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IN RE: BUDGETHEARING

MAJORITY CAUCUS ROOM ROOM 140 HARRISBURG, PENNSYLVANIA

MONDAY,MARCH 1, 2004, 10:03 A.M.

hnn^hfi tj!,r \-/t(EJ HON DAVID G. ARGALL, CHAIRMAN HON DWTGHT EVANS HON PATRICK E. FLEAGLE HON GIBSON C. ARMSTRONG HON MATTHEW E. BAKER HON STEPHEN E. BARRAR HON STEVEN W. CAPPELLI HON CRAIG A. DALLY HON GENE D1GIROLAMO HON PATRICK E. FLEAGLE HON TERESA FORCTER HON JEFFREY E. HABAY HON JIM LYNCH HON JOHN A. MAHER HON EUGENE F. MCGILL HON STEVEN R. NICKOL HON SAMUEL E. ROHRER HON STANLEY E. SAYLOR HON CURT SCHRODER HON JERRY A. STERN HON PETER J. ZUG

HILLARY M. HAZLETT, REPORTER NOTARY PUBLIC

..Sikn ARCHIVEREPORTING SERVICE e 2336 N. SecondStreet (717) 234'592L ffi Harrisburg,PA 17110 HAX(717) 234-6190 -[ UO 04 - ct t2., 1 APPEARANCES: (Cont'd)

z HON. DAN. B. FRANKEL HON. FRANK LAGROTTA HON. KATHY M. MANDERINO HON. ANTHONY J. MELTO 4 HON. PHYLLIS MUNDY HON. JOHN MYERS 5 HON. MICHAEL P. STURLA HON. THOMAS A. TANGRETTI 6 HON. DON WALKO HON. JAKE WHEATLEY, JR. 7 ALSO PRESENT: I HON. ROY E. BALDWIN Y HON. KERRY A. BENNINGHOFF HON. RUSS H. FAIRCHILD 10 HON. KATE HARPER HON. DTCK L. HESS 1-l_ HON. SUSAN LAUGHLIN HON. KEITH R. MCCALL t2

13 t4

J-J

_LO

25 I APPEARANCES: (CONIId)

2 HON. DAN B. FRANKEL HON. FRANK LAGROTTA J HON. KATHY M. MANDERINO HON. ANTHONY J. MELIO 4 HON. PHYLLIS MUNDY HON. JOHN MYERS 5 HON. MICHAEL P. STURLA HON. THOMAS A. TANGRETTI 6 HON. DON WALKO HON. JAKE WHEATLEY, JR. 7 ALSO PRESENT: B HON. ROY E.. BALDWIN Y HON. KERRY A. BENNINGHOFF HON. RUSS H. FAIRCHILD 1n HON. KATE HARPER HON. DICK L. HESS 11 HON. SUSAN LAUGHLIN HON. KEITH R. MCCALL L2

t< t4

25 1 INDEX

3 WITNESS PAGE

4 Al-1en .D. Biehler - Nora Dowd Eisenhower 91

6 Stephen M. Schmerin r-50

1 Dennis C. WoIff 225

1-0

1,2

13 r.t

ir IJ

T7 l_B

21,

25 1 CHAIRMAN ARGALL: Good morning. On behalf - 2 of the House Appropriations Committee, I would Iike

3 to welcome everyone to this public hearing looking at

.! the proposed budget for the Pennsylvania Department

q of Transportation.

o A reminder to all of our members, we

I continue to abide by the five-minute ru1e.

I Mr. Greenwood will have the clock.

9 Befor:e v"e introduce our presenter, I would

10 like to ask Representative Evans to make any comments

11 that he woul-d like to and then we will- go down the t2 row and make the introductions. l< REPRESENTATIVE EVANS: Good morning.

L4 Dwight Evans.

REPRESENTATIVE LAGROTTA: IIM FTANK

16 LaGrotta from Lawrence, Butler, and Beaver County. I

17 thought you were going to make remarks, Mr.' Chairman.

I wasn't prepared for the introductions.

1-9 REPRESENTATIVE MCCALL: KCith MCCAII,

20 Democratic Chairman of the Consumer Affairs

2T Committee.

22 REPRESENTATIVE LAUGHLIN: Susan Laughlin,

23 Professional Licensure and Transportation Committee.

24 REPRESENTATIVE MELIO: Tony Melio, Bucks

25 Count y . 1 I REPRESENTATIVE WHEATLEY: Representative

2 Wheatley, Allegheny County.

3 REPRESENTATIVE WALKO: Don Wa1ko, Allegheny

4 County.

REPRESENTATIVE McGILL: Gene McGiIl,

6 Montgomery CountY.

t REPRESENTATIVE CAPPELLI: Steve Cappe}li'

B Lycoming County.

Y REPRESENTATIVE BARRAR: Steve Barrar,

10 Chester and Delaware CountY.

11- REPRESENTATIVE ROHRER: Sam Rohrer from t2 Berks County. t< REPRESENTATfVE FLEAGLE: Pat Fleagle from

1_4 Franklin County.

15 REPRESENTATIVE ZUG: Peter Zug from Lebanon

16 County.

L7 REPRESENTATIVE FORCIER: Theresa Forcier,

1B Crawford County. lv REPRESENTATIVE ARMSTRONG: Keith Armstrong,

20 Lancaster County.

2L CHAfRMAN ARGALL: Secretary Biehler, we're

22 Iooking forward to your testimony. Welcome.

23 SECRETARY BIEHLER: Thank you very much,

24 Mr. Chairma.n and members of the.Commj-ttee. Can you

25 hear? 1 CHAIRMAN ARGALL: Itrs not on.

2 SECRETARY BIEHLER: AII TiqhI. There we

go. WeII, 1et me just say thank you for inviting me;

4 and I'm very pleased to be with you.

5 I would like to give just a few highlights.

I believe you have my opening statement. Let me give

I you in my own words some hiqhlights of our progress

U from last year and hopefully our good direction for

9 the coming year

10 Looking through some of the modes, I would

1l- l-i ke to talk about highways and bridges f irst. We t2 had a target last year of putting out for l-3 construction a total of a billion and a quarter

14 doll-ars worth of work.

15 Irm pleased to be able to say that we met

IO that target and slightly exceeded it. We were able

1,7 to put out a little over $1.3 billion worth'of work.

18 It's an important part of our entire

1_9 highway program along with our maintenance efforts"

20 and when you couple the new and reconstruction

2T efforts with our maintenance, we are abLe to improve

22 something in the neighborhood of almost 6500 miles of

23 road. That's been a fairly steady number in recent

24 years, 63 to 6500. We've been about on par through a

25 series of special efforts that f'11- talk about in a 1r second. '04-'05, 2 As .we l-ook f orward to FY w€r

J again, dt the moment are targeting, againr. about a

4 billion and a quarter dollars as our construction

5 contracting target f or pro j ects across t.he

Commonwealth.

I On the bridge side of our business, due to

B some programs that you folks have had a hand in

9 startj-ng going way back into Lhe '80sr we spent

10 something in the neighborhood of $a billion

11 cumulative j-n that period of time on our bridge t2 q rr q I am

1J This yearr we have been targeting we

T4 targeted around $300 million for our piece of work on

the bridges. .Werve been able to hold to that, but I

16 also need to tel-l you straight.forward that bridges

17 continue to be a real- dif f icul-t arena f or us.

1B We've got depending on whether you're

19 measuring bridges over 8 feet or 20 feet, we've got

20 somewhere between L6r 00O and 25r 0OO bridges.

2L They continue to be a struggle for us.

22 They continue to be a struggle trying to get ahead of

23 the curve, if you wi11, indemnity bridges and giving

24 the various kinds of funding programs about not

25 quite, but about one out of every four bridges has I some sort of structural deterioration. They may not

2 be weight restricted. Some are. In fact, a few are

1 cl-osed.

4 It's enough to. cause us concern trying to

continue to campaign our bridge system as we go

forward, and we will continue to do that.

1 Under the heading of Rail- Freight Grants,

v obviously, our as I have come to our railway

9 programs, j-t's a critical program. We've got

10 something like 5r000 miles of rail Iines, freight l_1 rail- lines in Pennsylvania. About half of them are t2 the big Class 1 systems and the other half are the

1? smaller systems; short lines, and whatnot. They're a l-+ critical part of our business and assets in industry

and keeping ourselves in a competitive position, none

16 the least of which is a concern to make sure that l7 we're helping where we can within the bounds of our l-8 grant programs to keep infrastructure in good shape,

IY so that we also not. only remain economically

20 competitiver:but also do all we can to make sure we

2T have as much balance with moving freight between

22 highways and trucks and rail- and rail vehicles.

23 I'm pleased that we have proposed in next zLl year's budget to increase the rail freight grant

25 program back to its traditional 1evel of a 1itt1e 10

1 over $ B mil-1ion.

2 We've been in the last three or more

J years, we've had a program of about four and a

4 quarter million dollars. I'm pleased we are

proposing with '04-'05 budget to increase it to eight

6 and a half million dollars.

7 There's been a significant number of grant

I requests to be able to do that. Again, the more we

Y can I think given the incredibl-e growth of truck

10 traffic on our highway system, the more we can do to

l_1 encourage a better balance between rail and highways,

t2 it's going to be good for a1I of us.

13 Another big effort, just a minor note to

74 you folks, is the grant application process. We have

15 expedited the grant application process. We're doing

J-O as much as we can electronically to get these

L7 requests in on time and get them programmed in such a

18 wdy, so that once the grant amounts are approved,

19 that we can deliver the dollars as quickly as

20 possible.

21 We're doing a similar thing on the aviation

22 side to determine the grant cost. In that case ,

z5 we're not quite as far ahead of the electronic system I 24 that was in place in the rail system, but we're in 25 the process of revamping the aviation grant 11

1 application process.

2 We have it's been interesting. One of

the things we have noted is that if you're appfying

4 for similar dol-1ars through the Federal Aviation

5 Administration, their process is more effective than

6 ours. We're basically giving monj-es out f or s j-milar

1, improvement.

6 Vile need to finish our target, which is to

9 streamline that whote process. That's in our sights

10 for next year

11- This year we've been able to deliver a t2 significant number of aviation grants, 15 million l_3 a littIe over 15 million in aviation development t4 program grants and almost 10 in state block grants -

15 I think, as you know, the state block

16 grants are, in fact, federal dollars because we're a

T7 block grant state. We receive 'a block grant from the l_u Federal Aviation Administration for certain airports

1v and are able to distribute those dotlars. Those

act, are continuing f und at the more 20 do11ars, in f .to 2'1, normal leveI, normal meaning in sync with the

22 revenues that come in from aviation fuel tax. z5 On the subject of Public mass

24 transportation, Iet me just say thank you to this

25 qroup and other members of the General- Assembly who L2

n I in December helped to not only restore the $16

2 mil-lion cuts in mass transit assi-stance. but also

3 concurred in basically replacing a portion of the

4 electronic gross receipts tax with a portion of the

sales tax.

6 That t s one of the t-hi nos that we've talked

about in the past, if we can get mass transit fundJ-ng

I on a more stable basis, it means a great deal to the

9 transit agencies as they do their annual planning. l_0 Thatts the action that you fol-ks took in passing l-1 those. When I say you folks, I'm talking in terms of

LZ the General Assembly in the past. When the General

Assembly became alive in December, it real1y made

L4 big dif f erence in going toward that direct j-on.

1q This year we're proposing an increase j-n

16 mass transit assi-stance, a 3.4 percent increase. As

17 you know, in recent years the mass transit account

1B has either been f l-at or has had minor increases.

19 In fact, out of the Iast seven years,

20 there I s been no increase. This would represent at

21- l-east an improvement in mass transit assistance from

22 27 O mil-lion to 27 g with a change to help the transit

23 industry

24 The transit j-ndustry; cIearIy, the

25 financial health of the industry continues to be a 13

L reall-y tough challenge f or al-1 of us. It's a very

2 complex situation. Not only is it related to the

J federal reauthorization, it also relates to simply

4 the changing demographics that we've got in our

various urban areas. It continues to be tougher and

6 tougher for the transit agency to attract riders

I when, in fact, there is such a migration and so

B forth.

just 9 .I wanted to mention a couple of other l-0 things. One is we have been working hard within the

11 Department of . Trattspgrtation to tackl-e our t2 administrative spending actions.

1J We've had a series of activities over the

74 last years to attempt to deal with those, ds you

15 perhaps recall. It's certainly been in the

16 newspapers. Almost a week or so after the beginning 'year a- I took the seat of the ob as of last when .j 1B Secretary, there was an audit regarding the use of

19 our purchase cards.

20 Wet ve made significant changes in the whole

2L control- function of our purchase cards. I think

22 they've been responsive. We think we've got a good

23 process in place to make sure we're monitoring and

24 spending the public's money wisely.

25 We al-so have identified something under L4

1 sort of ke your own monies heading, if you will'

2 to take a hard look at project deliverance, how long

3 does it take us to deliver our ,pro j ects and what

4 improvements can be made to shorten up the time it

5 takes to get through project delivery and design by

"R mental reviews and so on.

I We've made some progress. frm pleased that

x one of the things we did was work with the Department

9 of Environmental Protection on one of the steps

L0 that's going to help us expedit,e some of the stream

11 permj-tting proces ses and so on.,. Wet re going to t2 continue on that and look for substantial

13 improvements over the ensuing years. t_4 This yearr w€ also were invol-ved through

15 the leadership of the Department of General Services

IO in strategic sourcing of a few select of our

77 commodities.

1B We have been involved in three commodity

Lv purchases. One has been the purchase of new

20 computers. The second is plant mix bituminous

21, material and also liquid bituminous material by goj-ng

22 through a strategic sourcing effort.

23 In fact, the prices we have just received

24 recently related to those efforts has totaled $4

25 mill-ion worth of savings. 15

1 -L There is one more commodity that is on our

2 l-ist at the moment. That is the purchase of

aggregates on a strategic source and basis. We will

4 have to see what kind of prices we receive for that.

5 Overa11, a series of administrative actions

that we have ta.ken and have started have allowed us

7 to increase the amount of dollars in highway

8 maintenance in the proposed budget by $?8 milIion.

9 , We have pulled out all of our stops. We

10 know that we're fighting inflation. Werve attempted l-1 to do a1l- we can to cut administrative costs . across

1-2 aII funds and put those dollars back into the road

13 system, if you will t_4 Two other items to mention to you. One is

1q for a number of months over last year and continuing

Ib this year, I have been talking about the importance

L7 of what I ment.ioned earlier, changing demographics.

In fact, the out migration of our r-9 population and employment centers away from the

20 traditional core towns and so on, the impacts of

21_ those changes and the hollowing out of those core

22 towns have been significant.

23 It has been significant in terms of what it

24 means to openly the trips on our highway system in

25 general, people when they move out further, generally lo

I instead of walking to the store, which perhaps at one

2 time they were abLe to do, they are now driving to

3 the store or driving to work

4 In general, the trip lengths of people's

5 trips that start out at their home generally are

6 increasing. AIso, generallyr as folkst- 1r move out in

1 I general, the number of autos and vehicles per

I household is increasing.

Y Those factors have coupled together over

10 the last 20 years or sor increaultg the vehicular

11 traffic on our road system in the neighborhood of t2 60-some percent. It's been a steady .growth. It I s

been a real challenge for us to try to keep ahead of

L4 ir.

Not only are we trying to keep our roads in

16 good shape typically, then t.he question is what about

17 the congestion and the frustration.

18 The: not,ion of the se demographic changes and

19 what it means not only to the quality of life to

20 folks wherever they Iive, but the impact of

21 identification is pretty profound

22 Last summer, myself and the secretaries of

23 the D'epartment of Environmental Protection,

24 Conservation and Management Resources hosted a

25 one-day conf erence on land use, the sub j ect of l-and 1 tl q a

2 We tried to get a PrettY ,broad audience. A

3 number of folks participated. At the end of the

4 conference it was simply a.one-day conference to

r say what do you think about this topic we had a

6 l-ot of good thoughts about workshops.

There was a caII from particj-pants not to

B stop you there was enough interest to sdY, we've

9 got to continue this topic, but not having a clear

1_0 course of action; but the request was made to usr

11 could we draft could we draft some sort of an t2 action agenda that would be sent back to that not

13 only that audience, but suggested to send to others

1A ICI as well for further discussion.

15 Again, there was no particular set of

16 requirements that this thing we11, let's continue

T7 the discussion.

18 I'm pleased to report that a week or'two

1v dgo, we drafted such an action agenda and have made

20 it available. If any of you folks would like that,

21 if you don't have it, we wouLd be happy to give it to

22 you. z5 It's setting a set of goals and objectives

24 that perhaps we ought to continue to work oDr that

25 talks about the whole guestion of land use and how we 18

1 should deal with land use changes over time. ft's

2 important'to a1I of us what our quality of life looks

3 like.

4 In our regard, for 2OO4-2005, we have

q proposed a so-ca11ed Hometown Streets Program and a

6 Safe Routes to School Program' emphasis that might

7 encourage interest in the core towns.

U Hometown Streets is about doing repairs to

9 many of the so-calIed Main Streets in some of the

10 core towns. \ 1l- WeI ve seen changes. People in some of the t2 towns have put up decorative lighting, put down

street benches, put down street trees, and those kind j-n L4 nf t-sr.+rrYh i ncrse .- It made a better business environment

some of our ol-d towns.

16 In fact, some of the folks'have pointed out

1? that those kind of changes have been helpful to

1B attract new businesses back into some of our core

19 towns. That's one of the programs that we are zv proposing.over the next four years to amount to

21- something in the neighborhood of $200 million.

22 It's not a huge amount of money when you

23 compare to the total amount of dollars that we deaL

24 with. Vrlethink it 's one to start.

25 On the safe streets Safe Routes to 19

1 Schoo1s, we have a similar program to look at various

2 intersections, treatments and other activities such

as that to use that pot of dollars al-so to help

4 enhance and encourage folks to walk to. school.

5 There's an awf ul- 1ot of kids who simply go

6 to school by bus, partly because their walk j-ng route

1 I is not safe.

B For those folks who have a walking route

Y that is not too long, again, that can improve the

10 quality of l-if e f or some of our cities and towns. t_L Last but not least, Iet me just mention

1,2 federal reauthorization. Federal reauthorization is

very critical to us. As you know, we've been in a i L4 period of the Transportation Efficiency Act that we

15 are currentl-y -- that has been currently the rule of

IO the land, if you will; expired on September 30th of

T7 last year l_B Congress has extended the program at its

19 f ormer f unding l-evels f or a period of f ive months,

20 and just Friday, Congress and Senate passed an

21 extension for an additional two months.

22 I met with many of the folks in our

23 transportation Congressional delegation Iast

24 Thursday, in fact, right when thris activity was

25 brewing. It appeared that the writing on the wa1I 1 says it looks l-ike there will- be a two-year extension

z as opposed to a .six-year biIl.

{ Now, that story sort of changes fairly

rapidly, but f would guess that that is the case. We

5 will be anxiously awaiting the resul-ts of that

activity. It means a tremendous amount to our

I highway and public transportation programs in

X Pennsylvania.

9 With that, Mr. Chairman, thank you very

10 much for letting me have a few remarks. will be

11 happy to answer any questions.

12 CHAIRMAN ARGALI: Thank you, Mr. Secretary.

If we lose federal funding to some degree or if we l-4 stay even and inflation keeps eating into the annual

15 budget, even the sma1l inf l-ation rate when you r_6 multiply it for three, four, five, six years, it

!7 turns into a bigger number. t8 I guess we have several options. Every

LY Ierr(rv i mc -T y"rro I o a meeting with anyone who has anything

20 to do with road building or bridge building or bridge

fixing, the two questions that I'm always asked are:

22 What is the administrat j-on's view on potential

23 increase in the sasoline tax?

24 The other thing that comes up continually

25 whether your district is along Route B0 or not, the 1 idea I think it's been bounced around for the

2 better part.of 20 years, is some kind of a toll on

3 Route 80 either in lieu of a gas tax'increase or in

4 addition to perhaps.

5 Can you please talk to me about those two

potential sources of additional revenue?

7 SECRETARY BIEHLER: f would be happy to.

8 Thank you for raising the question. Itfs certainly

9 on our mind and as well as on yours obviously.

1n You have to f or rt€r I have to put this

11 in some sort of context. There's been revenue t2 enhancements in Pennsylvania in 1991- and in 1-997, not

13 too dissimilar with the periods of time of the t4 federal reauthorizations and so on. So the federal

15 reauthorizatiol, the one that is coming uP, certainly

IO has a huge play in this whole question

1,7 I have to take a look at our system and

L8 sort of what kind of shape is our system in. What is

19 our revenue gross? We've been roughly growing at a

20 percent a yea: plus or minus a bit. Obviously,

2t that's a good thing. The negative side is the cost

22 of inflation.

23 The negative thing as you mentioned, is it

24 keeping pace? No, it is not. Another issue is the

25 performance of our system. I mentionedr w€ certainly 22

1 have a backlog of bridges that we are concerned with

2 and are working very hard to do things with.

And they you know, the first thing that

{ I try to look at is help myself. Itfs obviously all-

tr of our responsibility to try to do the most effective

thing f or the taxpayer' s doll-ar.

It's got to be our chal]enge to sdy, you

B know, let's not go back to the weLL. Let's first

9 live within our means and work harder. I think we've

10 done that.

L1 ' Clear1y, there is a day coming at some

72 point where yqu say, if you continue to lose t1 inflation, rro matter between Fhe good professional

1A -L .i things you do, you may not be able to pick up.

15 Let me just mention a couple of things. r_6 First indicators, one of the indicators that we use

17 is the smoothness of our road. V[e have a roughness

18 index that we actually measure very frequently to

19 know where we are.

2O In general, it's like golf scores. The

21, lower the number, the better you are. The lower the

22 roughness, the smoother the road is. Therefore,

23 we're making progress.

24 fn general, we have a hierarchy. On the

25 interstate system, we hold that to a higher leve1 of 23

1 standard than we do the lowest volume sort of farm

2 and market road where a rougher pavement may not have

3 vulturous effects on travel and so on.

I I will tell you as I look over some of the

'indicators 5 on those indices, we lrave made a lot of

6 progress over the last years in the previous

7 administration, and I know it' s something I've tal-ked

I with t^he previous secretaries about and they've

9 campaigned that. f think that's the right t.hing to l-U do.

11 If we have had in the DePartment a

12 maintenance first priority, then I think it I s the

1-3 right one.. I think it conLinues to be the right one- t-4 We have got to do the best we can.

1-5 Those industries have been coming steadily t-6 down. They're coming down in the interstate and the t7 primary systems and the farm and market roads in

IU different categories and different Ievels. It's been

LY coming down. We're seeing those things level off.

20 It I s sort of a warning sign that something is going

21, out.

