cross-training 96
1 between.
2 REPRESENTATIVE DELOZIER: Okay. And how
3 much of the dollars from the fees come to Labor
4 & Industry to cover the cost of enforcement from
5 PA One Call?
6 MS. MANDERINO: Well, the -- PA One Call
7 actually was one of the few areas where, when we
8 got fees, we kept them in the Department.
9 Everything else went into the General Fund,
10 which is a discussion for another part of my
11 budget, if anybody wants to ask me that
12 question. But it was covering the cost of what
13 we were doing for --
14 REPRESENTATIVE DELOZIER: So your fees
15 were covered? So the costs were covered?
16 Okay. And switching real quick over before the
17 time runs out is, we had a hearing in the Labor
18 Committee dealing with many issues, but the SWIF
19 Fund and outstanding debt.
20 One of the issues that was raised by
21 folks from your agency, and that's something
22 that raised a lot of flags, as well as interest
23 to fix that; because there are many companies
24 that might be bad actors that don't pay in leave
25 and may form a new business under another name. 97
1 And because SWIF is the last resort, they're
2 required to provide that insurance.
3 Would you support legislation that would
4 require and give more teeth to the Agency to be
5 able to go after those bad actors in order to
6 bring those dollars in, and possibly be able to
7 give authority to deny insurance, if they know
8 and can validate that that is a bad actor?
9 MS. MANDERINO: Yeah. I mean, we would
10 very much like to work with the General Assembly
11 on any solution. I think it's always a
12 balancing act that you have to play between
13 driving businesses underground and making the
14 problem worse versus trying to keep them
15 operating their business correctly.
16 So, you know, we talked a few minutes
17 ago about the UEGF Fund and we don't want to
18 drive people out of getting workers' comp
19 insurance and then we drive those injured
20 workers into the UEGF Fund. But I think there
21 are some things that we can try to accomplish
22 together to make a better balance.
23 REPRESENTATIVE DELOZIER: Okay. I look
24 forward to working with you on it. Thank you.
25 MAJORITY CHAIRMAN SAYLOR: I did want to 98
1 recognize that we've been joined by
2 Representative Kate Harper and Representative
3 John Taylor here.
4 Next questioner is Representative
5 Miccarelli.
6 REPRESENTATIVE MICCARELLI: Thank you,
7 Mr. Chairman; and thank you, Madam Secretary. I
8 had to chuckle when you asked if we actually
9 read your testimony. It's almost like you were
10 a Rep yourself at one point.
11 So my first question is: During the
12 budget impasse that we had, somehow the call
13 centers had been kept open. And I was wondering
14 if the same ideas that kept them open during the
15 budget impasse were considered, and were there
16 any conversations to that effect?
17 MS. MANDERINO: Remember that, even
18 though we had the signature dollars from SIIF,
19 we have -- the majority of the money comes from
20 the feds, so there was never a fear -- well, let
21 me say it differently; because actually I
22 started down the wrong path. The SIIF dollars
23 came to us whether or not the budget passed,
24 because they're not coming out of the General
25 Fund. The SIIF dollars were authorized for us 99
1 to be able to take a portion of the employee
2 contributions to the trust fund and move it over
3 and use it for administration. So those dollars
4 were there, and they were authorized by the SIIF
5 legislation, not by anything that happened in
6 the Appropriations Bill. Does that make sense?
7 REPRESENTATIVE MICCARELLI: It does.
8 And just kind of a follow-up to that, is there
9 any way that these call centers could be opened
10 or there could be a decision made to open them
11 sooner rather than later? I heard your timeline
12 of three to six weeks. Pending, you know,
13 legislation like Representative Schweyer's
14 coming forth, is there a way the Governor could
15 do that?
16 MS. MANDERINO: With all due respect,
17 Representative Miccarelli, I'm not going to
18 recommend to my boss that we open anything on a
19 wing and a prayer. We can't afford to do that.