22 I can also tel] you that we have challenged

23 each and every one of our districts, each of our. l-l-

24 districts, 12 districts, consistently to do all they

25 can to affect the results. 1 As an example, up in District I, in the 'area, 2 Erie for example, they ground off a huge amount

3 of the overlays on Interstate 79; but they tried to

4 recapture and recycle that and put that Same material

remix it and apply additional liquid bituminous

6 and use that as resurfacing materj-aIs on some of the

7 secondary and small roads to try to use the best we

I can.

9 Our folks have been creative and theyrve

10 done a good job. They've also campaigned certain

1l_ special maintenance things that sound aS mundane as

L2 making sure that our shoulders are grad,ed properly

13 from year ' to year as the spring thaws and the rain

1A ]T hits, to make sure that the water is draining a\^Iay as l_5 best we can. l_o It sounds so mundane, but it is real stuff

1_7 that prolongs the life of the pavement. we continue

18 to do that

19 The things I mentioned before about project

ZU delivery, the more we can help ourselves with project

2T delivery, that has an impact.. If I can shorten the

22 time that we get through environmental reviews and

23 design and whatnot, that has an effect

24 Another thing is it's f air giame to always

25 as k yoursel- f as you look to wj-den a road, do you have 25

1 to widen the four lanes through the entire length or

2 can you get away ith two lanes and widening an

intersection.

I Again, it has a lot to do with anyway

5 long story short, I sound l-ike Mi ke. Anyway, you

6 knowr w€ have attempted to do an awful tot of things

7 to help ourselves. I think we've made some pretty

I good progress.

Y . We clearly have, you know, the bottom of

10 the iceberg to deal with in terms of our bridge

11 syst.em. We attempted to campaign those things . t2 At some pointr w€ probably will have to t_:3 talk about revenue. f'm not sure that it's right

I4 now. Certainly, we started to have discussions.

15 Some of the Ieadership commit.tees, they are very

J-O thoughtful people.

L7 In the same regard, we've always said if

18 there's going to be a dj-scussion along those Iines,

19 we think transportation has to be part of that mix of

20 discussion.

21, It has such a long history, a difficult

22 history of steady funding that is either flat it

23 doesn't come near inftation. Somehow we've got to

24 find a better stream. Sorry for the long-winded

answer. 26

1 CHAIRMAN ARGALL: Can you touch on the

2 . Route 80 issues?

SECRETARY BIEHLER: Yes, I'm sorry.

4 Regarding toIli^g, tolling has been raised whether

5 it' s Route 8 0 or Route 8l-.

6 We are in the process right now of taking a

7 hard look at what it wou]d mean

8 improvements woul-d it take if you wanted to put a

Y tolI facility on Route 80.

10 In factr ds we speak, we are trying to

11 complete some evaluation, working with the Turnpike t2 Commission and some of our consultants in there just

13 to identify these

L4 As an example, we've been talking about

I5 on-line to11 booth kinds of facilities, not the ones

IO that were built originally with the original

I7 Turnpike, but ones that are the more modern toll

1B facility where you have you have a main line kind

19 of system.

20 Before you do that, you've got to now widen

2t out the road for a whole set of toll gates and

22 there's a significant expense, not only the road

23 widening but the equipment itself. z.t been looking at as a We've .potentially 25 draft of --, as part of that system placing something 27

1 like about 10 to11 facilities throughout the whole

2 stretch of Route 80. It's one every 3O miles as

opposed to at every interchange point.

4 WeI ve al so said i-n order to evaluate a tol-l

5 potential, that we think the public woul-d require if

6 a toII facility you have to have a certain leve1

I of servj-ce if you were on that system, a certain

I quality that might exceed quality, especially on the

9 eastern end where there's an area where you have

10 pretty sj-gnificant congestion. You might have to

11 widen the lane or whatever it is.

I2 f can simply tell- you that our folks have

J-J told us it' s in the billions of dol-lars, the kinds of

I4 improvements, because it's a long system and it's

15 pretty complex.

16 The question is, what kind of to11s wil-1 it

17 take first of all, how long will it take to

18 construct those improvements, what kind of time

19 frame, what kind of money do you need up front to

20 start it, and what kind of design. You have to have

2'J" a war chest, if you will, to get the thing going.

22 Then secondly, if you string it out, what

23 kind of to11 structure. Those are things werre

24 looking for. I would say that at the moment that

25 we're in the middle to look at that, I see numbers 2B

1 that are very expensj.ve.

2 The question is: Does the traffic make

sense? Then last but not least, what is the impact

4 on the public to the folks who are caught between

5 j-nterchanges? Wherever you place the to11, the

6 neighbor may have two interchanges where there's no

7 cost, but someone next to them may have.

I The bigger I think what it means to the

9 trucking industry, the trucking industry already pays

10 some significant taxes and so on. They will have a

11 -- it will- no doubt be a factor to. consider whether

T2 it meets the we are looking at it. That is the

13 quick answer. Those are the kind of factors.

I4 CHAfRMAN ARGALL: Do we now have the

15 federal authority to do it, if we choose to do it?

J-O SECRETARY BIEHLER: If Irm not mistaken, I

T7 think we do with certain provisos. We will still r-8 have to interact with the federal government because

19 there is certain criteria that you have to, in

ZU effect, apply-

2I They have a set of ru1es. I guess the

22 question me retract the answer. The answer is

23 oo r because.'we have to apply. know what those

24 rules are.

25 At the moment, the current legisl-ation 29

1 requires that you take all of those revenues and put

z it back into the maj-n system.

3 . We also have to show and demonstrate that

you cannot maintain yourself. Thatfs another one of

5 the reguirements. Then there's a couple of others.

6 We would have to apply; but aIso, f think there has

to be actual actj-on of the General Assembly to

approve al-I of those things.

9 HAIRMAN ARGALL: The main -- the Hometown

10 Streets Program

11 SECRETARY BIEHLER: Yes, sir.

I2 CHAIRMAN.ARGALL: -- was of interest to me- t< When I was Urban Affairs Chairman, w€ looked at

14 downtown revitalization strategies aIl across the

15 state. What is the status of that initiative?

16 SECRETARY BIEHLER: The status is this: We

L7 have proposed that, in essence, we take the current

IU federal- enhancement program, the enhancement dollars

19 or a portion of Service Transportation'Program's

20 monies that come out of federal distri.bution, use our

21, B0/20 monies; B0 percgnt federal and.20 percent

22 non-federal.

23 What we are proposing is basically to z.t expand that program. Currently, the feds require

25 that you spend l-0 percent of these monies on 30

'1 f enhancements. You can also increase it. The fact is

2 that there are other sources that you can flex in and

out of that program.

4 The status of the program is there are a

5 number of enhancement programs that have already been

6 taken advantage of already, that reaI1y kind of fall

7 into this name of Hometown Streets.. Thatrs a name

a that we have assigned to it. ft's not a federal

Y name. l_u So in fact, there have been some other

11 improvements in Pennsylvania. We have seen things in t2 littl-e V[ashington; V[ashington, Pehnsylvania;

13 enhancements with downtown streets that are using t4 federal enhancement dollars that have been

15 signi ficant .

16 ,In Tyrone, for example, I know the folks

17 have shown me some pictures of some enhancements

18 ihere . The mayor of Tyrone, I believe his name j-s

19 Pat Vfilson, I'm not sure I know she has said to

20 some of our folks that they have seen some of the

2L smaller businesses moving back in.

22 . CIearIy, that is one of the factors. I

23 used to five in Middletown until- a few weeks ago. As

24 I go from Middletown over towards Hummelstown and I

25 walk around Hummel-stown and I see the brick sidewal-ks 31

1 and the decorative sort of treatment, itfs just a

2 nice walking env j-ronment.

The question i", that's the kind of thing

4 we envision.with Hometown Streets. Maybe we can pick

5 up some of the env j-ronments, and we would like to

o encourage people take advantage of this.

7 We are trying to work with not only the

x Pennsylvania townships and boroughs, those kind of

9 foIks, the rural planning organizations to work with

1o their constituents in the towns and so orlr just

11 identify locations that might be good application.

72 Itrs produced a nice environment. It tends

to draw fol-ks back into some of those old core towns, t_4 hoping that it has a catalytic effect and have

15 nann'l a

16 CHAIRMAN ARGALL: How soon woul-d you expect

77 the grants to flow through the pipeline?

18 SECRETARY BfEHLER: Figuratively today.

19 What I mean by that is the opportunity is we don't

20 have to wait for anything. We're not proposing new

2T taxes, new revenues, new federal- dolIars.

22 Werre trying to use the flexibility within

23 the current fundinq stream to allow fol-ks to consider

24 use of those dollars.

25 So it could happen, as I say, virtually 1 immediately. It wiIl require programming. There

2 will have to be a step where they deal- with the

Metropolitan Planning Organization and get a proj ect

4 on a TIP. There may be some that are already there

5 that we j ust wanL t.o work harder at.

6 If we can encourage folks to expand that, I : 'think I it's a good thing. Now, since wetre operating

X with a finance set of dollars, that means the

9 question is, can we continue to do things to try to

10 shape other projects so we can save a few bucks to

11 make more money available. We would sure fike to try t2 to do that.

13 CHAIRMAN ARGALL: My only caution would be

I4 to work with some of the aggregates, the Pennsylvania l-5 Downtown Centers and some folks who have been at this l_b for some time t7 I won't embarrass the community, but f know l-8 we went to one community in Western Pennsylvania that

19 tried out an experiment along these lines - ,TheV 20 wanted to turn the downtown into a mall. They built

21- these big walls. It looks a IittIe bit Iike Berlin.

22 It was a terrible disaster. Ten years Iater, the

23 government came in and yanked them out and turned it I 24 back to the way it was. I think there s some good

25 models out there, but there's probably a couple of 33

1 bad mode l-s .

2 SECRETARY BIEHLER: I canr.t teII you how

dead on you arq. f remember a personal experience

4 similar to that. It happened to me in a place called

5 East Liberty, a littl-e neighborhood in Pittsburgh

6 It vras thought to be a great urban redevelopment

7 technique to shut off streets.

x Representative ArgaII, that's exactly what

Y they did. It was a disaster. They turned folks

10 away. FoIks got frustrated and couldn't even get in.

t_l- It's just another thing that you should not do.

1-2 CHAIRMAN ARGALL: Representative Evans? o l-J REPRESENTATIVE EVANS: Thank You, Mr. l-4 Chairman.

IJ Good morning, Mr. Secretary.

1_6 SECRETARY BIEHLER: Good morning.

L7 REPRESENTATIVE EVANS: I would'like to

18 foll-ow up a little bit what you talked about from a

19 federal perspective. You started down that path when

20 you indicated I think you talked about two years

2t versus six vears.

22 What sense

23 ba.Il, no! that anyone would ever know what they do in

24 Congress what sense do you have in terms of what

25 that would mean to Pennsvl-vania in terms the two J4

I years or the six years in terms of the impact of

2 moving forward, in terms of the approach that they

3 take?

4 SECRETARY BIEHLER: Thank you for the

question. The question j-s: What happens if it's a

6 two-year reauthorization versus a six-year and what

'7 is the impact on Pennsylvania?

B The answer, of course, we don't know; but

9 here are some of the factors. As you folks knowr w€

10 have been th.e benefactor because of the important

11 position of Congressman Bud Shuster of being the

L2 recipient of, in fact, more dollars in federal gas t< tax revenues, we've been getting more back than w€i t4 in fact, have been contributing.

15 We are known as a receiver state, if you r_6 wi11. There's also a series of donor states. So if t7 you can imagine, now that the chairmanship has

IU changed and there are fol-ks in the donor states who

19 are looking anxiously toward reauthorLzation to right

20 that situation in their mind, they are looking to

2'J_ apportion the funds differently among the states.

22 To give you a more concrete example, there

23 was a Senate Bill that had a magnitude of $318

24 bill-ion that was floated as one of the possibilities .i 25 for a six-year reauthorization. That bill was going 35

1 I to increase the amount of revenue for our programs

2 over the period of s j-x years by 19 percent

ft sounds great. Oh, by the wdy, the

4 average to al-I of the states was 3 6 percent . We

5 would have been, in relat j-on to the other states, cut

6 pretty significantly.

I There's a thouqht that if there's a

I six-year billr w€ may be on this source of having the

9 donor states feel it's their turn and therefore, in

10 rel-ative order, us getting a slightly Iess

11 apportionment, if you wiIl

L2 Over a two-year period, it's not known. I l-3 don't know. There' s been a l-ot' of discussion about a

T4 two-year bill. At the moment, it seems that that's

l- J.J the way the Congress will lean based on discussion

16 with now Congressman Bill Shuster and Congressman

17 PIatts and Congressman Hoeffel and Congressman HoIden

18 and Senators Specter and Santorum, but we don't know.

19 Itrs'not clear if they will try to right

20 the donor versus donee situation in a two-year biII.

2L The answer is, I can't tel-l- you.

22 My guess is over a six-year period, therers

23 a more greater opportunity to raise the amount of

24 dollars, I think f think we would have a better

25 shake if it was a six-year biIl, because there's an 36

t_ opportunity to raise revenue, I think, is the feeling

2 within our members over a short-term peri-od.

3 They said that the President has really

4 been clear that he does not want to see a bill and

5 wi11, in fact, veto a bill that significantly

6 increases the amount of federal of the federal

I program in excess of $45 billion a year or $45

I billion' times 6 is 270 billion. They're looking at

Y 45 bil-lion times 2 years or a $ 90 bi l-I ion program.

10 REPRESENTATIVE EVANS: So as a result of

11 this kind of uncertainty, that kind of makes it

72 difficult for us from a state perspective in

13 determining up running transit as well- as routes.

1_4 SECRETARY BIEHLER: That t s true.

15 REPRESENTATIVE EVANS: Then I want to lead

16 into transit. I know you obviously know a great deal

17 about transit and the issues, and I thank the

Id Administration working with the restoration with the

J-v 16 million as well as 3.4 that you are proposing; but

20 at this pointr ds you know, obviously, two of the

2T major transit authorities are accumulating deficits-

22 You also know from yourself and you and

23 tr have had these conversations about the way we do

24 things around here. As was done with t'he Turnpike,

25 we have had a huge increase over a long period of 37

1 t3-me. We have some way of pract icing avoidance

2 We know full well we need to do something

that will cost us this much more, and then the

4 consumers and the taxpayers want to know why all- of a

5 sudden this happens.

6 Aren't we in a sense at the same road,

I crossroad, in terms of transit, this sense of

I uncertainty and what it will mean for the future?

9 SECRETARY BIEHLER: Yes, f think so. I

10 think of two thlngs. One is the unpredictable nature

11 of our transit funding stream. It's not just a state

L2 si-tuaLion. Itrs a federal situation.

13 The second factor that I think is, in fact,

74 the shape of our demographics that I mentioned. If

15 you're trying to if you're the head of a transit

J-O agency and your market basis is continuing to spread

77 out, and if you have to take your.buses or.rail

18 vehicles or whatever the vehicles are and travel

19 longer differences to carry the qame number of

20 passengers, your costs go up significantly.

2L There I s a couple of .f actors at work. '

22 They're rea1Iy troubling. If there's a way to

23 stabilize that, it seems to me that would be the best

24 thinq.

25 It may seem somewhat odd, because the 3B

I I transportation department is reaIIy heavily into the

2 question of landing. I think it's important that we

do stay there because that is one of the effects.

4 Now, related to fj-nancing, if there is a

5 bray for the public t.ransit funding to be on a much

6 more predictable basis, something like the motor

7 license fund is a dedicated source of dol1ars, folks

U know that they can plan from year to year.

9 It has some possibility of bargaining

10 inf lation, then that woul-d be a nice goal to t_1 ul-timately get to,' but that's going to take an awful

72 lot of discussion. Other factors have to come in. t< What should the service look like? What

74 should the fares be that people need to charge?

1-5 What kind of a as you're saying, maybe Irm more on

IO a frequent basis; if you raise prices on a more

77 frequent basis, each individual increment wouldn't

1U seem l-i ke such a big such a hardship. Maybe

LJ that' s true.

20 I think there's discussion that we ought to

21 have, and we started it with the men and women in the

22 transit industry, to, in fact, talk about those

23 l-hinncerr4rrY s .

24 There's a conversation going on as we

25 speak, if you will-, with the Port Authority and also 1 the rest of the members of the Pennsylvania Public

2 Transit Association to relay this very question.

3 As soon as we generated a budget of this

4 year, I was pleased that the Governor's office and

5 the budget secretary were willing to advocate a 3

6 percent increase. It's realIy been a 1ong, difficult

I roao.

x REPRESENTATIVE EVANS: But did you think

9 and I understand how this crisis works out and itrs

10 been around for a long time sometime

1l_ the increase, does that stilI really fix the problem?

L2 I understand you advocate to increase

1? because people are happy to get an increase. What I r.t hear you saying, if I'm not putting words in your

mouth, wherg,.is the strategic thinking.

16 By adding the increase, does it take

L7 pressure off from dealing with what the fundamental-

1B problem is in terms of where we are in terms of

LY dealing with this problem? zv Give the increase, right, and then everyone

21 figures everything is aII right. They got a little

22 rriv+vLv!J. r.t-nrrr Tn the meantimer."f w€ have to either f ix the

23 probl-em,or move toward fixing the problem. That'.s my

24 concern. I've been around here and was very much a

25 part of the dedicated funding. 40

1 SECRETARY BIEHLER: I "think you' re right.

2 I don't know that it's taking the pressure off this

3 probt:*, tfe S. a percent increase. ft continues. I

4 read the'same things you probably read. In

q Philadel-phia, the amount of deficit they have is not

6 going to be solved by the 3 percent. rt helps, but

I it I s not solving getting, ds you said, not a

I strategic solution

9 That's why we are, in fact, para1le1

10 beginning those .discussions to sdy, okay, letrs

11 discuss those, because ultimately I need to discuss

1,2 those with the J.eadership of the Transportation

IJ Committee and to look at the waterfront and soY, is

1"4 there any opportunity here to have a-better,

15 longer-term sol-ution?

L6 REPRESENTATIVE EVANS: I would like to go

11 over one thing with you. This is my good colleague l_8 f rom Warren County, Jim Lynch. Therle's a story in

19 today's paper, Philadelphia Inquirer, bY a gentl-eman

20 named Thomas Highton, who is the author of Save our

2L Land and Save our Towns.

22 He talks about in the story, he tal ks

23 about Pennsylvania makes no suclr distinction around I 24 the Department of Transportation, which announces a

25 saf e route .to school- initiative, which you announced 4L

1 that today, versus the Department of Education in

2 t.erms of how they distribute money in terms of

3 schools.

4 My question to you is this: Even though

5 you and other cabinet officers have done a qreat deal

A about quoting the Brooklyn Report, youtve been

7 quoting, it, and in the language of the Governor's

I peopJ-e, my question to you is: How is that

9 translating down within the departments itself that

10 people understand what the left and right hand is

rl-11 doing ?

T2 . Irm going to give you the story. The story

13 rea11y talks about the consolidation of the school

74 rather than keeping small-er schools. If you keep

15 smaller schools, the nej-ghborhood schools would fit

J_O closer to the direction that you're coming from with

1,7 the Department.

18 It's like the Department of Transportation : 19 is saying one thing and the Department of Education

20 is saying something different. 'a11 2L Even though you and tel-I us this .come 22 language when you come before uSr my question is, you

23 know, what about the people who are under you? Do o 24 they share this same kind of philosophy of addressing 25 what has been happening to Pennsylvania? 42

l_ SECRETARY BIEHLER: Of course, they do.

2 REPRESENTATIVE EVANS: I just read that in

3 the paper. Somebody is exaggerating something.

4 SECRETARY BIEHLER: No. I'm kidding. The

Brooklyn Report was interesting reading. We can

6 probably all- find things that we agree with and don't

I agree with; but this issue of l-and use that f

x mentioned, we started talking about that long before

9 the Brooklyn Institution Report.

10 I will- tell you that in terms of how we're

11 working within an agency that's got 1,2,000 people to

1,2 try to have discussion meaningful discussion about

13 those issues, we not only are discussing within the

I9 Harrisburg -: sort of central office; but it's

15 critical that it gets down into our agencies.

IO Werre doing that through our various

17 district offices and having those kinds of

18 discussions. We go to them. They come to us. We

19 have an awf ul- 1ot of dial-ogue.

20 There's a l-itt1e circle here of f olks who

2t need to be involved. ft's not only us in our central

22 organization, but also the metropolitan and regj-onal

23 planning organization.

24 There's a lot of discussion about where to

25 put monies and what projects we need to deal with 43

1 that are happening in that arena.

2 There's one more agreement that I would

mention to you, the State Transportation Commission.

4 Every two years we update the 1-2-year program. We

t just got done having a series of hearings in late

6 summer, early fal1. We're working with members of

7 the State Transportation Commission.

I IncidentaIly, they're not only folks

Y appointed by the Governor and General Assembly; but

10 it incl-udes the Transportation Chair, Minority and

11- Majority Transportation Chair. Senator Madigdo,

t2 Representative Geist, and Representative McCal1 are

t< also members there. There's quite a broad range.

I4 Are we getting the word down to the folks?

15 I think the answer is yes. We are asking them to

16 think about land use issues and the health and

I7 quality of life in their communities. I think the

1B program Safe Route to School falls into the category.

t-v No matter whether you have if there's

20 some things you can do in the core towns to help

2T embrace mortatity and make a walkable environment

22 where there is now not one, we think that's a good

23 thing. o 24 We"have and will continue to talk to our 25 folks and have them look for those opportunities. 44

1 Just like Representative Argal1 talked about the

2 Downtown Group, there's a whole series of different

J audiences that can continue the different discussions

4 to make the best use out of these dollars. That's

5 our mechanisms. The folks care about it, and f think

'Fharrtro 6 LrrEy !E trllinnLAArrrv fnL\., rLril-

7 REPRESENTATfVE EVANS: Thank you.

I SECRETARY BIEHLER: Ask me for a report in

a year

10 CHAIRMAN ARGALL: We now have 11 members.

11 We need to l-ook f or those tight answers.

T2 SECRETARY BIEHLER: Okav.

13 CHAIRMAN ARGALL: Representative Rohrer? ' 74 REPRESENTATIVE ROHRER: Thank you,

15 Mr. Chairman. aa Mr. Secretary, thank you for your testimony

L1 this morning. I have one question that goes toward

1B the streamline sourcing initiative that the

19 Department is going through.

20 SECRETARY BIEHLER: SUTC

2l REPRESENTATIVE ROHRER: You mention in the

22 testimony about the benefits that woul-d be gained

23 perhaps in an area of asphalt and coverage and

24 bi tuminous and all of that area.

25 My question I guess my first comment is, 45

l- I think it's a good idea, absolutely, that there's an

2 effort being made about how we can reduce cost.

Foll-owing secondly on that, has the

4 Department in this area just taking this whole

5 area of bituminous roads, has the Department done any

6 kind of a study, impact study, dt all to determine

7 really what the impact of that would be not just on

I current suppliers, but even within counties from the

9 standpoint of whether or not it's rea1ly going to

10 make a difference on cost and how that works? Has a

11 study been done?

1,2 SECRETARYBIEHLER: No, we have not. No,

IJ we' have not.

1A l_9 REPRESENTATIVE ROHRER: Are you intending

15 to do any kind of a study to determine that, or is

16 this just a good idea that we hope works out?

I1 SECRETARY BIEHLER: We11, we will l_u certainly, because we work with a number of different

19 associations, the Asphalt Paving Association and so

20 on; certainly, we will continue to work with those

2L associations. I would be happy to let you know what zz they have to say.

23 f would also just mention that there's sort

24 of just a reference, w€ have something Like these

25 areas that we've identified are something in the 46

1 neighborhood of $200 million worth of costs out of

z our budget of 1. 6 mil-1ion.

3 At the moment, there is an awful 1ot of

4 .those . kind of material-s. services wiLl- continue to

tr be bought, you know, simply using our.construction

6 methods and separate contracts and separate 1ow-bid

7 contracts.

B Each contractor, obviously, in the bidding

9 process is free to go to any supplier they possibly

1n can. I think it's not going to end up being one

11 supplier, you know, the big GoIiath, the WaI-Mart

\2 that knocks out every single, you know, corner

13 hardware store. f just don't see that, dt Ieast in

14 our business. These are purchasing materials our

15 folks use, not the contractors, if thatrs of he1p.

16 REPRESENTATIVE ROHRER: And I think thatrs

T7 probably a good answer. f know f had gotten and

18 actually solicited some input from entj-ties 1oca11y

J-v that are invoi-ved in providing these kinds of

20 services.

21- SECRETARY BfEHLER: Sure

22 REPRESENTATIVE ROHRER: The numbers that

23 they came back with would indicate that if a sole

24 source was chosen within a particular county and

25 the county f have here has several different ones 47

1 that do provide right now if it were to go to a

2 single source for that county, I have two different

contracts that we are looking at. The one comes out

4 where the actual if it were to go to the one low

5 bidder, the cost would be j ust about $l-1- more per 22

ton, which is one truckload. It does about a t2 foot

7 by 25 foot by 75 foot.

8 Then another contract would be almost. $8

Y more per ton. Therefore, the cost for that county

10 within that region would actually be more under a

11 sole source than it would be as it's currently done t2 where you take advantage of you know, if you're

13 doing a road proj ect down the road, you've got one

1A facility sitting 2 miles away and another one that

15 may be the sole source that is 15 mil-es away, it's

T6 cheaper to get from 2 miJes away. Thatrs the point

L7 t,hey were making.

IU I was curious if the numbers were done,

19 because this would indicate that a strict sole source

20 within a county l-ocation RaY, in fact, increase which

2t would be going the exact opposite directi-on that we

22 would want to go.

ZJ SECRETARY Bf EHLER: I shouLd al-so mention

24 when they do these, we're doing them in regional

25 areas. 48

1 Ultimately, we sure don't want to qet into

2 the situation where there 's only one bidder. The

savings werve seen so f ar, 4 miIlion, which j-s

4 significant stuff because we put it back into the

5 system, if you wi11, r€surface more roads.

6 We don't want to get into a situation where

I if you have only one bidder and all of a sudden the

B price is higher than you ever started with. That's a

9 valid question, one we have to continue to monitor as

10 you go forward.

11 REPRESENTATIVE ROHRER: Okay. That's good.

T2 I appreciate the answer. I think it would be good to

13 do as you'rg saying. Thank you very much. ti CHAIRMAN ARGALL: Representative LaGrotta?

15 REPRESENTATIVE LaGROTTA:,Thank Your r_6 Mr. Chairman. t7 Mr. Secretaryr ds the Chairman pointed out,

18 we only have five minutes so unlike some of our phone

19 conversations, I I ll- try to be brief .

point it 20 I want to, f irst of a1l, 9.tt that 2L is a pleasure working with you. It's always

22 impressive to me having been here 18 years when

23 somebody makes a phone call to the Department and the z4 Secretary, you've called me back as late as 9 or 10

25 or 11:00 at night. I appreciate that. 49

1 l- A couple of questions. Maj-ntenance

2 budgets, y9r and I have had this conversation before.

I have a county, one of my three counties,

t Lawrence County, that is in Distrj-ct 11. Under the

5 Thornbu r gh Administration, a number of county

maintena nce managers were dissolved, which puts my

1 count y Lawrence County, in a dual situation with

Beave r County.

v What strategy would you follow if you were

10 me and boy, is this a loaded question if you

11 want ed to get back a county maintenance manager?

L2 I mean, I have serious issues which we have

13 discus sed. I want to make sure that we have some

J,4 loca I accountability so that I don't have to call you l_5 at all hours of the day or night and to get things

aa l-o done.

L7 How would you follow now that we have a new

1B district engineer coming on eventually since ours

IY retired? This might be a good time to redo al-I of

2o that.

21, SECRETARY BIEHLER: I think I have two

22 answers to your questions. The obvious one about

23 moving onto your distr j-ct is not one. of the two.

24 I think of two things. One is instead of

25 going to the solution about deciding if you need a 50

1_ manager or a particular person, I would look at what

z is -- how are we doing? What is our performance in

Lawrence County in this case vis-a-vis any other

4 place? Are we effectively doing a job. that we're

q supposed to do? Thatrs No. 1.

6 Second1y, what are our resources? You

7 know, it's always been a great source of debate as to

I how much money is devoted. You know, itrs done by

Y formula, by act of General Assembly and so on. We

10 can l-ook at that.

11 I guess f would l-ook at those two things.

t2 You know, what are the resources and look at it in a o 15 number of ways; per mile of whatever, p€r Lane mile, 14 per whatever is the right indicator.

15 Sometimes the number of bridges ought to be

\6 looked at. Anyway, Iook at our performance in terms

]-'7 of the conditions of the roads in Lawrence County

18 vis-a-vis elsewhere.

19 I think those are the starting points that

20 I woul-d suggest we investigate your question. It

2T would be fair game to anybody.

22 REPRESENTATIVE LaGROTTA: Well, f wanted

23 you brought up what are the conditions, what are the

24 situations L was trying to be nice to you.

25 I have another question, Mr. Secretdry, and 61

1 this goes to the question of money in terms of how we

z al,locate money.

In my small county wel-l, in all counties

4 but in Lawrence County specificaffy, we bring on in

q the wintertime what we cal-t temporary maintenance

6 operators that leave in the spring and then we bring

7 on temporary summer maintenance operators that leave

I in the fal-1

.o fs there a reason why we do this as opposed l-0 to just saying, we have a need for a maintenance

11 operator? I'm not questioning who gets hired. Ifm

I2 noL trying to indicate that ll I'm just saying it seems people have

1A I= said to IR€r we get a good guy in the winter who has a

15 commercial driver's license, knows how to drive a

16 truck, understands and wants to work hard, and then

L7 he leaves in April and then he can I t be rehired in

1B the summer because the unions don't permit that. t_9 Then we bring on somebody else who has a CDL and

20 doesn't like to work hard

2T Is there a way we canrt just sdY, this is

22 the compl-ement f or County A and we're going to hire a

23 permanent guy who wants to work hard t2 months a

24 year?

25 SECRETARY BIEHLER: It's clearly a matter 52

1 of trying to get the most money, you know, 9et the

2 effectiveness out.

3 There may be certain times where you have

4 peaks with wj-nter maintenance and summer maintenance

5 where if you kept f olks orrr you wouldnrt be able to

6 use them effectively. That's, I think, the root of

7 why that system is in p1ace.

B The exact details of every labor contract,

J I'm not going to be able to tell you. I'11 be happy l-0 to research that or sit with you separately and go

11 through that and get our folks to sit with you.

1,2 The basic issue is rooted in trying to 9eE,

13 you know, the best labor cosL; and as I say, it's

T4 kind of like if you have peak hours , --

15 REPRESENTATIVE LaGROTTA: I understand.

Ib What I'm suggesting to you is that the foreman that I

T7 spoke with said, if we hire somebody on a temp

Id contract, he works fulI-time. He or she is a

19 f ul-l--time worker. Then thev leave and then a month

20 later, we bring on other people to do that job.

2T . Everybody has their own theory that saves

22 the Department money. They don't have to pay

23 benef its, which I know we would never do any.thing

24 like thati but the reality is, is that the people on

25 the f ront lines that cal-1 me saying r we aren't 53

-- 1 nafyv u t-urrry i nn \rre' re training Somebody to drive our

2 trucks dnd do this and that and the other, then they

leave. Werre not maximi zing our efforts.

4 SECRETARY BIEHLER: I think it's a subject

q that I have got to get into a little bit more

6 specifically about the time gaps between the

7 different periods between winter and summer. We turn

8 around and.one month Iater, we do certain things-

Y REPRESENTATIVE LaGROTTA: Itrs usually

I\J between April around tax time and then they come

1_l- back on in the middl-e of MaY. t2 SECRETARY BIEHLER: I need to look at the

13 9ap, because I don't know offhand what the gaps in

14 time are, but I would be happy to do that and get

1J back to you.

16 REPRESENTATIVE LaGROTTA: Thank you.

1,7 Thank You, Mr. Chairman

ARGALL: Representative Forcier? 1-8 . CHAIRMAN 19 REPRESENTATIVE FORCfER: Thank You,

20 Mr. Chairman.

2t Good morning, Mr. Secretary. Now.that

22 Pennsylvania has become a free st.ate bypassing the

23 modification of motorcycle helmet law, it is now more

24 important than ever to take a look at and focus on

25 motorcycle safety and motorcycle awareness. 54

1- What is PennDOT doing to focus on public

2 awareness of motorcyclists and specifically the use

3 .of flashing signs, billboards, and highway signs?

4 SECRETARY BIEHLER: The answer is I don't

5 know. I honestly don't know what campaigns are done.

We certainly have many over the years and a whole

I series of'different educational and, you know,

B efforts along the whole spectrum of safety.

9 , I can't answer off the top of my head the

10 issue about motorcycle safety. Obviously, we're alI

1l- concerned about the change in the law to make sure

1"2 we're monitoring, you know, injuries and f atal-ities l< and so on. .'I have not seen any of the statistics yet

1A IA for 2003

15 REPRE S ENTAT IVE FORCI ER: We1l- ,

J_O Mr. Secretaryr.I look forward to working with you and t7 possibly that's an opportunity, your flashing signs

18 now address l-i ke your seatbelt 1aw, you know, buckle

19 up, it's the 1aw.

20 SECRETARY BIEHLER: SUTC.

2L REPRESENTATIVE FORCIER: Buckle up the next

22 mitlion miles for your signs. Werve all seen them.

23 Irm just asking if there's a possibility and would

24 you work with me on looking at there's a very good

25 slogan. It's look twice. Save a l-if e. Motorcycles qq

1 are everywnere.

2 Maybe we can work on that theme along with

maybe something else to focus on motorcycle safety.

4 It's important that the public is aware of what is

5 going on in Pennsylvania.

SECRETARY BIEHLER: I think it's a good

I idea. Ilm simply saying in the case you referenced

B of the seatbelt 1aw, we're a secondary seatbel-t law

9 state but our numbers are very, very high.

10 REPRESENTATIVE FORCIER: And I think that's

11_ probably related to fantastic education we do in the

^"I.r'l 'i n t2 yuv!r9.

13 SECRETARY BIEHLER: We'd be happy to work

L4 with that.

15 REPRESENTATIVE FORCIER: Thank Your Mr. l_6 Secretary.

!1 Thank you, Mr. Chairman.

1B CHAIRMAN ARGALL: Representative Walko?

19 REPRESENTATIVE WALKO: Thank you, Mr.

20 Chairman.

21, Thank your Mr. Secretary. I had a question

22 about signage policy and PennDOT. I represent parts

23 of the North Side of Pittsburgh. There are a number

24 of highways criss-crossing the North Side, and on

25 those highways the PennDOT signs target one 56

1 I neighborhood. Itrs not even formally a neighborhood.

2 f t's j ust a .Iocation, the North Shore.

3 It's mentioned 20 times on different signs,

.i and the North Side, whj-ch is the entire community, is

5 on 1y on one siqn ., Neighborhood groups, the North Side Chamber

7 of Commerce and many members, are attempting right

I now to promote the entire North Side. We believe

Y thls policy sort of works aqainst it.

10 To show how important signage is on our

11 highways to usr there are 101,000 daily average trips

1"2 on T-279, 72,000 on the Parkway from Duquesne over to

13 the East Street Va11ey, 66,000 average daily trips on

L4 Route 28 North.

15 f want I know that the decision on the

J_O signage was made before your time probably, but I was

,17 wondering how it came to be that a newly-named area,

1U the North Shore, has its name aIl over these'signs

19 when the North Side, which attemptitg, again, to

20 promote al-l of its amenities as one unit including

21 stadiums, the War Ha11, the Chil-dren's Museum, the

22 Photo Antiquity Museum and other amenities, I wonder

23 how decisions were made.

24 I can say that I was never contacted about

25 what that signage would be. The Chamber of Commerce 57

i- was never contacted. The neighborhood groups that

2 make up the North Side Leadership Conference were

3 never contacted. f was wondering how those decisions

4 are maoe.

q SECRETARY BIEHLER: The answer is, I don't

6 know how this particular one was made. C1ear1y, we

7 attempt to sign for new destinations. Somewhere

B along the l-ine, someone made a j udgment that that

9 destination even though it if I remember, the

10 North Side is a neighborhood within the City of t_1 Pittsburgh.

L2 REPRESENTATIVE WALKO: Yes.

13 SECRETARY BIEHLER: Itrs a recognized

14 it's got a lot of history. People think of places

15 differently over time. That's a fact. It used to be . l_o ca1led All-egheny, right ?

L7 REPRESENTATIVE WALKO: Yes. The turn of

1B the century.

19 SECRETARY BIEHLER: The turn of the

20 century. Someone decided to ca11.it North Side.

2t It's not an incorporated location but it's a

22 neighborhood, kind of like the Hill District or

23 Homewood or"Oakland or whatever

24 So at some po j-nt, someone decided that

25 apparentJ-y the j udgment was made more f olks woul-d 5B

1 recognize North Shore. Whether that's right from a

2 commerce-driven perspective, I don't know.

Peopl-e knew it because of the stadiums

4 probably. Go to the North Shore and you'11 find the

5 stadiums, I think, was the logic behind that

6 REPRESENTATIVE WALKO: Mr. SecretdrY, I

7 thinlc that the logic behind it was to separate those

x developments from the North Side. We do have our

Y chatlenges and problems, but all along the debate

10 over whether public money should be spent on those l_1 stadiums, they kept saying, this wiII help the North t2 Side. This will improve the image of the North Sidg.

13 Now what they have done is attempted to

74 separate. I know you had nothing to do with it. .: 15 I have another point about urban quality of

IO life on the Route 28 stretch known from the Heinz,

71 plant out to the 40th Street bridge. I urge you to

continue to consider alternatives and the history of

19 the United States that would preserve the beautiful

20 hillside that leads up to Troy HiIl that would be in

21, accord with Pittsburgh history and the Landmark

22 Salvation and River Life Task Force

23 I believe the challenge would be to get

24 some air rights to southern railroad. I wonder if

25 you woul-d comment on any plans f or Route 28. 59

1 SECRETARY BIEHLER: f would be happy to.

2 Let me raise it to a broader context. Route 28 for

3 you folks who don't know where that is, it's a route

4 that .is a four-l-ane roadway.

5 A portion of it has controlled access,

6 virtually no entrances or exits on it between a

I couple of bridges. Another section has an entrance

I not every few feet but close.

It's an old design road. ft's one which

10 sits right at the top of a very steep slope and on

11 the other edge. is the river. fn fact, the church

1,2 that the Representative talked about sits right next

13 to f eet, it's vj-rtual1y 40 or 50 feet f rom

T4 the edge of the road and the parking Iot, it's called

15 St. Nick's Church.

16 The bigger issue here is how how we can

17 be sensitive as we design and improve our road

18 system. That road needs to improve. ftrs reaIly a

19 problem area, and probably we ought to be Duyr-nq up

20 some very dilapidated structures along the road. You

2L need to see it to understand what I'm saying.

22 have one pre-historic church, but we've

The key is z5 got to produce a design that works. .to 24 balance those el-ements. We are going to be sensitive

25 to those. 60

1 REPRESENTATIVE WALKO: Thank You, t 2 Mr. Secretary. I appreciate that sensitivity. It's

important to me and to my constituents and to the

4 St . Nichol-as pari sh. Thank you.

5 CHAfRMAN ARGALL: Representative McGill?

6 REPRESENTATIVE McGILL: Thank You,

7 Mr. Chairman.

I Good morning, Mr. Secretary.

9 SECRETARY BIEHLER: Good morn1"g.

l_0 REPRESENTATIVE McGILL: I'm not here to

1t- talk about SEPTA or the Port Authority, but I am here

L2 to talk about 309; and 'over the last I guess last

13 year, w€ received a drop a year on this project,

l-4 maybe 1-8 months, as it moves along.'

15 Last summer, f was made aware fairlY

i.6 quickly that money was f lexed f rom the 309 pr.o j ects,

t7 approximately $25 million; 15 of it went to the SEPTA

I6 and L0 went to the Port Authority in that, I guess,

J_v the last year!s fiscal problems that'we had.

20 I understand they have projected deficits

2T this year. So my question is, did you have a role in

22 allocating those federal funds to be allowed to be

z5 rolled into SEPTA in lieu of st,aying in the Motor

24 Fund for the motor Iicense fund for highways?

25 SECRETARY BIEHLER: I sure did. Let me 61

1 explain that. First of all, the flexing of dollars

2 for public transportation did not just happen related

3 to Route 309. You need to know that you're dealing

4 ' with two separate areas of the state.

5 So 309 had nothing to do with what happened

G in the southwestern portion of the state. That was

7 something within that metropolitan planning

I organization.

Y The work of flexing dollars related to , 10 helping one of the ingredients that closed the

11 deficit that Representative Evans mentioned in SEPTA,

T2 y€s, had to do with DERDC in that region.

1-3 Absolutely, y€sr I had a hand in it in this

Iq sense. ClearIy, the decision to fIex those dollars

ar l-J is the responsibility of those metropolitan planning

16 organizations. t7 I can te11 you firsthand, Y€s, that I spoke

1_B to both the heads of the transit agencies and those

19 areas and the respective heads of the metropolj-tan

20 planning organi zations and encouraged t'hem to do

t-l.-f 2t U ll A L .

22 Yes, I am the guy. I am guilty as charged.

23 It did not come, however, from the Motor License

24 Fund. Those dollars came from federal flexible funds

25 that are avaitable to be spent on either highways or 62

1 transit.

2 Yes, j-t meant in some places -- in each

case in the Pittsburgh region and the Philadelphia

4 region, those dollars were dol-Iars that were not

5 being able to be used Last year. Yes, I encouraged

6 them to

I REPRESENTATIVE MCGTLL : Did they force the

x 309 project to be further out?

9 SECRETARY BIEHLER: Not to my knowledge. t-u don't believe our folks have delayed our time or

1-l_ construction. There j-s a balancing act. The money

12 had to come from somewhere. You'ie correct.

13 REPRESENTATfVE McGILL: Well, I know: f '1" 4 represent both out of my area. It was a.concern to

15 me that when I take sides, I get accused.

16 The other area that I want to talk about,

I7 the Governor recently went down in Montgomery County

J-O and spoke about Section ?00 at 202.

19 I guess Section 4OO was a remarkable job

20 through the King of Prussia area. Section 700, we

2t are tol-d, is now not really being pushed as h3rd as

22 we would J-i ke

23 There's a debate over whether it's a $400

24 million project or a $200 million project. If you

25 could enlighten us on what j-s happeninq with that 63

1 .-lvJhrn + 6^i- -T assure you that there are many, many

2 legislators down in that area that are act j-ve 1y

pursu j-ng the f ruition of that pro j ect.

4 SECRETARY BIEHLER: would be happy to do

q that. Route 202, 700 let me start again. Route

6 202 goes from the Delaware border all the way up to

I New Jersey. In essence, hobbled together, it's kind

B of a ring road. It's in various parts of the state.

9 At one place, it's a two-lane road.

L0 It was thought of some years ago to be a

11 freeway, a compl-ete freeway from stem to stem. It

L2 had eight sections to it. They were Section 100, 2,

1_3 3, 4, up to 800. l-ast section went through .The 1"4 Section B0O went through Bucks County, New Hope and

15 so on.

16 At some point I donrt know when this

I7 happened, you might have a better sense of the r_8 history Section 800 was dropped as part of the rY freeway. The other sections are stilI on the books.

20. Something is happening with all of the

2'J, sections . They're in construction. They're in

22 design. They're j-n engineering. They're in

ZJ someplace. zq Section 700 was one of those projects in

25 Montgomery/Bucks area, where it's qone through a long 64

1 history of development. ft was decided that there

2 ought to be a freeway connecting through that area.

One of the good things about it is, in fact, some of

4 the guys have set apart land

a REPRESENTATIVE WALKO: You have almost all-

6 of the rights.

1 SECRETARY BIEHLER: There!s'a side 1and.

6 Itrs a good thing. It's gone through the

9 envi-ronmental process and so on.

10 There's a nucleus to some folks that have

11 spoken against it. They have wrj-tten letters to me

T2 and to the Governor and the Federal Highway l_5 Administration.

1"4 At some point last year, the Governor asked

15 to get brief ed on it. I can just tel-1 You, the

16 Governor, ds we told him what the facts are, the

11 facts are as follow: The total cost of this 7- or l-d 8-mile section is $464 million, of which about $70

19 some million doll-ars has been spent. Ergo, there's

20 about $380 or gO million yet Lo go.

2T The Governorfs reaction is, wow, is that a

22 1ot of money. It.'s a huge amount of money. Sort of

23 obvious question is, shoul-d we continue along that

24 line or what should we do.

25 Simultaneously, they sent Ietters to the 65

1 Federal- Highway Administration. The Federal Highway

2 Administration sent the letters to us requesting that

wcYrvt i n far:f ,- analyzesrrs the loca1s request one more time

4 to look at the concerns that they have raised.

5 We said that we woul-d do that: We as 1.", 6 we speak, trying to finalize the work program that

I will do that analysis. I wil-1 te11 you that

B simultaneously while we're going to engage the study,

9 I'm hoping there's a six-month effort, that we do it l_0 as f ast as we can, we're going to conti-nue with the

1l_ design of the work that has started for some years.

12 I will teIl you that

IJ I will also tel-t you, we will look hard at

I4 this issue of what the committees have raised. I

1q think it's within our responsibility. We have to l-o respond to the Federal Highway Administration

17 We have to respond to either salute the

1B f1ag, a good thing to do, or decide something else

1_9 and get on with that. Let's not be in this No Man I s

20 Land. In the meantime, werre going to continue..

27 REPRESENTATIVE WALKO: A11 right. Thank

22 you.