20 That's why we had to make such a hard decision
21 about doing those layoffs immediately when we
22 knew that the dollars had disappeared.
23 I actually had proposed doing it
24 earlier, because I didn't think it was going to
25 get over the finish line. But so long as there 100
1 was a chance that it was going to get over the
2 finish line, we delayed notification of layoffs.
3 I can't, in good conscience, say, let's
4 just hope that the General Assembly's going to
5 give us money and call people back earlier.
6 That's just not right. Their lives are
7 disrupted now enough.
8 REPRESENTATIVE MICCARELLI: Okay. So
9 there is the ability, but you're saying that the
10 circumstances being what they are, you don't
11 think it would be prudent?
12 MS. MANDERINO: Well, the ability would
13 be, in a short-run, to front-load dollars that
14 then in the back-end will make you run out of
15 money and make you have to lay even more people
16 off. So it just doesn't make sense to me.
17 REPRESENTATIVE MICCARELLI: Okay. And
18 just my final question: In your Department, and
19 maybe you don't have the information with you,
20 what percentage of your employees are veterans?
21 MS. MANDERINO: Actually, I think I do
22 have that number, if you just give me a minute.
23 Is this in my -- I think that's in my complement
24 folder. You know what? Let me get you that,
25 Representative Miccarelli, -- 101
1 REPRESENTATIVE MICCARELLI: Call me
2 Nick.
3 MS. MANDERINO: -- because I'm pretty
4 sure we keep that statistic.
5 REPRESENTATIVE MICCARELLI: Thank you
6 very much, Madam Secretary. Thank you, Mr.
7 Chairman.
8 MAJORITY CHAIRMAN SAYLOR:
9 Representative Boback.
10 REPRESENTATIVE BOBACK: Thank you, Mr.
11 Chairman. Good afternoon, Madam Secretary. I
12 have a different type of question. My
13 understanding is that L&I, through its Office of
14 Vocational and Rehabilitation Fund, has funded
15 the ACES initiative; and that, of course, is
16 Access College Employment Success; and that's to
17 build a capacity for students who have
18 intellectual disabilities. And I find that it's
19 a very worthwhile, good program.
20 Of course, finding jobs, nice-paying
21 jobs, that would certainly take many of them out
22 of dependence on DHS benefits. Well, more
23 specifically, the DREAM Partnership, which is a
24 subsidiary of UCP in central PA, was the grantee
25 for the ACES fund this year. And the grant was 102
1 for five years. But my understanding is, it was
2 funded for three, but years four and five they
3 won't receive funding.
4 I was wondering, is that true? And if
5 so, is there something else that they could
6 apply for to continue this worthwhile program?
7 MS. MANDERINO: Yeah. Thank you,
8 Representative Boback. And the ACES and the
9 DREAM Program do wonderful work. They were
10 funded for three years with a possibility of
11 extension should there be additional money.
12 They were funded out of a pot of money
13 that we got for four years from the General
14 Assembly, called the Reemployment Fund; that is
15 another fund, a pot of money, that was part of
16 the original Act 34 negotiations. And that pot
17 of money ended this December, as well.
18 So unless the General Assembly
19 reauthorizes a state appropriation for the
20 Reemployment Fund, that pot of money doesn't
21 exist anymore. Having said that, at OVR, we are
22 doing a lot of work and putting a lot of RFPs or
23 proposals out on the street for folks to provide
24 preemployment transition services for young
25 people with disabilities. That's very much 103
1 in-line with the scope of what the ACES Program
2 was doing.
3 Now, the federal dollars have a little
4 bit different rules in terms of what you have to
5 do than what the state dollars did. And they
6 also have to be bid for through the competitive
7 RFP process, but that is an avenue for possible
8 continuation of that program. It may need to be
9 revamped to meet federal requirements a little
10 bit more.
11 When we had just state dollars involved,
12 there was a little bit more flexibility in terms
13 of what needed to be done for the program
14 requirements.