23 SECRETARY BIEHLER: Yes, sir..

24 CHAIRMAN ARGALL: Representative Wheatley?

25 REPRESENTATIVE WHEATLEY: ThANK YOUI 66

I Mr. Chairman ' 2 Good morning, Mr. SecretarY.

3 SECRETARY BIEHLER: Good morning.

4 REPRESENTATIVE WHEATLEY: Last year, I. was

part of a majority of my colleagues and I supported

6 the restoration of mass transit funds back into the

7 budqet.

I If.m a major supporter of mass transit in

9 general; but during that conversation, the

10 Administration undertook something that I thought was

1l- very positive and historic with the budget secretary t2 actually looking at and making an assessment of both

13 SEPTA and the Port Authori-ty and rea1Iy looking at

L4 the j-r f inancial he1P.

15 the question I have this morning really

10 goes to what is happening with the recommendation? t7 From my understanding, there was coming out of that, l_8 there waS Some preliminary recommendatj-ons that were

19 asked. I wanted to know from you what the Department

20 is doing to try to imPlement.

21, Then two, if there's an overall strategy to

22 Iooking at mass transit or how we transport people

ZJ throughout the Commonwealth and really try to make a

24 more efficient, €ffective mode of transportation for

25 people in general. 67

I J- Then 1ast1y, what is the accountability

2 mechanisms of the systems and making sure what was

J reflected was reaIly happening in the best efficient

.{ and effective way?

q. SECRETARY BIEHLER: Have you been spying on

my Department? The reason I give that flippant

7 answer is this: For your.first two comments, I kind

U of

Y the first study and are we implementing things; in

10 fact, wj-th every good study you continue to do more l_1 studies.

L2 What I'm saying is first effort we r-3 worked, again, with the same three agencj-es that I

14 mentioned; SEPTA, Port Authority, and we al-so were

15 engaged with the Pennsylvania Public Transj-t

16 Association to look dt, you know, the dilemma that we

L'7 had last year. And the results of looking at that

1B dil-emma, in f act, Ied up to ultimately some of the

19 transit agencies, in this case SEPTA and the Port

20 Authority, taking certain internal to reduce l"aions 21- certain administrative costs, and each did. zz The Port Authority had a $20 million

23 deficj-t if my memory is correct. SEPTA had a $55

24 mil-l,ion def icit.

25 Each of those took a series of actions to 68

1 -L offset some of those projects with their own

z wherewithal that l-ef t remaining issues.

3 One was the restoration of the mass

4 transit, $ 16 mil-l-ion that trickled down. You f olks

5 did that. I say thank you for that. That was

6 another ingredient in helping to offset those two

7 deficits

B Last but not least, the thing'that we

Y talked about

10 DBRPC & SPC to use flexible money to plug the last

11 bit of those deficits. That's what we did.

1"2 In essence, that's what we did with those I r-3 funds. I was being flippant with the studies I4 continuing. W€, in f act, are cont j-nuing those

15 studies today because the deficits, in fact' are not

16 you know, they're not going away

1.7 The question is I think it's fair to ask

t-u the question, ultimately, is looking as

l_v Representative Evans has suggested -: in a very

20 strategic way.

21 Al-1 of those ingredients are at p1ay. I

22 think it's fair to ask the question about what kind

23 of service leveIs are appropriate, what are the fair

z4 pr j-cing that ought to go with that, what are the

25 administrative costs that go with that, what kind of 69

1 state subsidy or federal subsidy and other loca1

2 subsidies ought to be at pfay to ul-timately come out

at the end.

4 In fact, that ties to your last issue about

q what kind of controls or what kind'of criteria should

6 we establish to say that we're on a good source and

7 we ought to have reason to consider perhaps special

I funding to

Y REPRESENTATIVE WHEATLEY: Irm sorry to

10 interrupt you. I want to get this.

11 SECRETARY BIEHLER: SUTC.

72 REPRESENTATTVEWHEATLEY : What t,ype of time

IJ frame are we working with under tha t scenario? Right

I4 now, who is actually monitoring thi s process and

15 holding the systems accountable? r.6 SECRETARY BIEHLER: Okay. The answer is in

T7 terms of when you say monitoring the.process, the

1B Pennsylvania Department of Transportation has certain

19 resp:nsibilities as part of its grant delivery

20 process to monitor and get reports from the various

2L transit agencies annuafly.

22 We get those on a regular basis. So those

23 are availabl-e. In case you would be interested in

24 reviewing Lhose, I would be happy to sit with you and

25 do that. 70

1 I W€, in fact, 9et annual reports on the

2 perf ormance of these agencies . You shoul-d j ust know

3 that.

4 In terms of the future and in terms of what

- is going orrr the transit agencies right now, I think,

are very busy'at home trying to figure out how

7 they're going to deal with their respective budgets

9 If wer in fact, are working with there's

10 a consultant that is workj-ng along.with the Secretary

11 of Budg€t, Mike Mash. Her name is Arlene Finer, and

L2 she is, in factr working with these agencies looking

IJ at .their f inancial reviews again. The study is, as I

14 sdy, continuing.

1_5 We will work hard with all of that. No t-6 doubt, ds I mentioned, I wil-1 be working with the

L7 transportation chairs and discussing these issues.

Id We aII have to look forward to a longer-term solution I LY some way through this. It s a reaIly tough funding

20 issue. Good suestion.

2t CHAIRMAN ARGALL: Representative Cappell-i?

22 REPRESENTATIVE CAPPELLI: Thank you,

23 Mr. Chairman.

24 Mr. Secretary, nice to see You' sir.

25 SECRETARY BIEHLER: Nice to see You. 1 I REPRESENTATIVE CAPPELLI: FiTSt, A

2 proprietary questj-on: The planned Market Street

3 Bridge project which expands the west branch of the

4 Susquehanna River in Lycoming County, is that project

is that going to be left this year; and do you

6 have a time schedule for the project in scope?

7 SECRETARY BIEHLER: I'l-1 te11 you -- the

X piece of paper I'm looking at says March 25, 2004-

We're 9 It's either .that date or close thereafter-

10 Iooking at something very imminent

11 REPRESENTATIVE CAPPELLI: Thank you. I

12 want to personally commend you for the personal l_5 involvement'you've taken in this project and

J- .* indications with me and my staff each and every time

IJ we've made an inquiry. I really appreciate the

16 interaction and your involvement.

L7 My second question, Mr. SecretarY, involves

18 the liquid fuels tax. First, how much do we garner

19 each year? What is the total- amount of revenue

20 brought in?

21, SECRETARY BIEHLER: Let me make sure I get

22 an accurate number for you. This is Dave Margolis.

23 REPRESENTATIVE CAPPELLf: I guess more

24 specifically then, w€ give the first one half cent of

25 that 12 cent levy to our 67 counties, and then 20 72

1 percent of the remaining 11 and a half cents is

z apportioned to roughly 26OO municipal governments.

Does that formula work having an allocation

4 to our counties and then the separate formula

a1l-ocation to put j-nto subdivision, because I believe

6 countj-es also subgrant portions of their grant funds

7 also to subdivisions?

I So is that an area the Department may look

9 to reform or make a little more efficient and

10 effective j-n years to come?

1_1 SECRETARY BIEHLER: Yeah. I would say in

1"2 response to that, it's always appropriate, it seems

l_3 to trr€, to periodically take a look at that and see

t4 what we think.

l_5 To my knowledge, we haven't done that in.

16 recent years; but certainly, we get probably the same

t7 kind of cal- Is that you f olks might get that says,

Boy, is there any way E,o increase the cost per mile?

19 We'd certainly appreciate it.

ZU A locaI municipality, you know, when

2L they're fixing up the roads, they look at their own

22 budgets and whatever tax revenues they bring in. To

23 the extent that they have a road on a federal aid

24 system, that's another avenue.

I 25 Certainly, this allocatj-on is important to 73

1 it as well. f guess the answer to the question is,

2 we have not

3 recent years, and maybe itts time to do that and see

4 and think about the adequacy of those dollars.

? Certainly, it's important to think about it

A in terms of the rest of the use of those monies,

7 which is mainly to maj-ntain the state highway system

and bridge system.

9 I think it's f air to look at it. V0e try to

10 l-ook at different options within the allocation of

11 the state dollars to counties to counties

L2 within our county structure to maintain our own

13 roads. l-4 There's a there's no f ormul-a is

yu!lvvu.norf cr.t- You j over time to See 15 try"-J to ad ust those

16 what makes sense. ft's also a political process. I

I7 mean, it just is.

18 It needs to engage members on t.he various

1-9 committees. To my knowledge, w€ have not done it. I zv certainly heard you say you have folks begging for

21, he 1p

22 REPRESENTATIVE CAPPELLI: LAStlY,

23 Mr.. Secretdry, you've only been in office now a year, zq but I was curious to your thoughts on the

25 Department' s Agility Proqram. 74

1 I SECRETARY BIEHLER: Which program?

2 REPRESENTATIVE CAPPELLI: The Agility

3 Program.

4 SECRETARY BIEHLER: Yes.

5 REPRESENTATIVE CAPPELLI: It I s been very

well- received and quite helpful in particular in more

7 rural parts of the state. Do you plan on continuing

B that program or making any modifications to it?

Y SECRETARY BfEHLER: Un1ess directed

10 otherw j-se, we think it' s a home run. Vile think it' s

11 been a great program. It's been hetpful, we think, t2 to us. We get benefits. As you know, it's a help to t< each other kind of program.

14 In some cases, municipalities are able to l_5 do cert'ain things, mowing gras s and who knows what,

L6 and trade up for us painting a line or something or

L7 vice versa. We think it's been terrific l_8 It was interesting. We had a little

19 celebration of the program this last winter; and boy,

20 a 1ot of folks really responded and gave great

21, testimony of how effective it was.

22 The answer is yes. We think it's been

23 great. It's been a way to make sure the

24 municipalities know about the technical applications

25 of their road buil-ding business and repair business. 75

1 They don't have enough staff but we do.

2 If we can get that to them and use their

dol-l-ars more widely, it can take some of the pressure

4 off. Itrs been great.

5 REPRESENTATIVE CAPPELLI: Thank you for

6 your sentiments.

1 thank you, Mr. Chairman. B CHAIRMAN ARGALL: Representative Tangretti?

9 REPRESENTATIVE TANGRETTI: ThANK YOU,

10 Mr. Chairman.

11 Good morni.g, Mr. Secretary t2 SECRETARY BIEHLER: Good morning.

1_3 REPRESENTATfVE TANGRETTI: I have a couple

L4 of questions; actuafly, three, but two are related.

1q The plan by which the process by which we plan to

16 spend our highway dollars on transportation, a proven

77 pl.an with the Transportation Commissj-on and various

18 funding organizations, has been around for a long

IY t ime

2o I think and we've had this conversation

2t as you wil-1 remember with our county commissioners,

22 our delegation, and var'ious other members of the

23 community about a couple of projects in Westmoreland

24 County, which I think are probably problematic

25 throughout the state. 16

1 I just want to get your thoughts again on

2 the record about this, because it draws a large

concern of mine to everybody's attention and I

4 suspect they're thinking of it, too.

q. . We plan for projects from preliminary

6 design to right-of-way acquisition, relocation of

7 utilities, final design, aIt the other things, and

a then we get to a point conceivably and this has

q happened at least in two projects, maybe more in

10 Westmoreland County, where there's no construction l_ l_ laws.

1"2 The process is one of scramblitg, trying to

13 come up with dollars to implement and put into p1ace,

J- zt that which we have j ust spent mil-lions of dollars

Tf, planning for. aa I think it begs the question at least in my

I7 mind about the process not being designed t_8 appropriately. I say that full well knowing that the

19 process is a whole lot more complicated than what I

20 just described

2T We have, for examPle, the New Stanton zt Center Avenue Project. I don't expect you to know

23 the specific project, but it's been on the books for

24 a. good ten years now.

25 It's probably escalated in cost by the 77

1 factor of inflation over those ten years and maybe

2 more. We still don't have it. We're to the point

3 where the project is about to be conceivably less

4 within -- in the near future. There's no money to

J build thingsr or at least therers a scramble to find

A the money. .We have the same situation on Route 22 as

you know.

B My question is: Is the Department looking

9 dt, in conjunction with all of the other players, a

10 method by which we can update this process where we

11 don't have these hundreds of mil-lions of dol-]ars

72 spread out over thousands of projects across the t< state, with the idea that at some point only some of r{t them are going to be funded? That has caused me

15 great consternation.

16 I know in Westmoreland County, it has

77 caused a lot of people a lot of co.ncern. I wou1d be

18 curious to hear your reaction.

LJ SECRETARY BIEHLER: Boy, you rea11y hit an

20 important strategic subject for the transportation

21, business in general-.

22 Tt's interesting. We are engaged in those

23 kind of instructions right now with the State

24 Transportation Committee. f look at Representative

25 McCall. td

1 We are looking at the kind of hearings we

2 had Last summer and f al-l, and f olks came in and

? identified that we had more l-eads for the 12-year I program, whether it's the 12-year program or the tr first 4 years of the program with the Transportation

G Improvement Program. Itrs the same issue

1 My senses are as follows: Number one, the

express needs are here and the same ol-d litany of

9 this many dollars.

10 My guess is that wefve probably got too

11 much stuff on the program, too many projects on the t2 program.

13 We have typically phased phased

!4 phased f inanced our pro j ects. We'1l- say, l-et's get l-5 something going for every good reason in the world to

16 try to be responsive to members of the General-

I7 AssembIy, t.o this municipality, to that county

18 because of all good and valid reasons. Let I s go

19 ahead and put something on the proq.ram.

20 Meanwhil-e, out here on the scene is a $40

21_ mill-ion construction project with right-of-way costs

22 that hreI re sort of blind f rom, if you will.

23 I think we need to l-ook at that issue and

24, sdy, 1et's figure out whether we can afford $40

25 miltion farther down the line to seek because when 79

1 it comes due', we don't want to be in a scramble every

2 time and potentially have to delay.something eIse.

f think your point is absolutely well

4 taken. It's not an easy one, because some projects

5 simply fa11'off the edge of the list, if you wi1I.

6 We get something started. There's different

1 interests at play and they decided to drop it.

B We ouqht to all-ow a certain number of

v projects that wilI never happen. However, we ought

10 also to look down and be much more realistic with

11 ourselves. I canrt tell- you how strategic that is. t2 REPRESENTATIVE TANGRETTI: Just a final

13 there is an:ongoing process in the Depart,ment to take

74 a look at that whol-e

IJ SECRETARY BIEHLER: Absolutely. We are in

L6 the midst of discussing that with the State

1,1 Transportation Commission, within the ranks of my own

18 executive staff. We started discussions with the

19 MPOs and the RPOs about the same time. It I s a really

20 tough one. It's important that we do that.

2L We need to be able to finish things when we

22 start them. I also mention this project delivery

23 issue. If we can help oursel-ves by cutting some of

24 those time f rames, that means we're spending l-ess

25 money in the get-ready stages and more money on the 80

1 proj ect ,itseIf.

2 ; I think part of that r w€ need to continue

3 and make sure werre trying to commit our own money as a i: : t^ta | | : 4 I

't 5 REPRESENTATIVE TANGRETTI : Thank you, Mr

6 Chairman.

7 CHAIRMAN ARGALL: Representative-': Barrar?

U i' REPRESENTATIVE BARRAR: lhank you, i ':. ' l'r ' i. t. Y Mr. Chairman. ii !

qi, 10 With the Governor looking at borrowing $2 :: l_l- billion for economic development projects, wonrt that

!2 add another l-evel of frustration and an impact onto

1_3 your budget that Representative Tangretti was talking !. : l-4 to you:recently about, that will add some to your

15 delays? l_o SECRETARY BIEHLER: I don't know. t7 REPRESENTATIVE BARRAR: Do you see him

18 looking at $2 billion for additi ondl economic ! .1 l f 1-9 deve l oirment projects? Will that Plt a tax on where I 't. 20 vou'rei atr now with current proj er:t.s ? As wF let these J !' ! I a t ; 2'J, economic p roj ects out, there' s always a need for road 'a !t :. .t 22 r_mprovements in the area of

23 SECRETARY BIEHLER: SUrA

24 REPRESENTATIVE BARRAR: addit ional

25 highway improvemenES. U1

l_ SECRETARY BIEHLER: I would say to you that

z I don't see that as any kind of a frustration at all.

I sort of see it as the opposite, that itrs a great

4 opportunity.

5 We ought to be able to from time to time

6 l-ook at special j-nvestments that we think wiIl have

1 an overall positive impact on the economic stimul-us . B and health of our state.

Y So if ultimately we need to look at amounts

10 to prioritizing projects we've always attempted to

11 put a small- kitty of dollars aside for economic t2 stimulus kinds of activities we would certainly

13 l-ook at using those dol-lars. It may be an

T4 opportunity to reprogram from time to tlme as weII.

15 REPRESENTATIVE BARRAR: WouId a bond issue

16 at this time be more important than a revenue

T7 enhancement to help with the backlog of projects that

18 you have?

20 sensitive question, because the folks who at one

2L point knew that the Department was paying something

22 like $200 million in bond costs, the answer you

23 know, in fact, that issue was raised l-ast year in a z+ similar forum

25 My answer was we've been abl-e to bring the 1 annual bond payments down to a much, much more

2 controlled level to the point where I think we're

3 okay.

4 Do you want to go out and consider

rebonding? I think that's one of the options to

6 consider. I wi.l1 also te11 you that, boy, f would '7 get real nervous that if it was the will of the world

I to bond finance but not have a specified number of

9 doll-ars, you know, €drmarked to retire those bonds -

10 business of just simply bond financing _th. 1l_ without having a way to pay for it, boy, I would

T2 realIy get nervous about

1-3 REPRESENTATIVE BARRAR: WhAt dOCS dcbI l_4 service currently represent to theLL ^ Department now?

SECRETARY BfEHLER: I think we have that t_6 nrrml.ror

T7 REPRESENTATIVE BARRAR: I dON't thiNK it

18 would be r_9 SECRETARY BIEHLER: This is Dave MargoIis.

20 MR. MARGOLIS: Dave MargoIis, fiscal

21- of f i-cer at PennDOT. WeI re down to of the $200

22 million debt that the Secretary talked about, that's

23 at a $ 12 million l-evel as a result of ref inancing

24 which wil-1 continue f or several more years.

25 We won't have that t s been declining and 83

1 this is the time that it leve1s out. In addition to

2 that, there is another $23 million in debt service

.{ that is associated with the bridge program, but that

4 is being covered by that dedicated bridge funding

R source that was established by the General Assembly

in the '80s

'1 REPRESENTATIVE BARRAR: So it represents an

8 extremely low percent in the budget?

Y SECRETARY BIEHLER: Right. l_0 REPRESENTATIVE BARRAR: I saw that in the

11 budget. I thought maybe it was a mj-stake or I wasn't

\2 reading it properfy.

13 fncidently, with gas prices being at an all

14 time high right now, I would think the bond issue

15 would probably make more sense at the current timing

16 to help us complete some of the economic development

nrnia-l-a L7 v-vJ

18 . Let me talk about another issue that you

I9 had mentioned in your opening comments, about the

20 purchase card program, that you h.ave this under

2T control-. What was the outcome of that? Has all of

22 the money been paid back? Have any employees lost

23 their j ob due t,o

24 SECRETARY BIEHLER: There was one employee

25 who the matter was turned over to the Attorney B4

1 I General. As soon as we discovered it this last

2 spring, we suspended and fired the employee' one

3 person particularly. Unfortunately, it's just in a

4 pIacewith12,oooemployeeS,there'S.goingtobe

5 those unfortunate things.

6 We're not proud of it. We took quick

7 action to deal with it. We've completely revamped .

B our purchase card program. I would'-- I just want to

9 cite the work of Deputy Secretary Ron Howard who

1_0 really took us on as soon as we found out.

1l_ When I learned of it the week. after I took

l2 office, we sent out a memo and said, stop doing

13 certain things, immediately and then we'11.take a look

J_ll at improving.

t-5 We have since reduced the number of

16 purchase cards by 60-some-odd percent and completely

t7 revamped our process for training folks who can use

1U them and for what Purposes.

19 We have now, I think, two or three

20 different layers of double-checking on those

2t purchases. It's a very good proqram- It I s a very

22 helpful program. It has to be watched and managed.

23 we think we have done that and completely reformed o 24 our training 25 REPRESENTATIVE BARRAR: Thank You. aq

t_ CHAIRMAN ARGALL: Representative Melio?

2 REPRESENTATIVE MELIO: Thank You,

3 Mr. Chairman.

4 SECRETARY BIEHLER: Good mornitg,

5 Mr. Secretary

6 . REPRESENTATIVE MELIO: Good morning. I '7 have a-question about the temporary assistance for

x needy families that have come from other courts to

Y your Department

10 This is an important program because if we

11 don't continue this program, w€ are going to have t2 people who are the form of recipients of welfare and

13 not get them to their job.

1A f= In my districtr w€ have been very

15 successful with this program. I wonder what is groing

IO to happen.

I7 SECRETARY BIEHLER: That's a tough one.

IU It's a federal- program, but it comes through the

L9 Department of Publ-ic Welfare. Itrs able to designate

20 a certain number of dollars for that program.

21 Unfortunately, the Federal Government is

22 requiring the Department of Public Wel-fare to spend

23 additional money on j ob train j-ng education of the

24 welfare recipients.

25 If they donlt do that, there are huge 86

I I penalties. As a result, they've got to spend more

2 revenue, more resources on that program' which this

3 year j_s going to affect the so-ca11ed transportation

I for needy family dollars that we can utilize for

5 public transPortation.

6 Boy, is this a tough decision. As

I projected, that is going to be dropping from $10

I million to $7 million and may even go lower, as much

9 as zero.

10 It's a real concern. I'm glad you raised

11 it. In fact, the public transit agencies, they use

12 that.. to match other j ob access f ederal- f unds. I t3 Anyway, it s realIy a tough situation where

14 the Federal Government is imposing its additional

15 requirements on weLfare.

16 They need to then use some of their

17 resources and, therefore, had to cut back on that

18 pro9rram.

19 It's like asking the question of which one

20 of your fingers do you want to cut off. That program

2t has done good. It's been able to subsidize and been

22 able to provide access to jobs for the welfare

ZJ recipients it's intended to serve.

24 Itrs a problem that doesn't have a great

25 answer at this point because unfortunately, the 87

1 actions are on the Federal Government.

2' . REPRESENTATIVE MELIO: The reason I ask

3 and I noticed that Governor Rendell- j-s proposing an

4 additional 4OO,OO0 for the Keystone corridor. I'was . 5 able to use that transportation several years ago. I

6 haven't used it since, but I know that we can get to

1 Harrisburg quicker by car than you can on rail from

B Philadelphia to Harrisburg.

9 Now he's proposing an additional 40O,O0O.

1_0 What is that, going to do? Is that you know, is

11 that going to increase the times that we can use the t2 facitity, b€cause you can only use it certain hoursi

13 and if you come from Philadel-phia to Harrisburg, You t4 can't get home at certain times if you miss the last

15 train.

IO SECRETARY BIEHLER: Right. Itrs different t7 sources of money here, but in the case of the Amtrak

1B line, the Keystone corridor from. Harrisburg to

LY Phil-adelphi-a, and this is the additional dollars the

20 Commonwealth has helped to support a portion of that

2'J, service, something like 44 trips out of 100, some

22 trips are being supported by the Commonwealth.

23 We're proposing, if I remember the line

zlt item- t +eit-rs something like growing from $5.8 million

25 subsidy to 6.2. Thatrs the cost of providing that 88

1 through Amtrak.

z Youtve got a situation where you've got an

3 aging line. It takes more money to maintain that

4 line. I would say parenthetically it will- be reduced i in future years.

6 We just had a meeting with the president of

I Amtrak, David Gunn, along with the northern folks and

U southern folks. We arg looking to increase in that

Y corridor. Perhaps at a later time, they won't have

10 to be spending so much money on maintenance. They t_1 will get that track bed in better shape. That will

1_2 help us down the road.

13 REPRESENTATIVE MELIO: It's just that the

14 funds have been such a great thing for my area

15 anywa y.

16 The only other question I have is on the l_7 I-95 turnpike, where are we there?

IU SECRETARY BIEHLER: You mean the

IY inte rchange ?

20 REPRESENTATIVE MELIO: YES.

21, SECRETARY BIEHLER: The interchang€, the

22 Turnpike Commission :- excuse me is moving ahead

23 with -- I think they have just finished the

24 environmental work. Theyrre into the final- design.

25 This is a massive undertaking UY

1 .If it includes new bridges across the

2 river; it's as high as $600 milIion. Therers 200

mill-ion that have been availabLe f or a long t,ime.

4 nard to implement

5 the project. The answer to your question is, they're

6 in financial design.

7 REPRESENTATIVE MELIO: ThCV tAlKEd 6OO

I mil-lion but Governor Ridge when he was in of f ice, he

Y said it could be a billion by the time it gets

10 st arted

11 SECRETARY BIEHLER: As I said, the Iast

T2 number f heard was 600 and some odd. That included

-- t< new bridges. The interchange does not. Tt'" a t4 the interchange boy, it's a huge capital cost

REPRESENTATIVE MELIO: Thank You.

16 CHAIRMAN ARGALL: I promised Representative

77 Da1ly the last question.

18 REPRESENTATIVE DALLY: Thank You,

19 Mr. Chairman.

20 SECRETARY BIEHLER: Good morning.

21 REPRESENTATIVE DALLY: Before I get into my

22 two questions I have, I would just like to, once

23 again, thank you and the Department for your work in z4 Northampton County and the sinkhoLe problem and the

25 bridge on Route 33, Your response was incredible. 90

1 We realIy apprecia,te your attention to that problem.

2 SECRETARY BIEHLER: Thanks very much.

3 REPRESENTATIVE DALLY: In reviewing your

4 budget request, I noticed that the welcome center

5 line item was taken from the general fund

appropriation to the motor l-icense fund

1 appropriation.

8 It -iust seemed to me that that would be

Y more of a travel- and tourism item as opposed to l-o something that woul-d be funded for mot.or license

1_1_ funds. Did you receive a legal opinion on that or

L2 did the Governor?

14 whether we did. We may have. I think we felt that

15 we have been lucky to get it in the general fund for l_o all of these years. I think we have a difference of

17 oprnr_on.

18 The welcome center performs a pretty

19 important f unction. FoIks are in t.here because

20 they're on the highway. They're asking for .: 21, directions or information or asking how to travel.

22 Wethinkit'sabso1ute1yneceSsaIywithourroad

23 system, certainly dsr you know, people are asking for

24 directi-ons and utilize the roads.

25 They're going to places, hopefully some of 1 which are tourism. I think we respectfully suggest

2 that we have been very lucky all of those years.

J REPRESENTATIVE DALLY: Thank you. Finally, ,4 Titl-e 7 5 viol-ations. Last year in the budget

negotiations, the Governor was toutJ-ng several

surcharges for, quote, reckless drivers.

7 The total amount of surcharges I think

8 it was in the neighborhood of $l-00 million. I notice

9 in this yearrs budget, there isn't any reference to

10 those.

l-1 The concern is this money was to be levied

t2 through the fines and then used for general fund

13 purposes, even though they were Title 75 motor

t4 vehicle viol-ations. I 'm j ust wondering whether the

15 administration is still considering those proposals.

16 SECRETARY BIEHLER: I canrt te11 you.

1"1 There was certainly a flurry of activity and the

'l R fol-ks were asking for information and so on and

19 information was provided. I have not heard recent

20 discussions. If folks are thinking along those

2L lines, I just haven't heard

22 REPRESENTATIVE DALLY: Thank you. I would

z5 j ust l-ike to sdy, I look f orward to you coming out to

24 the ribbon cutting for the bridge- Thank you.

25 CHAIRMAN ARGALL: Thank you very much, 92

1 Mr. Secretary

a CHAIRMAN ARGALL: We're going to stand down

4 f or a f ew minutes. We'l-1 come back and begin with

5 the Secretary of the Department of Aging

6 (Break. )

7 CHAIRMAN ARGALL: We return now with the

6 Department of Aging with Secretary Nora Dowd

9 Eisenhower.

IU WeIcome, Miss Secretary. PIease begin.

1l_ SECRETARY DOWDEISENHOWER: Good morninq,

L2 Representative Arga11. Thank you for having us this t{ mornang.

14 Chairman ArgalI and distinguished members'

f am pleased to appear before you today to discuss

na IO the Governor's proposed 20O4-2005 budget for the

17 Pennsylvania Department of Aging

18 With me today are Ivonne Bucher, Director

I9 of Program Management; and Tom Snedden, Director of

20 the PACE program.

21- Together with the Generaf Assembly' we are

22 makj-ngt great strides in servicing older

23 Pennsylvanians

24 By balancing the needs and preferences of

25 older adults with current fiscal cons traints, this n I budget proposal makes possibl-e our largest expansion

2 in Pennsylvania's prescription medication assistance

J and facilitates an unprecedented effort to rebalance

4 the Commonwealth's long-term service system.

5 In short, this budget witl help us meet the

6 needs of older adults while continuing to be fiscally

7 responsible.

8 I would like to briefly highlight some of

9 the most significant program changes supported by

10 this budget.

11 First, with your heIP and I mean the

I2 help of every single one of you an estimated

13 115,000 additional older Pennsylvanians are expected

t_4 to enrol-l in the PACE/paCgNIer program as a result 9f

15 the expanded income eligibility provisions of Act 37

l_6 of 2003.

L7 Since.TanuarY 1st of this Year, the

18 Department has enrol-Ied over 20r000 people in PACE

IY and PACENET who were previously ineligible for

20 assistance.

21 We are averaging well over 7r000 calls per

22 week, more than double previous call- volumes. I want

23 to thank each of you for your active communication o 24 with your constituents. 25 You have helPed us to reach older 94

L Pennsylvanians within your d.istricts who are newly

2 eligible for these important and often l-ife-saving

3 prescripti.on benef its

4 We know you are helping them complete . . 5 applications, and we' re doing our best to expedite

6 that process so theY can get enrolled as quickly as

7 possible.

I Second, the Department has requested i-ts

Y PACE contractor, First Health; to apply to become an

10 approved issuer of the Medicare prescription discount

Ll_ cards. t2 Approximately l-51', 000 persons currently l-3 enrolled 1n PACE/paCENET are eligible for Medicare r.t transitional- assistance, which provides qualified

t- J.J recipients with a $600 annual credit towards the cost

16 of their medicati-ons in both 2004 and 2005.

I7 There is potential for the Commonwealtn "a" .real-ize signif icant sav j-ngs in f iscal year 2004-05 if

1_9 we can successfully navigate the CMS administrative

20 parameters for a transitional- assistance

2L This experience will also afford us an

22 opportunity to configure a methodology for

23 complementing the Medicare drug benefit, which is to

24 be operational on JanuarY !, 2OO6-

25 I also want to mention that to heIP 95

1 Pennsylvania stay at the forefront of prescription

2 drug assistance to older adults, the Department

conducts several research and evaluation initiatives

4 in collaboration with'prominent university research

centers and medical schools.

6 Efforts funded through university research

I centers address critical aging issues, such as

B i-mprovinq patient safety by reducing medication

9 errors, a collaboration with the University of

L0 Pennsylvania School of Medicine that has enrolled

11 PACE card holders as study participants.

I2 Harvard Medical School recently completed t< the field portion of a pilot program, known as the

Iq Brittle Bones Project, that involved visits to

ar IJ Pennsylvania physicians to discuss the diagnosis and

J_O treatment of osteoporosis among the PACE enrollment. '\ 17 The Department and Penn State University

1e are also working'to acquire Medicare data from 1993

19 .to 2003 on. beneficiaries enrol-led i-n the PACE/PACENET

20 program.

27 Access to this data wilI aIlow Pennsylvania

22 to evaluate the program's impact on enrol-Iees' health

23 status, .non-drug health services utilization, and

24 healthcare costs.

25 The Department, in its role as an advocate 96

1 J. for the needs of older adultsr'recognizes a growing

2 int.erest among older adult consumers and adults with

3 physical- disabilities to dlrect the manner in which

4 they receive long-term support services.

Consumers are telling us that they prefer

home and community-based services. One typical

I consumer seeking long-term support services is a

I 6 9-year-ol-d couple with an income of l-ess than

9 $35 r 000 a, year.

10 OnIy 2 to 3 percent of older persons have

11 Iong-term care insurance and Medicare pays very

72 littIe towards Iong-term care.

Among states, Pennsylvania has the fourth

L4 highest per capita spending on long-term care. Yet'

15 the state ranks 4Oth in its spending on home and

16 community-based services . That means that in t1 Pennsylvania today, 82 percent of long-term care

18 funds suppor facility-based care with only

19 percent supporting services to people j-n their homes,

20 such as the services provided to older adults through

27 the Department of Aging.

22 It is estimated that for every $5 expended

23" in facitity-based care, $3 can be saved by i 24 appropriately providing services to the same consumer

25 in his or her home 97

1 Not only are community-based, j-n-home

z services dost effective, it is what older

3 Pennsylvanians tel-1 us they want and pref er. ' 4 In this context, establishing a reasonable

tr balance between what the Commonweal-th spends for

6 facility-based nursing care and what it spends for

7 home and community-based services is essential to Lhe

X stability and solvency of Pennsylvania's long-term .

care system.

10 Accordingly, the Governorrs budget proposes

11 additional- resources for home and community-based t2 services and several strategies to rebalance our r_3 system that result in overal-l- cost savings to the'

1-4 long-term care appropriat j-on.

15 First is an expansion in the PDA 60-p1us

16 waiver to aIIow an additional 4,526 MA eligible older

1-7 persons to receive services in.the community, an tx increase of 29 percent for a total of 15r0OO slots.

LJ This will al-so provide corresponding

20 increases in administrative funds for area agencies

21 on aging.

22 The second rebalancing strategy is to add'a z5 new community transition service for the PDA waiver z1 program. Funds would be used to support consumers

25 with living essentials, such as cooking utensils and YU

1 security deposits, that would help them rel-ocate from t 2 nursing homes back to their previous or to a new

J housing arrangement in the community.

4 Area agencies on aging wilI receive

5 additional funding for appropriate transitional

6 coordinator staff capacity.

7 A third strategy to better meet consumer

x needs is shifting from an individual to an aggregate

an consumer cost cap for the PDA 6O-p1us waiver.

10 ' Currently, the waiver is capped on an

l-1 individual- basis at B0 percent of the cost of care in

t2 a nursing facility. This individual cap can be

13 detrimental to older adults with higher than average

14. service needs.

1q Under the individual cdp, service hours for

l-o some consumers had to be cut in response to

L7 reasonable increases in service costs. Other

IU consumers had no option but to move into a nursing

J_v facil ity.

20 An aggregate statewide cap woul-d appfy the

2't- BO percent cap.across al-1 consumers in the PDA

22 60-p1us waiver, allowing more consumers to continue

?3 receiving care in their home.

L 24 A fourth strategy is to update the PDA

25 waiver asset cap by adding a $6,000 income disregard, 99

1 effectively increasj-ng it from $2,000 to $8,000.

2 This will- provide a cost neutral eligibility

3 expansion for home and community-based services by

4 maximizing federal financial participation.

5 The proposed budget al-so maintains current

6 growth rates in the cost sharing bridge program at 60

1 slots per month.

U Finalfy, the budget provides an additional

Y $1.2 million for in-home attendant care services for

10 individuals with disabilities for a transition to the

11 PDA service system.

T2 I want to briefly emphasize a couple of t< other initiatives the Department is pursuing to

14 better meet consumers needs with existing resources.

15 Fj-rst, the Department is partnering with

16 the Departments of Heal-t,h and PubIic Welfare, and the

1-7 Office of Healthcare Reform to enable meaningful :

18 consumer choice and increase the availabilitv of home

19 and community-based services.

20 Through our community choice demonstration,

2'J- we have revised our intake and enrol-Iment processes

22 to initiate an individual's assessment for home or

23 community-based services within 24 hours of their

24 scheduled discharge from a hospitat or nursing

25 facility and begin services within 4B hours. 100

I The pilot began in Washington, Green and

z Fayette Counties in October of '03 and in

3 Philadelphia in "January of this year. We.plan to

4 make the new process available statewide in the

R 2004-'05 f iscal- year

6 Results from one month's data in the 7 southwest are very posJ-tive. Consumers with R immediate needs have begun PDA services within'48

9 hours. th. average length of time to begin receiving

10 services shrank from 10 to 16 days

11 Even more important, the number of MA

1_2 eligiblu ol.der adults who chose to be served in the

13 community instead of entering a nursing home, has t4 increased by 50 percent. l_5 In another collaborative effort with the l_6 Department of Pub1ic Welfare and the Office of

17 Healthcare Reform, the Department of Aging submitted t_B a joint application for five federal grants from the

TY Administration on Aging and the CMS.

20 These real choice systems change grants for

21 community living are intended to enable states to

22 make endurinq long-term service systems change to

23 improve the availability, access, and quality of home

24 and community-based services.

25 As a result of these efforLs, the 1-01

1 Commonwealth was awarded three of the grants

2 totalling nearly $2 million over a three-year period.

? The grants will facilitate planning and

4 demonstrations to integrate long-term consumer

e support resources into a single coordinated system'

6 create a uniform and integrated system of quality

I management for all Medicaid waivers, and examine the

X feasibility' of restructuring state, long-term support

9 service dollars to permit funding to folIow consumers

10 to the most appropriate and preferred setting. l_i- Within the l-ast f ew weeks, the Department

L2 has also been actively reaching out to the retirees

13 of the ZINC Corporation, who similar to Bethlehem l-4 Steel has discontinued its retiree benefits due to

15 its financial insolvency.

16 Through the APPRISE Program' the Department

I7 has conducted town haLl meet'ngs and provided free

18 counseling services and informaLional materials to

IY ZINC retirees in Carbon and Beaver Counties.

20 APPRISE counselors have been avai-1able to

2a dj-scuss any concerns and issues that ZINC retirees

22 and their families had about this situation. They

23 have also been answering eligibility questions about

24 Medicare, M€dicaid, long-term care insurance, and

25 PACE/ PACENET r02

I Final1y, the Department will soon be

2 implementing the long antj-cipated social assessment

and management system, or SAMS, electronic reporting

4 system.

5 The system will- provide our area agencies

on aging with a 21st century administrative

7 management tool that will facilitate the efficient

x and effective provision of services.

9 SAMS wil-l- dramatically improve cl-ient-based

10 service data col-lection by the AAA Network, and

11 enable outcome-based state planning and

12 accountabiLity. l-3 The budget proposal includes $500,000 for r.l additional trainingr software, and central database

15 reporting.

IO In closing, I believe we must continue to

77 together to expand and improve access to home

IU and community-based services. ' r_9 Given the demographic realities of an aging

20 population in Pennsylvania, the growing demand for

2t Iong-term support services, strong consumer

22 preference, and the cost effectiveness of

23 community-based, in-home services, it is essential

24 that the Commonweal-th shift a greater proportion of

25 its resources to these services. 103

l_ Consistent with the budget's overall-

2 emphasJ-s on improving the quality of life of

Pennsylvanians, this strategy will enhance the l-ives

4 of older adults living independently in the

community.

6 This concludes my opening remarks. Thank

1 you for your time and attention. I am pleased to

X answer your questions at this time.

9 CHAIRMAN ARGALL: Thank Your Madam t_0 Secr.etary. I think in many of the media accounfs of

11 what was an extraordinarily difficult year not for t2 just Pennsylvania government but for all of the state

13 governments in the nation, many of them did point out t4 that the one key program that the legislature and the

15 Governor were able to come tO terms on was the major

16 expansj-on of the PACE and the PACENET program as t7 referenced in your comments.

18 How soon will we know how the new federal

Lv expansion and the new state expansion will- cooperate? .

20 f mean, that has to be an extraordinarily just

2t complicated matter.

22 We want to make sure that the new programs

23 do complement each other and give reference to

24 significant savings. You mentioned signj-ficant

25 savings. It's a biq number whatever it is. I'm 104

1 curious as to how that is going to come together.

2 SECRETARY DOWDEISENHOWER: You're not the

only one who is curious about how that is going to

4 coordinate and how we want to really cooperate with a

CMS as they admj-nister this program.

6 At least right now let me just break it 't into two parts. We havee the time PeriodP leading uP '06. d to January of Let's put that aside for right

9 now. That' s when the prescr j-ption drug benef it will

10 kick in.

1l- UntiI then, w€ have something called a

discount card or transitional systems, which we can

13 get access to a sj-gnificant amount of dollars if we t l4 can enrol-l our eligible PACE recipients. That s what

15 we're working on. l_o I can give you a little bit more about

L7 that, and I im going to ask Tom Snedden to comment on

18 that, who has been working very closely with CMS,

I9 with our federal legislative members, to coordinate

20 as best we can. There are some real challenges

21- though.

22 What we expect in '06 is very unclear in z5 some instances, because those regulations have not

24 been promulgated yet.

25 There's some clear challenges that we 10s

1 notice just from looking at the legislation, but we

2 don't actually have a lot of very. accurate answers at

this point. We have some, but we don't have a lot.

4 It is significant doIlars. We have got to

make sure that we get the dollars that we're enlitled

to here in Pennsylvania for our older population.

,7 Tom, do you want to give a little bit more ' 8. detail on that?

9 MR. SNEDDEN: I will just try and quantify

10 a little bit for you, so that you have an

11 appreciation for the amount of money that we're

L2 talking about here

13 With the discount card, for.those people

_L .* that qualify for transitional- assistance and they

15 will- be people whose incomes are less than l-35

percent of the federal poverty 1eve1, approximately

t7 12, 000 of over 16r 000 we have enrolled currently ";. 1R in PACE 1-51; 0 O0 people who meet that criteria . I f we

19 can get all of these people enrolled in the discount

20 card so that they qualify for the transitional

21. assistance, we will save between 7O and 8O miltion

22 per year r-n ' 0 4 and then again in ' O5 .

23, I don't have any doubt that werre going to

24 get many of these peopl-e enrolled in that

25 transitional assistance benefit. 106

1 The question is, can we make it easy,

2 simple, and seamless? What we need to get CMS to

agree to is that we can use the PACE application t.o

4 qualify these people for the benefit, so that they

r don't have to complete another application that is

6 only going to cause a lot of confusion and

I consternation. That's an open j-ssue before CMS now.

B We're hoping with all of the support that

9 we have that ul-timately they will agree to what's

10 caIIed auto enrollment, whereby we can enrol1

1_1 everybody without having them complete anything more

I2 than they have already completed.

13 With respect to the Medicare drug benefits

.l T4 starting in t06, as the Secretary said, it's rea11y

too early to give you an explanation as t.o how that

16 might work

77 We need regulations. We need to know who

18 the plans are going to be that will offer the

19 benefit. We need to know exactly what that benefit

2o is. going to be, so that we can figure out how we

2I might meet the challenge of coordinating a benefit in

22 such a way that we save money

23 The CMS people, Mr. Skully in particular ltt who recently left as the administrator, told the

25 state senate hearing here last year that we will save l_07

1 $200 million a year in PACE as a result of a Medicare

2 drug benefit beginning in '06.

I woul-d say that's highly possible, but it

4 will be highly challenging as we11, because the bulk

5 of that money will have to come from people who meet

6 the low income subsidy test, which not'onIy is an

1 income test like a discount card, but itts an asset

6 J-a

9 From the information we have available, we

L0 think about 98,000 PACE enrollees out of the 320,000 l_1_ who will be enrol-Ied in the program at that time will

1"2 m,eet that low income subsidy test.

13 Tf we're able to get al-1 of them into the l-4 federal benefit, then we will save at least 200

mil1ion a year; but I 'm not sure yet how we ' re going

1-6 to meet that challenge. We're pretty much focused on t7 the discount card and that's challenge enough.

18 CHAIRMAN ARGALL: I guess it's one of those

19 good challenges that you l-ike to have

20 MR. SNEDDEN: Yes.

2t SECRETARY DOWDEISENHOWER: Oh, Yes.

22 CHAIRMAN ARGALL: In terms of the current

23 budget, the 286 that was included, much smaller than

24 the other number that we were talking about, but this

25 was for Alzheimer's outreach I was told that that 108

1 was eliminated in this proposal by the Governor, that

2 it's onqloing; and unless the Iegislature restores it,

3 we will be looking at a loss of some federal money.

4 Can you explain to me what that program

5 does and why it didn't make the cut in the current

6 proposal now before us?

7 SECRETARY DOWDEISENHOWER: The available

145r000 in state funds that supports outreach now and

9 the I think it's $1 million of a three-year grant

10 is rea11y designed to conduct memory screening and

1l- related services in rural and culturally diverse

12 communities.

1-3 I think itrs a situation of realIy what we

T4 need to bal-ance. Those federal dollars are assured

15 with that $145,000 funding level, as you see now. l_o4a I think it is a really significant program. t7 I think Alzheimer's support and caregiving realIy

1B compl-ements the other program that we have in the

19 community.

20 We reaIly want to pay attention to that

21 because of the need to enabl-e people to stay at home

22 and in the community. We know this is one of the

23 services that supplements that.

24 CHAIRMAN ARGALL: Thank you.

25 Representative Evans? 109

I t REPRESENTATIVE EVANS: Thank your

2 Mr..Chairman.

3 Good afternoon, Madam Secretary.

4 SECRETARY DOWDEISENHOWER:' Good afternoon.

q REPRESENTATIVE EVANS: Let's focus on the

6 word demograph j-cs, and you mentioned it a number of

7 times when you were tal king about change to l-ead into

R the questj-on of the state plan since you indicated

Y about the growth and change in the-demographics. t_0 What specific steps are being taken to

11 ensure locaI government service organizations, t2 senj-ors, and the Commonwealth is able to express the

13 concern regarding the current services and hopes for

1i IJ the future?