15 REPRESENTATIVE BOBACK: And I appreciate
16 you being on top of that. Thank you. My second
17 question has to do with our -- the CILs, the
18 Centers for Independent Living. And I believe,
19 the last I looked, it was level funded. But is
20 there something else that your Department can do
21 maybe with partnership with them? Because there
22 again, very worthwhile program.
23 MS. MANDERINO: Yeah. And if you'll
24 recall, last year we had requested -- in our
25 budget request, we had asked for additional 104
1 money for the CILs, because what they are
2 getting from Pennsylvania is under -- is kind of
3 not what the national average is for other
4 states; and they do do such good work, the
5 Centers for Independent Living, supporting
6 people with disabilities for the supports they
7 need to live independently.
8 Having said that, in these tight budget
9 times, it was -- we would have liked to have
10 asked for a lot more money for a lot of things,
11 but I think you guys know looking at that number
12 that we couldn't do that this year.
13 REPRESENTATIVE BOBACK: Thank you.
14 Thank you, Mr. Chairman.
15 MAJORITY CHAIRMAN SAYLOR:
16 Representative Keller.
17 REPRESENTATIVE KELLER: Thank you, Mr.
18 Chairman; and thank you, Madam Secretary, for
19 being here today. Quick question: I'm over
20 here on this side of the room.
21 MS. MANDERINO: Oh, there you are.
22 REPRESENTATIVE KELLER: The question I
23 have, it deals with the Governor's GO-TIME
24 initiatives. And I imagine you're familiar with
25 the website padotgovdotgotime. You have -- or 105
1 the Department of Labor & Industry has about ten
2 items on there.
3 How frequently are they updated on that
4 site so that people can see the progress towards
5 the completion of them?
6 MS. MANDERINO: Oh, I don't know how
7 frequently they're updated on that site. But if
8 you have one in particular that you want us to
9 --
10 REPRESENTATIVE KELLER: Here's where I'm
11 going to go with this. Okay?
12 MS. MANDERINO: Go ahead.
13 REPRESENTATIVE KELLER: Because I looked
14 on the site, and almost everything that I found
15 on the list of items, and this isn't just your
16 department, but it's across many, has fiscal
17 year '15-'16 in them; and some of them are still
18 in progress.
19 And I guess my question is: If we have
20 these initiatives that we're looking at putting
21 in place to better service -- because a lot of
22 these categories are efficiency, consolidation,
23 better use of resources, improve customer
24 service, reduce resources. That's on about
25 three or four of them, a use of resources, 106
1 efficiency, consolidation, all for the
2 Department of Labor on the GO-TIME website.
3 And my question is: You know, how are
4 we managing them and where's the visibility for
5 somebody who would want to check and see how
6 we're doing? Because we're spending a lot of
7 state resources on these items, and I'm not
8 saying they're not beneficial, but how do we
9 follow up on them to see if we're getting --
10 MS. MANDERINO: Actually, somebody just
11 passed me a note. I do believe it's the GO-TIME
12 initiative within the Governor's Office of
13 Administration that does the updating, but they
14 do get updated quarterly.
15 Having said that, let me just give you a
16 few. Although, I think these are already
17 updated on the website. But if they're not,
18 they will be in the next time; because we have a
19 couple of them that I can just mention that are
20 a hundred percent complete from '15-'16.
21 Our modernizing personnel resources at
22 Unemployment Compensation, which was really
23 reevaluating from top to bottom how the offices
24 were organized, reducing some management
25 positions and reclassifying them as 107
1 non-management positions; that saved $269,000 a
2 year.
3 REPRESENTATIVE KELLER: Actually, you
4 know what? I believe that, you know, we're
5 making progress; because I'm looking here and
6 there's four of them that are marked completed,
7 Items No. 92, 93, 97, and 101. They're all
8 marked completed.