15 SECRETARY DOWDEfSENHOWER: Several. What

16 we're really looking at, and I think many of us have t7 known f or some time, and I know you' re not a strangf er l-8 to this booming demographics that we know was coming,

19 the boomers aging into a very high proportion in

20 Pennsylvania. We are somewhat unique in that sense.

21, We Iead the nat.ion.

22 ' To some degree, what we need to do is look

23 at this popul-ation and recogni ze that there are goJ-ng

24 to be some chanses that we need to make.

25 It's been anticipated for some time that 110

l_ werre going to need many more healthcare services,

2 and this population is going to age into the health

3 system and.is going to break the bank

4 What we want to make sure is that that

? doesn't happen. We know that part of the shift of

6 home and community-based services, aside from the

7 fact that'itts what consumers want today and it's

X much more economical- and that every budget secretary,

9 I think, over the Iast several years has looked at it

10 as the way to go, it is going to help us provide more l- l_ services to more people and to your people who are

T2 not in the system today, and realIy spread services

around to more people to keep them out of

Iq institutional care as long as possible. That's one

15 of the main thrusts of what we're doing.

16 Part of getting information from t7 communities around the state is going to occur when

18 \^re do our state plan hearings, which are coming up in

LA the coming weeks.

20 We're going to be in Germantown inviting

2T community members, advocates, providers to come and

22 talk in a forum setting about issues that are z5 confining them and what we see coming down the pike

24 in the future, so that when we create our state plan

25 working with AAAs and working with the Administration 111

1_ on Agingr w€ rea1ly will reflect on what is happening

2 and have a plan to make those services available.

REPRESENTATIVE EVANS: The pharmaceutical

4^ assistance program, fry understanding of the

5 Department, you use a cash balance for the fund to

A cover increase due to increased enrollment projected

1 in 2004- I 06. It should say 2005.

I Does the Department anticipate a Iarger

Y transfer of lotterv fund revenue to the

10 pharmaceutical assistance program beginning

11 200s-2006? t2 SECRETARY DOWDEISENHOWER: You know what I

13 anticipated in '05 and '06 is the benefit from the

T4 federal transitional assistance discount card if we ir meet the challenges of coordinating.

16 Then in '06, while we can't answer t7 guestions about how we're going to meet the

18 challenges of tapping those dollars, the federal

1-9 dollars for our PACE recipients, dollars that they're

20 eligible to in the Medicare program' we anticipate

2L that the maximum we coul-d look at is $200 mil]ion a

22 year from Medicare Rx in '06.

23 So that means if we do our job and we can

24 work with our colleagues in federal agencies, we wiIl

25 be able to draw down those dollars. LIZ

1 . What that's going to mean for PACE is I

2 think a decision and something that we need to look ^ at. Does it mean expanded eligibility so we can get

4 more older Pennsylvanians in? I think that's where

5 we're looking at there being some change.

6 REPRESENTATIVE EVANS: One Iast question.

I fn the past, this General Assembly has set money

x aside for facil-ities around centers in terms of

9 i-nvestment. : 10 Do you have any feelings or thoughts . 1-l- regarding those kind of investments for senior

L2 centers ?

1J SECRETARY DOWDEISENHOWER: I think

T4 investing in senior centers is key for Pennsylvania

t- IJ in so many ways

IO I think one of the things we want to do

T7 when we do our state plan hearings is real-fy go

1B around and talk to people and see what is working and

19 what's not working.

20 We know I think you're ref err j-ng to

2L dol-l-ars that were availabl-e which really helped

22 senior centers.

23 I think what we see now i-s that senior

)q centers are being strategic about where they need to'

25 provide services, where they need to be located, 113

1 whether consolidation is the answer or whether

2 providing a different array of services wiII draw in

3 consumers more.

4 That's something that we were looking at

5 and that we really must be strategic on. It's one of

A the things v'/e're working on. I think we' re goj-ng to

7 get more information around the state when we do our

B state hearings.

Y REPRESENTATIVE EVANS: Thank you.

10 CHAfRMAN ARGALL: We've been j oined by

11 Representative Dick Hess. We welcome Chairman Hess.

L2 SECRETARY DOWD EISENHOWER: Hell-o.

1_3 CHAIRMAN ARGALL: Representative Fleagle?

L4 REPRESENTATIVE FLEAGLE: ThANK YOUI t-5 Mr. Chairman

16 Good afternoon, Madam Secretary. When we t_7 as policymakers look at taxation systems, I know

18 therearecertainadvocatesouttherethattake

IY course, we're supposed to take care of everybody., but

20 certain groups pretty much get taken care of by their

21 own advocacy groups.

22 I think of perhaps a business that has the

23 chamber out there who at any time we would even think

24 of raising business taxes, that therers subsequent

25 j ob loss. They l-et us know about that 114

1 I What concerns me are those people who

2 really dontt have a voice and have come into my

office after we've done something usually and let me

I know what we've done to them.

r One of the concerns I have had and I know

6 the Governor said when we were looking at this

I sti1l look.ing at this 4 percent sales tax and.how

8 regressive would be toward older adults and the

Y poorr c€rtainIy, there's an advocacy there; but Irm

10 concerned how taxes or fees, like tippinq fees that l_1 are being proposed and their effect on the poor and

T2 the elder1y, because I think it is a reqressive tax

13 that atI of those folks have to pay. .,Thuy all

L4 generate waste or they have minimum bill-s.

15 I guess my question to you is: Does your l-6 Department act as an advocate to the Governor when he

L'l proposes these type of fees; and does your Department l_u go to him and sdY, wow' wait a minute- Seniors are t_v going to be hit with this pretty hard because it is a

2o regressive type of tax?

21- SECRETARY DOWDEISENHOWER: What we do with

22 our colleagues in the administration, other

23 secretaries, is really have discussions similar with

24 what we are having with you.

25 REPRESENTATIVE FLEAGLE: What was the 115

I resDonse --

z SECRETARY DOWDEISENHOWER: We advoca.te

REPRESENTATfVE FLEAGLE: frm sorry. What

4 was the response on this when the 'SECRETARY q DOWDEISENHOWER: When we

advocate -- I'm sorry. Thank you. When we advocate

7 for older consumers, we really Look at a number of

I different issues, partj-cu1ar1y the property tax,

Y income tax, taxes or something that is going to. have

10 a very specific impact on ol-der Pennsylvanians who we

11 reaIly want to stay in their homes as long as

72 possible

13 What we see with the tipping tax,

14 partic.ularly since half of the haulers are coming

15 ,from out of state, is a different impbct on older

16 consumers.

17 Vile really believe that if we can draw

1B revenue from resources, that we would be able to

19 really assist Pennsylvanians by helping them stay in

20 their homes later, by reducing property tax.. We're

2t Iooking an income tax as opposed to a sales tax.

22 REPRESENTATTVEFLEAGLE: And the only

23 reason Irm saying this is because I only have five

24 minutes, this particular tax though is granted for t 25 the envj-ronment, a good and worthy causei but it 116

1 would not go back to helpr dS far as I know, anything

2 for senior citizens

3 Who is there to be the advocate for a

4 senior. citizen that is going to come in other than

q me that is going to come into my office and sdy,

6 well, you can call it what you want, but I still had ,7 to pay an extra $10 a month that I don't have to. help

R pay for this tax.

9 SECRETARY DOWDEISENHOVIER: I rm not sure

10 that I see the connection, Representative, between a

11 consumer paying an additional $ l-0 f ee when we know

L2 that the tipping fee is going to be levied against t-3 businesses who use the state.

Iq . So, I mean, it may be passed. along to the

15 consumer or maybe there are other ways that the

1_6 business can absorb this cost.

1"7 I think what we really see here is my

18 Department advocating for older consumers and rea11y

19 feeling so proud of the fact that the PACE program

2A has been withstandJ-ng. It's one of the Ieading

21 programs in the country. We know that. .It's been

22 operated by the state.

23 It was very farsighted when the state

24 implemented it all of those years ago. What we

25 real1y do is talk to older consumers about that. 117

I That I s really what they come and talk to me about if

z they need help with prescription drugs. Vfe hear from

{ people everyday. f'm sure you do.

4 REPRESENTATIVE FLEAGLE: Very true, y€s.

5 f'm concerned about regressive taxes that hurt senior

6 citizens and who are the advocates for them. f know '7 I, for one, will bring this up during this budget

I discussion

Y I have to make tough decilionq. I know

10 there are ways trr*at if we don't come up with taxes or tsome 11 revenues other waysr w€ have to do it in another

12 fashion, granted, but I'm rea11y concerned about some t< of the proposals that we've seen in this year's

T4 budget.

15 They're certainly regressive towards senior

16 citi zens and money that wil-l ultimately come out of t7 their pocket that they could use for other things.

18 I look forward to working with your office

19 and trying to al1ay some of my fears and helping the

20 senior citizens by not balancing our budget on their

21, backs. Thank you, Madam Secretary.

22 SECRETARY DOWDEISENHOWER: Thank you.

23 REPRESENTATIVE FLEAGLE: Thank you, Mr.

24 Chairman.

25 CHAIRMAN ARGALL: Representati-ve Sturla? 118

1 REPRESENTATIVE STURLA: ThANK YOU, o 2 Mr. Chairman. 3 Madam Secretary, I j ust want to l-et you

4 know that there are a lot of seniors in my district

5 that like the fact that there are going to be

6 playgrounds for their grandchildren to play on and' a . 7 cfean environment and all of that kind of stuff as a

8 result of this.

9 What I reaIly want to do is return to the

l-0 PACE proqram here for a second. I think Tom can te1l

1i- your I was over talking to him six, eight years ago

t2 about the PACE Program.

At the time and I think it's stilI true

I1 now my concern was that every time we set new

-LJ limits in. the. PACE program, we go out and beat our

16 chest and sd1rr you knowr w€ got more people on.

t7 As soon as we get everybody signed uP, the

l_8 next day, there's somebody in my office saying, I'm

t-9 $10 over that limit or I'm $50 over that limit. What

20 are you going to do for me?

2I A11 I do is I just change the list of

22 people that are complaining about the fact that if we

23 set the limit artificially, $50 is too low'

24 One of the not j-ons that I ran past the

25 Department several years back, and I would hope that 119

1 maybe noltt with this potentiaf influence of large

2 amounts of money in the near future we might be able

3 to do something about this, is to do a spend-down

4 program wheie you c.an essentially say I want the

5 Gove rnor to be able to stand up and say, every senior

6 citizen in the state of Pennsylvania qualifies for

I the PACE program.

I The way to do that is to do a spend-down

9 program. You stil-1 have those artif icial limits set.

10 Now, if I'm $50. over the limit that we currently have

11 set, if I use that standard, as soon as I go spend

I2 $50 on pharmaceuticals as a senior citizen and we

1J have the abitity to track that as long as they're l_ .l signed up for the PACE program their effective

I5 income at that point in time is the same as the

16 limit.

T7 So that day they wal-k into the pharmacy and l_B the druggist says, today is your lucky day. The

1_9 computer says you now get co-pay instead of paying

20 the whoLe thing

21 What we do is it buil-ds in a catastrophic : 22 component, because we know that there are people that

23 are 50 or $100 ove.r that l-imit that have 5 and $6,000

24 worth of pharmaceutical costs no matter where we set

25 that l-imit . 720

1 we build in a spend-down program, even

2 if the person never spends down far enough to get

there r we have at least been abl-e to l-ook at their

4 utilization and whether there is conflicting drugs.

5 We're provj-ding service to them j ust

6 because they signed up for the PACE program, and we 'the I . tracked what they did every time they went into

X pna rma cy

9 We al-so then with the spend-down program

10 get more people invol-ved and have no one feared that

11 some day they're going to get a doctor saying, you

1,2 need to take these drugs. It t s going to cost you 5 l_3 or $6,000 a year and they're $50 over the limit. t4 Is there -- can you teII me why a program

15 like that wouldn't work?

1_6 SECRETARY DOWDEISENHOWER: No. I donrt

L:7 think it's a program like that not working. I think

1_B . j-t's a matter of the cost of a program like that and

1_9 the highly cal-ibrated nature of expanding PACE the

20 we have, and to come into a unanimous decis ion on .ruy 27 that in the House and the Senate is pretty

22 s i gni fi cant

23 What you're talking about j-s real-. I think

24 we know people who need assistance with medications

25 who don't qualify for PACE or PACENET. We know 721,

1 that's a very serious issue for them.

2 We're hoping that with the Medicare

prescription drug benefit, we will be able to help

.+ more people. How that actually plays out, I'm not

5 Qll rA \ta.l-

6 We know we are going to be entitl-ed to some

7 of those, federal dollars which should assist us. I

B think when you have a program that sets an income

Y 1imit, this may happen. l_u I think that with the expansion of PACE and l-1 PACENET, I think it is appropriate to pump our chests

I2 here' in Pennsylvania. We have made eligible probably

13 half the population over 65. That is so significant.

14 We don't see that in other states. I don't care

15 where you go. Wel-1, maybe Hawaii because of their

16 unique nature. That's something we should be proud

I1 nf

18 With that said unless, Tom, you want to add

IY anything on .the spend down 'quantif 20 MR. SNEDDEN: Again, I would j ust y

2L it f or your 'Representative Sturl-a. There's no

22 technological impediment to doing what you suggest -

23 From a pragmatic standpoint, complexity

24 might deter people that need the benefit - Werve seen

25 it in other states l-ike New York, that the more L22

1 complex the state program becomes, the less like1y it t 2 is the people will enroll, but I think we can

overcome that.

4 I think here is what you have to think

5 about, even with this latest expansion, which as the

Secretary said qualifies a million of our 65-plus

.1 I population, you still have another million that don't

l X qualify.

I Y We know within that million who don t

10 qualify, there is probably as many as 300,000 people

11 who could use help in paying for their prescriptj-on

T2 drug benefits

J_5 If you were to expand it to everybody, you

1-4 would effectively almost double the size of the PACE

15 program, which is going to run about $450 million

16 this year

L7 If you're going to double its size, even if

l-8 the benefit isn't quite as generous and you make it

lv more catastrophi-c, you're sti11 talking about another

20 2 to 300 million that you would need to pay for that

2l kind of expansion.

22 REPRESENTATIVE STURLA: At thc tiMC WE

23 looked at it six or eight years d9o, it was only

24 about 40 or 50 million.

25 If we couId, I would like to go back and I look'at those numbers only because to rt€r the

2 simplest way to explain to a senior citizen whether

or not they qualify is to sdy, if you're a senior

4 citizen, you qualify. You may have to do a spend

5 down, but you go get signed up for the PACE program

and we'11 determiner'you know, which day is your

t lucky day when you walk into the pharmacy.

I MR. SNEDDEN: WeII, when we talked about in

Y I 97 and '98, prescription drugs were costing about 50

10 percent of what they do today. That, of course,

11 woul-d only take it to 100 million.

L2 A lot depends on where you set the l-3 threshol-ds to qualify. If you set them high enough,

14 then you can make it 100 millj-on; but if you set them

15 to a point where it's a meaningful benefit, I think

16 you can always adjust the threshold.

77 REPRESENTATIVE STURLA: Given

18 SECRETARY DOWDEISENHOWER: Somethinq else

19 that I think may helpr w€ are operating a clearing

20 house effort for consumers who just don't qualify.

2'J, Whether itrs $50 or 100 or whatever it is, we can

22 help them by rea1ly analyzing what their medications

23 are and looking at the discounts offered by the drug

24 companies. We can sometimes provide assistance that

25 is really significant. 124

1 REPRESENTATIVE STURLA: Right. I was just

2 hoping in . the .next couple of years while we I re

Iooking at the potential of a windfall, that look

.r at this as a possible way of getting Pennsylvanians

q involved here. Thank you.

A CHAIRMAN ARGALL: Representative Armstrong?

7 REPRESENTATIVE ARMSTRONG: ThanK YoU,

I Mr. Chairman.

Y Thank you, Madam Secretary. Itrs good to

10 see you again.

11 SECRETARY DOWDEISENHOWER: Thank you.

1-2 REPRESENTATIVE ARMSTRONG: I have a

13 question related to the interstate funding formula

14 both in terms of equity and the hol-d harmless

15 provr- s r_on

16 The formula determines how much funding

1.7 each candidate receives from the department. First,

1_8 I have to tel-l- you, Madam Secretary, that when my

19 office first asked for this supervision in my county

20 l-ast year r w€ were totd that that data was

2L unavailabl-e.

22 We took the manual, which is about this

23 size, and took it apart line by l-ine,'and after about

24 80 hours of our own research, came up with what each

25 county receives and then what each county receives 125

1 per senior.

2 Fj-rst, I woul-d like to ask, would your

Department be able to provide in the future a

4 breakdown by county of what each senior receives?

ECRETARY DOWDEISENHOVIER: Each senior or

6 each area agency?

'7 REPRESENTATIVE ARMSTRONG: WeIl, I would

B like to know in the future how much money each county

Y gets from the aging department, so that then we can

10 determine how much money we're getting per senior;

11 because here before, that data was not available from

L2 your Department.

1J SECRETARY DOWDEfSENHOWER: We'lI work on

I t4 nr.oviding that. f don t know why it wasnrt available

15 by county; certainly, by AAA. Some counties have

16 grouped together in the southwest j-nto one AAA. We

T7 will try to make it easy to get that data.

1_8 I think what we're looking dt, too, is

19 possibly the implementation of SAMS coming into full

20 force, that we will be able to track those dollars

2L more sor that not only wiLl you see per senior or

22 almost a per head, p€r dol-Iar figure, but what kind

23 of services are being provided and what are consumers

24 asking for,.and f think a whole number of strategic

25 elements that will help us do a better job. 726

1 REPRESENTATIVE ARMSTRONG: Thank you. As

z you know from our meeting last September with Senator

3 Armstronq, there's quite a disparity currently

4 between the amount of money a senior in some counties

5 receives compared to other counties.

6 Just to pick a few off, in the low end, if '7 you're a senj-or in Huntington County, you get less

I than $2 per senior. In McKean County, itrs just over

9 $t:

L0 Lancaster County where Irm from, it's about

11 $62. Then if we go to Philadelphia, it's almost 200;

I2 and then V[estmoreland next to Pittsburgh is just over

13 $200 per senior.

l_ {t That seems to be quite a wide variation;

15 and then to compound that, your Department continues

IO to use 1990 census data. I want to read a paragraph

L7 or summarize a paragraph out of the j-nterstate

l_8 funding formula manual.

LY During the next planning. cyc1e, which is

20 2000 to 2004, the Departmenc, proposes to maintain the

2L formula establ-ished in FY | 93/'94 usinq 1990 census

22 data.

23 Current increases in resources coupl-ed with o 24 dramatic population shifts in the 2000 census data 25 have l-ed the Department to retain the existing 3,27

.t formula.

2 This wiII provide a much needed opportunity

3 for the Department to closely study issues related to

4 census population shift during the coming two years.

5 I don't understand why we're using data

that is over ten years old. We have 2000 census data

I that is much more current.

I For someone l-ike myself in Lanca s te r

Y County, which is a growing county' I look at

10 Philadelphia, which is experiencing' a net loss of

11 population, and it makes me wonder, 9e€, are we doing

L2 this to give more money in one more way to counties

13 like Philadelphia?

14 SECRETARY DOWDEISENHOWER: You ask a

I5 rea1ly good question. The allocation formula is

16 something that seems to operate in a certain way. I

L7 don't. think therer s any doubt about that

1B By looking at data f rom l-9 95, how can we

19 possibly know what is happening ten years later,

20 particularly since we just had a census in 2000?

2I What I would like to do is highlight a

22 couple of issues. I do recall meeting with you and

23 Senator Armstrong on this issue

24 It's concerning for people living in

25 Lancaster County and other counties where a growth in !28

I I population could justify an immediate growth in

2 dol-l-ars.

3 I think just to step back and take a look

4 at how that allocation formula works, but also to

ref l-ect that we' re going to be in Lancaster tal king

6 to people, hearing about a number of issues that

I impact on the kinds of services they 9et, the dollars

B that go for those services, and how we can really

9 operate and be more strategic

10 We know that the AAA j-n Lancaster County is

11 one of the best operating AAAs. In fact, I think it

L2 is one of the ones that doesn't have any waiting list o 13 f or service. Th.ere's not a great outcry there. 74 Consumers are there waiting f or servj-ces.

15 ' Back to the allocation formula. It real1y

16 which, of course,

t1 is always going to mean that different dolLars are

18 going to different counties based on some factors.

19 I think that the factors that we look dt,

20 we're doing it right now. We're engaging in that

21, process in looking at our formula, looking at the

22 2000 census data and looking at a couple of factors'

23 and that is most importantly t.he number of people

24 over 60.

25 We also have to look at the people over 60 129

1 who are in poverty, who might be minority, and who

2 are rura1, because those different factors are reaIly

3 going to impact on the cost of services and what we

rt need to al-l-ocate to provide those services.

tr Combined with that is a hold harmless

6 provision, which means that state dollars must be

7 maintained at prior funding levels in the coming

U ye ars .

9 I think what we really need to look at

10 there is a way to come up with a formula that

11 refl-ects on these factors, that we must take a look

t2 at and get the'services to the people who need them. o l_3 One of the, if you wilL, ways that we make 74 sure that the AAAs are getting the dollars that they

15 need is to l-ook at their waiting list, is to see what

16 is happening, and make sure they can deliver the

t7 services that they need. That's something that has

18 been done on an ongoing basis; and realIy while

19 people are always concerned about.a waiting Iist'

20 they help us determine where we need to get more

21 services.

22 Vie know that in Philadelphia there is a

z5 great need for services when we look at these

zq factors, and that really does impact on how the

25 formula is going to come out. 130

1 I will assure you that we are working with

2 the area agencies on aging very closely to grapple

with different ways of coming up with a formula that

4 operates.

REPRESENTATIVE ARMSTRONG: Thank M.adam .you, Secretary. We're over time, but I just want to make

7 one final comment on the hol-d harmless provision.

I I think that needs to be revisited, because ? if we continue to hol-d harmless counties with the 10 const,raints of popul-ation decrease, what we guarantee

11 is that every ten years, this program wilI grow more t2 than it needs to. t_J If you think of a theoretical example, say

14 if Centre County loses 1OO percent of their eligible

15 seniors and they all move to Clinton County, we

J.O essentially have a program with no one to receive

1,7 those services.

1B So obviously, that I s not a realistic.

1,9 example. ft gets to the point that I think we need

20 to be responsible to the taxpayers also who are

2t footing the bill for this program. Thank you very

22 much, Madam Secretary. I look forward to working

23 with you. on this.