9 But it goes back to, and I guess I'm
10 going to hit on the whole thing here, we have
11 the tool for this and we look at the
12 unemployment call center problem that we have
13 and there's been money invested in upgrading our
14 computers. Is that correct or not? I mean, we
15 have had money for that?
16 MS. MANDERINO: I'm going to go way back
17 to before 2006 when Pennsylvania got federal
18 dollars to upgrade the computer system. That
19 was the IBM contract that everyone's familiar
20 with. It was broken out into three phases. The
21 first two phases did get completed. The third
22 phase is the one that failed and was cancelled.
23 Where we are now, is we're in the
24 process of finishing the evaluation process of
25 the vendors who bid on phase three; and that 108
1 will get underway this year.
2 REPRESENTATIVE KELLER: Okay. When did
3 you start that process?
4 MS. MANDERINO: Actually, it started
5 back in 2013.
6 REPRESENTATIVE KELLER: Okay. That's
7 good. How long does it take to evaluate?
8 Because here I'm going to go to a timeline. I
9 mean, we should have some kind of -- like, an
10 engineer, they use a Gantt Chart that says, this
11 activity begins now --
12 MS. MANDERINO: Actually, we do have --
13 and I think we shared it, you know, that UC
14 modernization flow chart that we put together
15 that has a timeline. We do show every phase of
16 where it is, so I thought that had gotten at one
17 point -- maybe it got to the Labor Committee,
18 but we'll make sure it gets to you.
19 REPRESENTATIVE KELLER: Okay. With
20 dates of when things are anticipated to begin
21 and end and -- so knowing that we had this
22 problem for several years, when did we actually
23 start looking into it? Because we're down here
24 now --
25 MS. MANDERINO: In 2013. And what I 109
1 mean by that, when Secretary Hearthway decided
2 to get out of the IBM contract, they immediately
3 started to figure out the next steps. And not
4 wanting to mess it up again, I guess, for lack
5 of a better way to say it, there was a very
6 systematic approach by the Department that
7 started with visiting other states that had had
8 successful systems, figuring out what it is that
9 they had done correctly.
10 They did a whole evaluation internally
11 of how we did things; decided that we needed to
12 look more for a -- figured out what the flaws
13 were in the first system and then started to
14 build the RFP for going out for a new system.
15 That process took them through 2014. By
16 the time I got there in 2015, we were ready to
17 hit the street with getting the RFP out on the
18 streets, which we did at some point in late 2015
19 or early 2016. Oh, here's my flow chart. So I
20 actually have a flow chart, and it's
21 color-coded.
22 REPRESENTATIVE KELLER: I know we're
23 running short on time, but I guess I'm just --
24 MS. MANDERINO: Okay.
25 MAJORITY CHAIRMAN SAYLOR: We are 110
1 running out.
2 REPRESENTATIVE KELLER: If I could just
3 make one statement, because I didn't have a
4 chance to say a lot of things.
5 MS. MANDERINO: Go ahead.
6 REPRESENTATIVE KELLER: I mean, if I was
7 running a business and my business depended on a
8 website that my customers could use effectively,
9 I would not have tolerated that performance
10 from anybody. And I think it's just pretty poor
11 that we, as the Commonwealth, the 20th largest
12 economy in the world, are having this much
13 trouble in holding people accountable to deliver
14 services for which we paid.
15 MAJORITY CHAIRMAN SAYLOR: Okay.
16 Representative Kauffman.
17 REPRESENTATIVE KAUFFMAN: Thank you, Mr.
18 Chairman; and it's good to see you, Madam
19 Secretary.
20 During the House debate on House Bill
21 2375, which you've mentioned last session, I
22 think many House members had the impression that
23 the Department would be closing two to three
24 service centers and delay the benefit
25 modernization portion if the additional funding 111
1 for SIIF did not come through.
2 Instead, the Department closed three
3 service centers and laid off staff in other
4 areas. And since the furloughs were announced,
5 there's been some conflicting information out
6 there.