24 SECRETARY DOWD EISENHOWER: I do, too,

25 Representative. Thank you. 131

1 I REPRESENTATIVE ARMSTRONG: Thank you,

2 Mr. Chairman.

3 CHAIRMAN ARGALL: Representative Wheatley?

4 REPRESENTATIVE WHEATLEY: ThANK YOU,

Mr. Chairman.

6 I think it's good afternoon, Madam

7 Secretary. I really just have one or two brief 'questions, B one dealing with Irm encouraged to see

9 that you and the Department of Public Hea1th ahd

1n Welfare are starting to work coll-aboratively and that

11 the administration sees the need to do more joint t2 effort to realIy look at the issues of our seniors; l_J and hopefully, it will branch out to other areas with t4 our children and so on and so forth. I want to

15 rea11y conqratulate You for that.

16 I heard you talk through your presentation. l-? about the PDA waiver; and in our Post Gazette today'

1-8 they had an article on PDA waiver, more seniors

19 taking advantage of that

20 I received some questions about although

2I I'm very encouraged to see that we're also trying to

22 do things to keep seniors in place, what are the

23 things we're doing to make sure that the seniors are

24 taken care of properly and the measure of

25 :accountability not only in their homes but in the L32

1 .L nursing homes as well for long-term care? What types

2 of things . are we doing to make sure they're receiving

the services they need?

4 SECRETARY DOWDEISENHOWER: You make a : 5 rea11y good point about accountabitity and quality of

6 care.that older people may be receiving in their

1 I home.

I We know that there are a number of ways

v that we can monitor services in institutions. We

10 have the only business office that works with the

11 Department of HeaIth, Department of PubIic Welfare to

1,2 really reach out to residents of i.nstitutions; but : t< it's a littl-e bit dif f erent when you're in somebody's

L4 home

15 We want to encourage them. We .know it's

16 economical. There's just so many.ways to make sense.

I7 The chances are they choose to stay home f:t many

Id reasons. One is the privacy and the other is the

t IY inst j-tutional settings. That is something we re

20 sensitive to and really expand care, of how do we

21, really monitor what is going on with respect to the

22 individual and their family.

23 f think by looking at the way the Area

24 agencies on aging do manage care, they're visiting,

25 they're monitoring what is going on. They can see 133

1 what is happening.

2 : ft's the care that theyrre receiving, and

3 very tail-ored, improving that quality of life if

4 there are other situations that need to be attended

+^ 5 LU r

6 We think that in this expand to home '7 community, werre going to need to'pay more attention

I to situations that might not occur; like financial

9 fraud, looking at how that plays out. We need to

10 l-ook at things l-i ke those in the f uture .

11 REPRESENTATIVE WHEATLEY: One last

t2 question. As you're going through the performance

measures, are you also looking at ways at making your

I4 Department more efficient? Like when seniors are

15 coming to me'and asking about long-term care, Itm not

16 sure to send them to your Department or send them to

17 the Publ-ic Welfare Department, depending upon the

id J_O question I'm assuming.

l_9 Are you, as a Department, as other

20 Departments, are you Iooking at what your functj-ons

2L are and making a streamlining process so that people

22 understand clearly where to go for help when they

z5 need it? o 24 SECRETARY DOWDEfSENHOWER: We're working 25 on that. I think it's a very important part of.what 134

I we need to do i-r you have anybody coming to you,

2 any constituent or staff with any question about

long-term care, come to us first.

4 We can really help you and the consumer

navigate that system. Whether it's questions about

6 long-term care insurance, we have a program that does

7 a realIy wonderf ul- j ob. Vfe were out in the west

B working with consumers who lost retj-ree benefits,

9 which frm very concerned we're going to see more of.

10 We were out there talking to them. We have

11 very good information to help them access what. is'

12 available. It's still- complicated. ft can be a time

13 of cris j-s. We really can help. ' I would suggest if

14 you have any questions like that, come to us first.

15 REPRESENTATIVE WHEATLEY: I said that was

IO the Iast question. This wiII be the last one. When t7 you're coming out for your overall plan, You said

18 you're coming across the state. Do you know where

IY you'11 be when you come to southwestern Pennsylvania?

20 SECRETARY DOWDEISENHOWER: Yes, we do.

2T What I would love to do is give you a listing of our

22 meetings. We're going to be in Williamsport on March

23 l-0th, Lancaster on March 11th, Youngwood on March

24 16th, Clarj-on on March 17th, Phil-adelphia on March

25 22nd,, Allentown on March 2Atn, and Hazleton on March 13s

1 25th. They run from 9 to L2:30 each of these dates.

2 We'11 be out there looking to hear from consumers,

3 providers and others.

4 REPRESENTATIVE WHEATLEY: f didn't hear

5 Pittsburgh though

G SECRETARY DOWDEISENHOWER: I thinK the

7 Pittsburgh is the Youngwood. ftrs in the

R Westmoreland County Community Coflege.

9 REPRESENTATIVE WHEATLEY: f'm going to ask

10 my two chairmen to get me a bus to take my seniors

11 t2 CHAIRMAN ARGALL: We qot a memo this

13 morning that the Governor's bus is now available.

1n I9 REPRESENTATIVE WHEATLEY: Thank you.

15 CHAIRMAN ARGALL: We need to move on.

Thank you. t7 Representative Dal1y? l-6 REPRESENTATIVE DALLY: Thank You, Mr.

IY Chairman.

2o Good afternoon, Madam Secretary. I just

2L have one quick question. I just want to say that the

22 majority of :- if not the majority, mosL frequent

23 issues that come into my district'office are relating

24 to aging

25 Tn my former life, I was a county sol-icitor 136

1 in Northampton County. f advj-sed the Area Agency on

2 Aging there. We have an awf u1 l-ot of contact with

3 them. John Maylor, who is the director who I was

4 working with, he provides great service to our

office. I want to make sure you know that.

6 SECRETARY DOWDEISENHOWER: Thank you.

7 Itrs great to hear.

R REPRESENTATIVE DALLY: I think yourre

Y moving in.the right direction with increasing the

10 waiver monies. We utilize that a ]ot.

11 My question is: Have you run into any

t2 probl-ems statewj-de in terms of finding vendors that I t< are available to provide those services? I4 SECRETARY DOWDEISENHOWER: T thiNK IhCTE

1_5 is a concern, particul-ar1y as we've heard, around

16 staffing issues that impacts on the availability of

11 vendors. I think what we're doing as we move

18 forward, we really have seen it's very

IY encouraging. There are vendors out there to provide

20 services to the home and community.

21 We need to be careful-. We know we need to

22 make sure that those are there so the consumers can

23 get what they need

24 f think that is a reaf concern, whether

25 it I s staffing or simply having the businesses in the 137

I I f particularly in rural areas like Northampton .oca|€s, t 2 County has a great deal of. We need to support that

; development.

4 REPRESENTATIVE DALLY: That was it.

5 Thanks. ' 6 SECRETARY DOWDEISENHOWER: Thank you.

7 CHAIRMAN ARGALL: Representative Melio?

I REPRESENTATIVE MELfO: Good afternoon;

9 Madam Secretary. You have been blessed with. a good

^r^st 10 JLCtrl-.

1t-

L2 Thatrs very true

l-4 a national conference of insurance Iegislators. They

15 talked about the new program with the federal-

IO government on prescriptions. 'One 1.7 of the panel members said there are

1B states that have a better drug program than what the

IY federal government is offering. He mentioned

zv pension.

2L He also said that those states should think

22 about taking the money they use for prescriptions and

23 putting it in other programs, Iike maybe informing

24 "the seniors about the long-term care and other

25 things. 138

'Are 1 we in jeopardy, like, because we have

z such a good program of not getting some funds from

3 the federal government?

.f SECRETARY DOWDEfSENHOWER: f don't think

we're in jeopardy of not getting funds because our

6 PACENET is too wonderf ul-. I think it is wonderful-.

7 I think the challenge reaIIy for ,us particularly

tt around the medical prescription drug benefit, which

is really the big issue for us within the

10 prescription drug issue, is to make sure that the

11 federal plan as it rol-1s forward enables states Iike

I2 Pennsylvania with a prescription drug plan

13 administered by the state to not be penalized.

14 We reallv need to be treated as insurance

carriers who are providing and going to be providing l-6 that discount card. I think that's a really

I7 important part of what we do.

18 What you're asking about as far as t_9 long-term care insurance, we're certainly spend.ing

20 dollars on PACE that could be spent on home and

2t community-based carer or the transportation do11ar,

22 or the property rent tax rebate.

23 Where do we need to spend our dol-lar is a

24 real1y important discussion, which is one that is

25 ongoing to really look at where are we spending those 139

1 I dollars, what do consumers want, what makes the best

z sense.

3 I think the emphasis on PACE and PACENET

4 today is because consumers in the past have

r desperately needed a prescription drug benefit.

6 There wasn't ever one.

7 lThe Medicare program was designed 30 years

8 d9o, virtually unchanged, and not reflecting the

9 change in the healthcare system and the development

10 of amazing drugs.

11 I think it's something that we need to look

1"2 at but refl-ecting that if ol-der consumers -- and in t 13 the PACE program, about 90 percent of the doll-ars we L4 spend, we spend on medications for chronic diseases.

15 ff we're treating people for those

l-o diseases, we know they're going to be home longer.

t7 We know they are going to access emergency care,

1B institutional care fess. We have some data to

LY support that and we're developing more by looking at

20 the Medicare data f rom 1-993 to '03 to rea1ly sdy, are

2L we helping people? How are we helping them? Are we

22 al-so saving doll-ars? That's something we're going to

23 work on.

24 REPRESENTATIVE MELfO: I know you're at an

25 extreme disadvantage by not knowing exactly what the 140

1 federal government is going to do. Is there a time

2 limit that says they're going to do this?

3 . SECRETARY DOWDEISEN.HOWER:. The regulations

4 for the benefit that t s going to ro11 out in January

5 of '06, we expect at the end end of this year.

They'll come out at the end of this year. Werre

7 trying to work with CMS to really get those

B regulations so that we're not penalized.

9 I do think and werve been doing

10 round-table discussions in the Senate. We just

1l_ finished one this morning actually talking about what

1,2 we can anticipate.

13 I think it's very likely that a resolution

T4 from the Senate will come forward to our federal l-5 del-egati-on and to f ederal agencies, that we need to

16 have the kind of program in place that does not

T7 penalize the states like Pennsylvania that wilI

18 provide this kind of assistance in the future.

19 REPRESENTATIVE MELIO: Thank you very much.

20 CHAfRMAN ARGALL: Representative Forcier?

2I REPRESENTATIVE FORCIER: Thank You,

22 Mr. Chairman.

23 Madam secretary, we've heard a l-ot thi s z4 morni-ng about the cost of pre s cr ipt ion drugs. I know

25 you have been working hard across the state. I4I

1 Also, we're looking at, having Pennsylvania

z j-d . be a buyers market . Having sa that, I understand

3 that there has been; study done by the Office of

4 Healthcare Reform concernj-ng prescription drugs

5 Now, Irve only received a couple phone

6 caIls. I do not have any paperwork. I was wondering

7 if that is true. Is there a study out there and has

your Department been part of that study?

J SECRETARY DOWDEfSENHOWER: I'm not sure

10 about a study per se. I know that our Department

11 working and reaIIy the effort being coordinated by t2 the Office of Healthcare Reform, one of the many t< issues they ''re looking at to coordinate and integrate

14 and really be strategic about offering healthcare in

1.5 the state, is perhaps referring to a task force seEup

16 . to work through the way all of the programs in the

T7 state that operate to reimburse or purchase

18 medications, what they look like. What do they do?

19 Do they do audits in real time? Are they coherent as

20 f ar as the cost of medication? That anal-ys is is

21- going on right now.

22 There's been no report issued, but by

23 looking at this, we're reaIly looking at ways to

24 implement the best practices and we know what those

25 practices are and implement them across the board in t42

1 as many programs as we can.

2 REPRESENTATfVE FORCIER: Madam.Secretary,

3 could you tell me when you think a study may be

4 compl-eted?

SECRETARY DOWDEISENHOWER: Irm not sure 'but that a study per se will be completed or issued,

7 I certainly think we can share some of that

I information with you.

9 . I. wil-I get back to you on that and working

1-0 with the Office of Healthcare Reform and all of the

11 Departments to really make sure you have the

72 information that you need

IJ REPRESENTATIVE FORCIER: That wou]-d be t4 great if you could get it to our Chairman.

15 SECRETARY DOWDEISENHOWER:' Okay.

Ib REPRESENTATIVE FORCIER: Thank your

T7 Mr. Chairman

Id CHAIRMAN ARGALL: Representative Mundy?

19 REPRESENTATIVE MUNDY: ThanK YoU,

20 Mr. Chairman.

2L Good afternoon, Madam Secretary. I rm over

22 he re

23 SECRETARY DOWDEfSENHOWER: frm sorry. How

24 . are you today?

25 REPRESENTATIVE MUNDY: Good. Thanks. In 143

.L your testimony, you touched on an issue that is

2 becoming a real- concern to me.

You talked about retirees of the ZfNC

4 Corporation, a bankrupt corporation who is now not

nrcr\ridino thevr. 5 I/!vv :, healthcare to its retirees that it was

6 used to and they were receiving.

I Irm finding in my district more and more

X individuals, because there is not any one large

9 corporation that has gone bankrupt who's cutting off

10 retiree heal-th benef its; but there are numerous l_1 companies who for whatever reason, and not because

T2 theyrre bankrupt, but I guess have found that it's

IJ too expensive to continue ietiree healthcare, are

1i t9 discontinuinq those benefits.

15 Unfortunately, I mean, a lot of retirees

aa IO might qualify for Medicare, except that some of these

1-7 retirees just aren't old enough.

18 You talked about the APPRISE program which,

1_9 of course, we always refer people to the APPRISE

20 program who are eligible for that service. How o1d

21 do you have to be to get this kind of counseling

22 through the Department? z5 Can you tell me just briefly what you're

24 finding? Are people able to find healthcare policies

25 that are affordable, or do they then just become r44

1 another one of the numbers of uninsured? Do you have

2 any information about what is happening to these

3 people ?

4 SECRETARY DOWDEISENHOIIER: We have some

5 anecdotal information. I'm sure we can provide you

6 with some more information as far as statistics about -| I what is happening.

I Yourre right. Itrs not a big Bethlehem

Y. Steel that goes out with great fanfare. It's often

1n smal-I companies and some of them may not have even

11 ar70 r offered retiree benefits. t2 We know that the uninsured and the eligible

13 retiree weI1, Medicare starts at 65. That's when

1A I3 you're eligible for the PACE program.

We know that people turning 62, 64 may be

IO in a very similar situation to someone turning 65

L7 today. We really counsel whoever comes to us at our

1B sessions, because it might have been the adult child

19 who is asking for benefits. We really try to get as

20 much information as we can to create as much clarity

2t as possibl-e.

22 . Are there rea11y good, affordable products

23 out there aS far as health insurance and medication

24 coverage for people 50 or 60 today? They're very

25 expens j-ve. I think that the reality,--tfL- is, you won't . 145

1 see in just a sort of stand-alone prescription

2 benefit or insurance program, because it's very

expens ive

4 There really needs to be other sources of

5 information to guide consumers in this area and

6 that's reaIly what we do. We do advocate working

7 with the Pennsylvania Department of Insurance and

d really try to advocate to improve the offerings out

j-n Y there, but our ma f ocus is through Medicare ?nd the t-0 PACE progr?m. That does limit someone to the age of

Aq 11 VJ.

1,2 REPRESENTATIVE MUNDY: Just another r-3 continuing side of the healthcare crisis in our

14 r.crrrn1-rrrerJ. r think I real1y you knOw, the people

15 who are coming to rre r I don't know what they' re able

1"6 to do or because we can I t f ind any help f or .lind, T7 them whatsoever.

1B SECRETARY DOWDEISENHOWER: Please send

19 them to us, because there are different programs out'

20 there in different parts of the state. There usually

2! is something we can do to improve.

22 If we look at the discount programs by the

23 drug companies, there's not an age Iimit. There's

24 often an income 1imit, but we can often help someone

25 there. I.r o

1 REPRESENTATIVE MUNDY: Okay. Thank you.

2 CHAIRMAN ARGALL: Representative Myers?

? REPRESENTATIVE MYERS: Thank you,

Mr. Chairman.

5 Good afternoon, Madam Secretary.

6 SECRETARY DOWDEISENHOWER: Good afternoon.

7 REPRESENTATIVE MYERS: As I listen to some

X of the testimony this morning or this afternoon nowr.

Y philosophical reasoning came into my thinking because l-0 I know you reaIly don't have any way to address th j-s;

11 but on have you had any ideological discussions

I2 with us being a buyers market with buying

1-3 pharmaceutical-s from Canada?

I4 SECRETARY DOWDEISENHOWER: Ideological. l-5 That's a good way to put it. It's i11e9a1, as we t_o1r know. There are ways to obtain l-ow cost

I7 prescriptions through Canada. We know people are

18 doing it everyday.

19 What we're looking at as a state is a way

20 to really enhance what we're gelting across the

21 board, whether it I s t.he prescriptions that we

22 purchase or the assistance, which is basically one as z5 a healthcare system, or reimbursing older consumers

24 through PACE and PACENET program, looking to get the

25 best rate because we get a 21 percent rebate off the L47

l_ best price in the program. Thatrs the law. It's a

z legisl-ative . creative one, as does the Medicaid

3 program. We are doing very well there.

4 f know the cost of prescriptions in Canada

can be up to 30 percent off retail, but f think what

6 we're trying to do in our programs is get the best

7 deal across the board

.U REPRESENTATIVE MYERS: f'm just trying to

9 get a coaliti-on.

10 SECRETARY DOWDEISENHOWER: I know you are : 11 REPRESENTAT IVE MYERS: I want you to keep

T2 your j ob. t< SECRETARY DOWDEISENHOWER: Thank vou. I

14 would like to keep my job, too.

15 REPRESENTATIVE MYERS: On this lono-term 'rrldybe 16 carer you can answer this question for me. As

I7 a member of the. legislature, we have long-term care l_B in surance

19 It was approached to us around L9g2. The

20 best pragtices seem to be durj-ng that period that

21, anybody who was rel-ated to the consumers cannot

22 p rovr_ oe s e rvr- ce s .

23 SECRETARY DOWDEISENHOWER: Cannot?

24 REPRESENTATIVE MYERS: Cannot.

25 SECRETARY DOWDEISENHOWER: A11 riqht. 148

1 .REPRESENTATIVE MYERS: And I had a personal

2 situation where actualfy, I didn't know that. It

3 was a rude awakening for me. My wife needs long-term

4 care. Her sister, who is my sister-in-1aw, who used

to live in New York, quit her j ob and came down to

6 help me take care of my wife

7 The insurance company fired her because she

I was her sister. I had to go get an agency or

9 somebody who is not related to rler which I think is

1n insane.

11 The j ob you've got to have the same kind t2 of restrictions could you kind of help me why the

13 best practices in 1"992 were dictated written that t4 way t

15 SECRETARY DOWDEISENHOWER: I CCTtAiNly

IO don't think that's the best practice. When we look

T7 at long-term carer w€ know that often a relative or a

Id friend provides some of the best care around. I

1_9 think that if we l-ook at our family caregivers

20 support programr w€ recognj-ze that in the Department.

2T . 1gg2 is a long time in many ways. I think

22 looking at long term-care insurance policies and

23 products that are offered today, consumers should

24 look for a policy that offers them to have a family

25 member provide the care. 149

1 REPRESENTATIVE MYERS: We canrt do that in

I z the legislature. It's a group pIan. ft's there. We

3 can I t change it. I guess I 'm venting.

.t SECRETARY DOWDEISENHOWER: Certainly,

'5 thoughr w€ 9an negotiate with any member and see if

6 we can make changes. In our family caregivers

7 support program, we do reimburse for caring expenses.

B I think that is something that is a best practice and

Y something we encourage

10 REPRESENTATIVE MYERS: Thank you.

11 Thank your Mr. Chairman.

72 CHAfRMAN ARGALL: Representative

l_3 Benninghoff sent over a note to me. I guess in your

I4 testimony, you tal-ked about trying to allocate a

l_5 bigger portion of resources to home and

16 community-based servj-ces .

t7 Of coursef at the same time, AAA funding is

l-8 p'retty flat for the agencies and so on. I'm curious

19 as to I understand the goal. How can you get

20 there ?

21, SECRETARY DOWDEISENHOWER: By being

22 strategic and by rea11y targeting dollars from the

23 waj-ver program to AAAsr so they are going out and

24 getting people in home and community-based services

25 faster. 150

1 Built into that, though, waiver dollars is

2 a smal-1 admi-nistrative f ee. It I s not the same as a

cost of living increase, which I know the area ^ q agencies rea1ly advocated for.

6 I think that what we I re trying to do j-n

6 this budget time is draw down these federal dol_Iars

7 to the waiver program and get it to people, because

I we know we can provide more services. That t s how

9 we're trying to do it and really expand home and

t-0 community-based care that is very pragmatic, that

1t- serves thu that really enables that AAA to "orrsumer, T2 provide those servj-ces that they know are needed in

l< the community. Thatrs how we approached it.

14 CHAIRMAN ARGALL: Thank you, Madam

15 Secretary. Wefre running over. Thank you very much

16 for your testimony.

1? This Committee will reconvene at 1:45.

18 We'Il be hearing from the Department of Labor and

19 Industry and will begin promptty.

20 SECRETARY DOWD EISENHOWER: Thank vou.

27 (Break. )

22 CHAIRMAN ARGALL: I'd l-ike to reconvene

23 this public hearing of the House Appropriations z4 Committee

25 Before I ask Secretary Schmerin to begin, 151

1 Represent.ative Baker, do you have an introduction?

2 REPRESENTATIVE BAKER: Yes. Thank you,

Mr. Chairman. It's my honor and pleasure just to

4 recognize the Tiago County Adult Leadership Program

5 under the leadership of Bob Blair and Tiago County

6 Development Corporation.

7 f'm very pleased to see them here today

U observing and watching. I know we'1I all be on our

Y best behavior and impress them very much. Thank you.

10 . CHAfRMAN ARGALL: Did you teIl them they

11 probably win the prize for traveling the furthest?

Schmerin, Department of Labor and t2 Iecretary 13 Industry, please begin your statement.

I4 SECRETARY SCHMERfN: Thank you. Chairman

15 Arga11, Chairman Evans, and members of the Committee,

L6 thank you for the opportunity to appear before you

1"7 today to discuss the 2004-2005 Department of Labor l-8 and Industry budget.

19 I will keep my opening.remarks brief to

20 allow more time for your questions. As you know, the

2t Department administers the unemployment compensation

22 system which provides temporary financial assistance

23 to workers who lose their j ob.

24 The good news is tast year L&I officially

25 paid out over fiz.7 billion in regular state r52

1 unemployment compensation benefits and $900 million

2 in federal UC program benefits for a total of $3.6

3 billion to almost 750,000 claimants.