7 On one hand, some of us were informed
8 that the Department had budgeted for a
9 $15-million payment for the benefit
10 modernization portion, I believe we had that
11 conversation in my office, for the first quarter
12 of this year.
13 On the other hand, we've been told by
14 the Department that the Department may not be
15 prepared to select a vendor until this fall.
16 And I've had other stakeholders in my office
17 inform me that they've been told that this $15
18 million does not exist.
19 And so I just want to get some
20 clarification on the record. Will the
21 Department be prepared to select a contractor
22 for the Benefit Modernization Project? How much
23 has been budgeted? When will that be done? Is
24 there $15 million sitting around waiting for
25 that? Could you answer to that entire issue? 112
1 MS. MANDERINO: Okay. We do our -- we
2 have three different -- we do our budgets in
3 Unemployment Compensation based on the federal
4 fiscal year; although, the dollars came in
5 differently.
6 So the federal dollars flow October
7 through September 30th. The SIIF dollars flowed
8 on a calendar year. Back in June and July when
9 we were being asked, what were the plans -- I
10 shouldn't say June or July, because it was
11 really August and September when we had the
12 House Labor Hearings on Unemployment.
13 Everything was very fluid: What would
14 you do if? And we ran so many different
15 scenarios. What would the scenario look like if
16 SIIF ended and we didn't do Benefit
17 Modernization? What would the scenario look
18 like if SIIF ended and we did do it? What would
19 the scenario look like if we downsized all the
20 centers versus called them?
21 So to the extent that we were trying to
22 be responsive to the specific questions we were
23 being asked, if that caused confusion, I
24 apologize. But I also have to tell you that my
25 mindset in our judgments changed as time moved 113
1 on, too.
2 REPRESENTATIVE KELLER: I understand all
3 that. I guess my question is: Where are we on
4 the $15 million, and where is the Benefit
5 Modernization, and when are we going to have a
6 contract?
7 MS. MANDERINO: Right. Let's talk
8 fluidity again. When we were asked last, I
9 think it was April or June, and we said we
10 thought, based on the normal procurement process
11 in Pennsylvania, we were told that it takes 90
12 to 120 days once your RFP responses come in to
13 get your kind of -- know that you're at a place
14 to select a vendor. So based on that normal 90
15 to 100 days, we thought we should have a vendor
16 selected in mid-January of 2017.
17 We didn't have a normal selection
18 process. We had the vendors say, you have a
19 really complex RFP and so we need more time to
20 answer. We didn't want to get it wrong a second
21 time, so we granted the extra time to answer.
22 Then when we were doing the scoring process, it
23 was a lot more complicated and so the scoring
24 process took longer than we thought it would.
25 Having said all that, when I talked to 114
1 you in January, and I thought it wouldn't be
2 until fall based on that timeline, I also, based
3 on the feedback I got from you, went back and
4 said, Where can we save time? Where can we --
5 so we sat down and we went through the whole
6 timeline with the Office of Administration, with
7 the Office of General Counsel, to see where we
8 can squeeze time out of that timeline.
9 So where I am today is that, I think by
10 the second or third week of June, on my best
11 estimate right now -- on the second or third
12 week of June, I'm going to be signing on the
13 line with a vendor for Benefit Modernization.
14 But that's my snapshot today.
15 REPRESENTATIVE KELLER: And do you have
16 $15 million sitting to make that payment?
17 MS. MANDERINO: Because when I sign --
18 well, it's not necessarily a payment. You have
19 to have the dollars -- whenever you kind of put
20 a contract in through the system, you have to
21 have the dollars in reserve to get that started.
22 So the other judgment call that happened
23 over the course of these past six months, is
24 realizing what bad shape we were in our legacy
25 system. There was something that we tried to 115
1 test, and it's going out of my head, but there
2 was some change that we tried to test that we
3 kind of went through all those levels of, as
4 Galloway said, about the COBOL system and the 17
5 layers that are top of it and we tried to test a
6 simple algorithm; and it almost crashed the
7 system.
8 And that was a huge wake-up call as to
9 why we can't afford to delay Benefit
10 Modernization. And one of the other reasons why
11 from where I was six months ago to where we
12 ended up in December, that we thought no matter
13 how horrible this is about laying people off, we
14 can't afford not to keep Benefit Modernization
15 on track, because forget about whether people
16 are there to answer the phones, if something
17 crashes, irreparably, we don't have a way to
18 deliver the benefits.
19 So I don't mean to be misleading. I
20 mean to try to explain to you how fluid the
21 parameters have been around trying to keep this
22 system moving forward and serve the people of
23 Pennsylvania.
24 REPRESENTATIVE KELLER: Okay. Thank
25 you. Am I done? 116
1 MAJORITY CHAIRMAN SAYLOR: You're done.
2 REPRESENTATIVE KELLER: You took way too
3 long to answer that question, Madam Secretary.
4 MS. MANDERINO: I'm sorry. I will see
5 you on March 1st.
6 REPRESENTATIVE KELLER: Guess what? I
7 get my second shot at you next Wednesday.
8 MS. MANDERINO: That's right. I will
9 see on March 1st.
10 MAJORITY CHAIRMAN SAYLOR: Madam
11 Secretary, thank you for coming today. I did --
12 one of the things that I think I've had a pet
13 peeve -- I've been here 24 years in the
14 Legislature -- you came in same time I did, in
15 1992, as a Legislator -- is that we in the
16 General Assembly and the taxpayers of
17 Pennsylvania, as well as the Governors, have
18 allocated hundreds, if not billions, of dollars
19 over the many years I've been here, to
20 technology upgrades. And every time I talk to a
21 Secretary, they're still operating in the beta
22 or whatever computer technology of what was 30
23 or 40 years ago. And the frustration I have,
24 and I'm going to ask to be honest with you, I'm
25 asking the Auditor General to audit every 117
1 Department for the technology money spent.
2 Because I don't think we've gotten our
3 taxpayers' moneys worth in technology upgrades.
4 Because I've got to be honest with you,
5 it doesn't look like we have. And it's not just
6 your Department; it's every Department. And
7 it's not just this Administration; it's all
8 Administrations.
9 We have spent millions of dollars in
10 contracts for computer upgrades, and we still
11 are not where we need to be; and that's very
12 frustrating to me as a member of the General
13 Assembly, that I'm allocating dollars -- we
14 should be able to, with modernization -- county
15 government, on a regular basis, modernize their
16 systems and they're constantly up to date.
17 We always seem to be years, decades, in
18 some cases, behind in modernizing our system.
19 So I'm mentioning it to you, Kathy, because you
20 and I are friends. But I think it's time, and I
21 am sending a formal letter to Auditor General
22 Eugene DePasquale, asking for an audit of all
23 computer technology contracts, where they have
24 had cost overruns and where they have failed to
25 meet the needs of this Commonwealth. 118
1 Because something is wrong when we are
2 not able to keep our agencies up to date that
3 best service our taxpayers of Pennsylvania.
4 MS. MANDERINO: I didn't get to tell the
5 good story in workers' comp, but we do have a
6 successful upgrade that's serving the customers
7 well.
8 MAJORITY CHAIRMAN SAYLOR: And I look
9 forward to that. Thank you, Madam Secretary.
10 MS. MANDERINO: Thank you.
11 MAJORITY CHAIRMAN SAYLOR: The Committee
12 will reconvene in 5 minutes.
13 (Whereupon, the hearing concluded.)
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1 CERTIFICATE
2
3 I hereby certify that the proceedings and
4 evidence are contained fully and accurately in the notes
5 taken by me on the within proceedings and that this is a
6 correct transcript of the same.
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8 ______
9 Tracy L. Markle, Court Reporter/Notary 10
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