4 The bad news is that one in eight

5 Pennsylvania workers were unemployed at some time,

6 last year and collected unemployment compensation

7 benefits.

X In . January 2003, the Department, when we

9 entered the adminj-stration, there was a backlog of t0 approximate 1y 19, 000 unemployment compensation l_ l_ appeals.

1,2 We immediately developed and implemented a t< plan to address the backlog, so that Pennsylvania l_q workers and employers were not left waiting to hear l-5 the outcome of their appeal.

1"6 I'm happy to say that steps that we took

71 last year are paying off. At the end of January

1B 2004, the backl.og was reduced to less than 13,000;

I9 and since then, w€ have come closer to our goal of

20 one month's appedl, which is approximately 7400 based

2'J- on today's current economic conditions.

22 That means the backlog is continuing to

23 decrease at :the same time the number of unemployment

24 compensation appeal decisj-ons hit an all-time record

ZJ high in 2003 of 92,500. I assure You, we are 1s3

1 continuing to work on the backlog while keeping up

I 2 with incoming appeals.

Another issue that our Department faces

4 rel-ative to unemployment compensation is the trust

5 fund balance. That is the pool of money that is used

ro pay unemployment compensation benefits.

7 Because of the extraordinary number of

I Pennsylvanians. out of work, the trust fund balance

Y has gone from a record high of $g billion in May IOOL

10 to ju.st below $500 million at the present time

11 Unfortunately, we are in the midst of a

t2 jobless economic recovery. On a positive note, last

l_3 year more than 20 percent of initial claims and 18

L4 percent of continued UC claims were filed via the

l-5 Internet, saving the Commonwealth tens of thousands

IO of dollars.

I7 We have also posted a Spanish language UC

18 application on the fnternet. On a related noter w€

1_9 have converted many of our other program area forms

20 into Spanish.

21" At the ot,her end of the spectrum' L&I is

22 working closely with the Departments of Education,

ZJ Communit.y and Economic Development, Aging and PubIic

24 Welfare to improve Pennsylvania's workforce

25 development system. 154

1 I . fn the last 12 months, I've learned that

2 workforce development is the classic chicken or the

'3 egg story. You can't attract business and create

4 jobs without a trained workforce. You canrt train a

5 workforce for jobs that don't exist. We are working

6 to solve that age-old dilemma

In the last l-3 months, we have made great

I strides to identify what is working in Pennsylvania

9 and what needs to be improved in terms of workforce

10 development.

t_1 For example, we have statistically

t2 identified nine industry cluster groups which have

.13 potential for significant growth in hiqh wage

L4 employment.

lr IJ This inf ormation will be inval-uable in.

IO identifying, then filling gaps j-n the workforce

t7 development system

tx Workers compensation is another important

19 area that impacts both workers and businesses. The

20 State Workers' Insurance Fund, SWIF' in Scranton has

21, new leadership and is making vast improvement in the

22 way it conducts business as the insurer of last

23 resort in Pennsylvani-a.

24 SWIF is now the largest workers'

25 compensation'insurer in this stater' ttiting over $300 155

1 -L million in insurance business. This is a dramatic

2 increase from Lggg when SWIF was writing about $58

3 million in business

4 Meanwhile, the Bureau of Workers'

Compensation and PENNSAFE, the bureau at the

o Department, is actively recruiting and promoting the

a 5 percent premj-um discount that employers can take if

I they have a state certified Workplace Safety : 9 Committee. This could be a huge benefit to

10 businesses. Yet, only 5400 employees out of

11 approximately 180,000 employers currently take t2 advantage of this.

1-3 In addition to the 5 percent insurance

T4 discount, employers who have Workplace Safety

15 Committees see exponential cost savings because their

16 employees are working safer and having fewer

L7 accidents. tx Speaking of safety, L&I's Bureau of

19 Occupational and. Industrial Safety is preparing for

20 the full implementation of the statewide uniform

2I 'construction code that was passed in l-999. This is a

22 significant undert.aking for the Department, and we

23 appreciate your patience and support as we begin to

24 enforce Pennsylvania's first statewide standard

25 building code 156

1 WhiIe implementation could be a challenge,

2 I assure you that the Department is doing qverything

possible to ensure that our inspectors are trained,

4 certi-fied, and ready to begin implementation without

5 delay on April 9th, 2004

6 Municipalities that elect to enforce the

1 I UCC must pass ordinances by July B, 2004. It is our

B goal to make sure that the UCC is implementing

Y smoothly so that al-1 Pennsylvanians benefit from this

L0 new safety standard.

11 The Department of Labor and Industry has

12 accomplished much in the past year. Vfe look forward

1_3 to continuing to work with you to make Pennsylvania a

14 great place to live, to work and to do business.

15 Thank you for the opportunity to appear

IO before you today. I will be happy to answer any of t7 your questions. l-8 CHAIRMAN ARGALL: Thank you very much,

19 Mr.. Secretary. The numbers that you provided in the

20 opening of your statement over the rapid decl-ine, I

2'J, guess, as unemployment compensation benefits are paid

22 out in the solvency of our trust fund, obviously,

.25 that is very concerning to you, to flt€r to everyone on

24 this Committee

25 What is the outlook over the next few 157

l- months for that trust fund?

2 SECRETARY SCHMERIN: As I indicated in my

3 opening, we are under $500 million. In order to

.t ensure. that we have money to pay benefits, the

Department is exploring alternatives for s for

6 borrowing money.

X ljut we aqe exploring borrowing from the Federal

Y Government or several other options that we

10 anticipate will be done. A final decision will be

11 rendered sbmetime this month, in March 2004

12 With the influx of revenue that comes with

13 the payment of taxes, our concern is for the

I4 immediate next few months.

15 We're optimistic that if we can get beyond

16 that period, we will- not have to borrow anymore j-n

L7 2004. The concern right now is for March, Apri1, and

1U May. 'CHAIRMAN IY ARGALL: We had a bad experience

20 with this program, I guess, a few decades ago. We

2L want to be sure that we don't repeat that.

22 It's my understanding that if, indeed, we

23 go ahead and borrow from the Federal Government,

24 there'.s a period of time in which we have to repay

25 that loa n; and if we do not, then our employers begin 158

1 to lose some of their tax credits.

' 2 SECRETARY SCHMERIN:. It s an r-ssue r Y€s i

3 and it's what we would anticipate being a short-term

4 borrowing period.

5 Again, when revenues from tax payments are

6 coming in in March, Apri1, and May, we woul-d be

7 optimistic that we would not have to borrow anymore

R in 2004.

Y Having said that, again, I guess the

IU numbers, that when you look at $3 bill-ion and now l_1 $500 mil1ion, there are concerns. There are concerns

1_2 that in 2004, the trigger mechanism doubled; and t_3 again, that trigger mechanism, the cost to employers, l_ .t and also the cost to employees, it's going to go up

again in 2005. So while, as I said, we've had a

16 recovery, regretfully, it's been a jobless recovery.

T7 CHAIRMAN ARGALL: I can teII you that

18 Iast Iike, two weeks dga, I had seen what I

19 thought was s,ome good news for my constituency, in

20 the published unemployment rates of Schuylkill and

2t Berks County on the f ront page of a newsletter,' and

22 within minutes, I was getting phone call-s and people

23 waving that newsletter at me saying, it can't be that

24 good. Irve been looking for weeks and months and I

25 can't f ind a -iob. t 159

1 . I heard up cl-ose and personal some of the

2 same things you've been noting in your return to that

demon of a jobless recovery.

I You and I last year were able to work with

q the Federal Government on some additional- doll-ars

6 through the FederalFcdera] TradeTrac Adjustmeni t and Assistance

1 Act.

I As. you'11 reca11, I l-ost upwards of 1, 000

9 jobs. Representative Evans has been talking a lot

10 about outsourcing, and the people that I represent l- l_ were very, very upset. to find out that suddenly the

72 local,textile mil1 that had been theret I guess' l_J since the Second World War was l-iterally moving its

Lq machinery but not i-ts employees to Honduras and

somewhere in China that I probably couldn't

IO pronounce.

!1 Is there any danger that we're going to

1B .have a repeat -- are we going to have any difficulty l-v in finding those TAA dollars this year as we did last

20 year before we finally were able to convince the

21- Federal Government to come up with some additional

22 dollars?

23 SECRETARY SCHMERIN: Wel-I, regretf ully, the

24 TAA, Trade Adjustment Assistance, is a cap program'

25 There's only $220 million nationwide. 1 My Deputy Secretary for Workforce . I ? Development, Sandy Veto, and I went to Washington in

January of this year to meet with the Pennsylvania

4 Congressional- de.legation and explained to them why

Pennsylvania needs more money.

Our entitl-ement money. f or f iscal year 2004,

1 again, was only 2]-, $22 million. We have obligations

a close to $38 mil-1ion.

9 Sandy filed a national emergency grant

10 similar to what was done last year. We are waiting

11 to hear from the DOL, the Department of Labor. Wetve

T2 ]earned f rom our mistakes last vear. We do not want I t< to suspend any of the proglrams, but the real issue is 14 we need an",.grant, the emergency grant, from the : 15 Federal- Government.

Ib Can I sit here today and teII you it's

t7 guaranteed? No, sir, I wouldn't do that; but I

18 believe we have utilized the Pennsylvania delegation

LY to let them see the numbers, to l-et them understand

20 what good TAA does for Pennsylvania's .dislocated

21 workers.

22 They al-1 submitted a l-etter to Secretary

23 Chow supporting our request for an NEG grant. Irm

24 optimistic that we will get some decision in the next

25 several- wee ks . 161

1 It's the last thing we want to do at Labor

z and Industry, to suspend the program again; but

? again, w€'re beholden' to the Federal Government

4 CHAfRMAN ARGALL: If we do not receive the

5 national emergency grant, when would that fund run

6 out of money?

7 SECRETARY SCHMERIN: We11, f had a meeting

8 Sandy and I met with the secretary, the budget

Y secretary, several weeks ago. It would probably run

1-0 out sometime in March, April of this year, so that

L1 our concern is the school year for most individuals t2 in the TAA"programs ends in April, May of the year

13 and then starts up again after usually a month break

14 or September and the fal1 term.

lt IJ ' It's our hope that we will not face that

16 issue; but again, I don't want to sit here and say

L7 that it, s a guarantee that the Federal Government is

an'i na rn A^1iVe1. l-B Yv!rrY u" .

LJ We're optimistic that the Governor has made

20 contact with the partner of the Pennsylvania

2I dele.gation. we're in constant communication with

22 them to help them encourage them to give us this NEG

23 grant

24 CHAIRMAN ARGALL: I guess I woul-d f eel

25 . better if it was ca11ed something other than an 762

1 emergen cy grant. I understand you can'L just keep

2 going back to t.he same source again and again.

SECRETARY SCHMERfN: Therers only so many

4 times you can qo to the well-.

5 CHAIRMAN ARGALL: Representative Evans?

REPRESENTATIVE EVANS: ThanK YoU,

7 Mr. Chairman

I Good afternoon, Mr. Secretary.

9 SECRETARY SCHMERIN: Good afternoon.

10 REPRESENTATIVE EVANS: Mr. Secretdry, as

11 the Chairman has indicated, I have throughout this

L2 process been asking the question about'globalization

13 and outsource.

L4 f've been asking the various departments l_5 and the people who fund. It's my understanding there l-6 are 19 states that do outsourcing'to other countries.

L'l he question I have for you is: To your

18 knowledge throughout state government, is there any t_v ent.ity who does outsourcing to other countries in

20 terms of the services we provide?

21 SECRETARY SCHMERIN: We11, I would only

22 speak to Labor and Indust ry, but there was

23 REPRE S ENTAT IVE EVANS: I'11 piggyback on

24 that thought to speak to what Irm curious about

25 within your Department in this new world of 163

1 globalization outsourcing. Is there something that o 2 you all. keep account of what takes place? SECRETARY SCHMERIN: We do not, except for

"4 at Labor and Industry, there was a contract that

5 expired in ,June 2.003 that allowed an IT vendor to

6 outsource 10 percent of the contract. That contract

is no longer in effect.

6 I believe the article th,at ran in the

9 newspapers last week in the Harrisburg area, there

10 has been a retraction. At the present time, there

11 are no there is no outsourcing at the Department

I2 of Labor and IndustrY.

I5 REPRESENTATfVE EVANS: We11, You can

I4 understand why f would ask that question. Irm not

r_5 holding you directly responsible. Obviously, that is

1-6 anationa1andinternationa1debatetakingp1ace

t7 There was a Governor from fndiana who kind

1U of took an approach of Indiana first. You're

19 basically looking 'at opportunities. fs that

20 something that you within your Department have tried

2t to advocate within the administration, to look at

22 Pennsylvania businesses first?

23 SECRETARY SCHMERfN: Well' I would be

z.l concerned about the commerce clause of the

25 constitution. I guess since I -- L64

I REPRESENTATIVE EVANS: Now' Mr. .Secretary,

2 let me repeat what I said. I didn't say anything

? about mandating.

4 SECRETARY SCHMERIN: I understand

5 REPRESENTATIVE EVANS: I didn't say

6 anything about guarante.es. What I said is the

7 example I used was the example of a state that

6 basically talked about Indiana just taking

9 inventory of what is in Indiana first. l-0 . Vihat I'm asking is: Is that something that

1l_ you or your Department at least think of? It's not

12 that you're guaranteeing anybody anything. Irm not r_3 getting into the debate of retaliation of one state ' 1-4 versus another. I'm just curious from a strategy

15 standpoint. l_6

1,7 that at the present time

18 . REPRESENTATIVE EVANS: Because the reason f

1_9 ask that is when I l-ook at your newsletter'

20 Pennsylvania Workforce, and it obviously talks about

2t the difference between a good producing industry loss

22 of jobs and the service producing industry, and I'm z5 only raising that as an issue with you to give some

24 thought to it from a strategic standpoint because

25 obviously, there's a lot of a lot of people are 165

1 confused about what is going on.

2 The kinds of jobs that we used to have,

they're not necessarily going to be replaced with the

4 same type of jobs. I think there has to be some

5 sense of a strategy.

Because even the question I have about your

7 job training activity, my question would be to you:

B I s your .Department working with other agencJ-es,

organizations, to assist in the large number of l-0 unemployed and dislocated workers?

1l- SECRETARY SCHMERIN: Yes, we are.

L2 Workforce Development . covers a multitude of other

13 departmentq. Being the Secretary of Labor and

1"4 Industry, it is an issue that when you're constantly

15 giving money to dislocated workers, what does that na I IO teII you? We re losing j obs. Werre losing l7 manufacturing jobs in Pennsylvania. We're losing

18 good-paying, family-sustaining jobs.

LY The issue becomes when are we going to turn

20 this around, and from the numbers that I have the

2L opportuni-ty to see on a monthly basis and a yearly

22 basis, we continue to lose j obs in Pennsylvan j-a. 'I 23 agree with you. f mean, I'm on board on

24 that issue. I would prefer that I don't have to

25 worry about TAA and dislocated workers. We have to 166

1 develop a program. I think this Governor is.

2 Wet ve addressed healthcare careers

3 awareness week. Wer re invol-ved with manuf acturing

4 and so we recognize there's a problem. I'm sure we

realize it in Labor and Industry probably more as

6 much, if not more, than any other department because

I we're the record keepers. I U REPRESENTATIVE EVANS: I guess that s kind

9 of my point when I ask about globalj-zation and

10 outsource.

11 Since you are the record keeper that's ' I2 your word you use -- I 'm j ust cur j-ous, are there any

13 kind of records being taken regarding outsourcitg, t4 even though you're saying that's not something you

15 were doing?

1a IO f'm just curious, would you think that was

L7 something you would look dt, how we are outsourcing,

1B not necessarily the state government' outsourcing

19 anywhere across the border?

20 Part of why I raise that issue with you is

2t maybe ir can help us look at different strategies.

Qaa T tm 22 vv9, not going to look at bashing someone else

23 because they may be more competitive than we may be

24 in certain circumstances,' but my t.hing is trying to

25 think about different strategies. 'I I That,srtlqu I kindJ\Ittg ofv! whatvYllqu I,mf l(t tryingg. to say to

2 you is figuring out, are there some different

3 strategies that we can use in terms of the state's

4 budget or tax policy. ' 5 One of the questions that I asked an

6 economist that we had in last week from Globa1

7 Insight is what can we do specifically as a state

B regarding budget priorities or tax policies in terms

9 of companies that are in Pennsylvania that would make

10 people look at developing and growing jobs here? Do

11 you have any thoughts on that? t2 SECRETARY SCHMERIN: We11, I'm optimistic

13 that the administration will be addressing the

!4 outsourcing and wiI1. rely upon al-1 of the cabinets.

15 We must develop a game plan, because it's an j-ssue

J-O whose time has come. We have to be a leader. We

T7 have to provide the mechanisms to be at the

1-B forefrontr so that we can show by our actions in

19 Pennsylvania what bre're trying to do to keep

20 Pennsylvania jobs here in Pennsylvania.

2t REPRESENTATIVE EVANS: Mr. Secretary, T

22 want to make this very clear, if I'm not. I don't z5 view, you know, the legislature versus the Governor.

24 I think we r re all in this together

25 I want to be verv clear. I don't view that 168

1 on your watch or Governor Rendell 's watch in the

z short perj-od he's been in of f ice that Governor

3 Rendell created this probl-em. want to be very

4 cJ_ear.

5 The questj-on I'm attempting to raise with

6 you is from. Oiscussion standpoint in talking about

7 strategies. Thatrs what f'm trying to raise. I want

X to be c1ear.

v I don't view you know, like, when you

10 show these numbers, I don I t view during your watch

11 this is your fault. I'm not I don't want you to t2 have that impression. I don't want you to be

1_3 de fens ive .

14 Vfhat I f m trying to do j-s have a discussion l_5 I've been raising these issues with people from a

16 discussj-on standpoj-nt, because if you look. at l7 Pennsylvania's situat j-on and the Governor has l_B tried to do something about the structural deficit;

IY but then you look at the national implication, where

20 the national government is, there I s, obviously, not

2I going to be a lot of money comj-ng.

22 The question to you is: How do we take our z5 operating budget, how do we take our capital budget,.

24 how do we take any budget that j-s off-line and use it

25 in a strategic way to spare the economy? L69

1 know the Governor is trying to do it with

2 a $2 mill-ion economic stimulus program. I know he's

3 trying to do it with growing greener. Those are

4 ef rrf an'i oq .I. r 5 m I usc curr-ous, you as the Secretary of

6 Labor, in a sense what kind of strategy do you have

I or that you're bringing to the table other than what

B the Governor is saying?

9 SECRETARY SCHMERIN: We11, f believe as

10 part of the Governor's team, I will be on board with l-1 what ever strategy and policy he has.

I2 I don't believe Labor and Industry, outside

13 of being a parrner and being the numbers keeper, will

1"4 come up with the strategy. Do I have suggestions?

15 Qrr ra l_o4- REPRESENTATIVE EVANS: That I s what I'm

I1 interested in. Let me get you right there. Give me

1B your thought about some ideas that you have

19 understanding, quoEe, unquote, I know the official of

20 our strategy but some thoughts that you have.

2L SECRETARY SCHMERIN: Wel1, I think in the

22 Governor's budget granting you time in machinery and

23 equipment loans, to offer that to businesses to try

24 to give them the incentive to consider expansion or

25 growth right here in Pennsylvania. 170

1 When I had the opportunity to attend the

) Team Pennsylvania Foundation meeting and the

representatives from Deloitte made their

4 presentation, that was vita1.

5 It's very, very difficult to compete with a

6 foreign country, whether it be China or the Far East

I or another Far Eastern company as far as the cost of

I labor. I think their response was werre not qoing to

Y be able to do or compete with their labor.

10 What we have to do is give them other

11 incentives, give employers and businesses other

IZ incentives to want to stay or relocate in t< Pennsylvania. l-4 One of those, I think, a.perfect example,

1-5 is making sure there would be machinery or equipment

16 loans available for those companie's to stay in l7 Pennsylvanj-a, to give them incentives to consider

18 expansion right here in a facility in Pennsylvani-a.

19 REPRESENTATIVE EVANS: ThANK YOU,

20 Mr. Secretarv.

2t Thank you, Mr. Chairman

22 CHAIRMAN ARGALL: Representative Saylor?

23 REPRESENTATIVE SAYLOR: Good afternoon, z4 Mr. Secretary

25 SECRETARY SCHMERIN: Good afternoon. 1,7r

l- REPRESENTATIVE SAYLOR: One of the things

2 that I have been talking about in previous hearings,

3 and here today I want to talk to you again as the

4 Secretary of Labor, is that in York County, I know

5 from employers across the state, in particular one

6 company j-n York County went to hire new workers.

7 They were expanding

8 At the same time they were preparing to

9 expand and hire new workers, the same competitive, r-0 not real1y sewing factory, two different ones, one

11 that makes Ti9he, Leroy King that you may be f amj-liar

T2 with. Mr. King went into our county to hire just

13 additional workers. At that time Danskin went out of t4 business in York County.

15 Mr. King approached the. Department about

16 the fact that he wanted to hire those workers for

17 jobs that not only had good pay but also had

18 benefits, . health benefits and so forth. He couldn't

IY do anything about it.

20 He couldn't be given a l-ist of employees.

21 Those employees werenrt sent to go to him. The only

22 thing he could do is advertise in the newspaper and

23 post something at the Department of Labor.

24 My question to you is: What are you doing

25 today in particul-ar to make sure that there are j ob L72

1 I search requirements for these employees?

2 I mean, we go through this all of the time.

It I s a national study that has shown that people t e1d

4 t.o stay on unemployment longer than they need to and

5 itrs a straining process that we see today. We're

A close to bankruptcy in this fund.

7 To ITI€, what are we doing to helP thos e

8 employees who are unemployed, particularly those that

9 have the ski11s and don't need additional' job

10 training? l-1 SECRETARY SCHMERIN: We11, I believe I

L2 heard t.wo questions. As f ar as being able to obtain

who are willing, or needing a 13 lhu list of employees 14 list of employees, I donit understand why that

1q gentleman, Mr. Kingr wds not given a list of 'm 16 employees who wil-I not be able f sure we can

T7 match, that's part of the responsibility of the

1B CareerI,inks.

LY If an employer indicates he has a need to

20 hire employees, that's one of the goals or purposes

21, of a Careerlink to exist. f would find that amazing

22 that we woul-d not be trying to help employers' z5 whether it be York County or any of the other 66

24 counties, to provide them with matches to make sure

25 that they could get qualified employees. 173

1 Even more importantly, our Deputy Secretary

2 of Workforce Development, Sandy Veto, and her

department have been trying to develop cluster groups

4 to do exactly what you just said.

5 We have identified nine clusters, what we

f eel will be j obs; gtood, paying j obs. We want to try

7 to coordinate those cluster groups so that they can

x communicate with each other.

9 REPRESENTATIVE SAYLOR: MT. Secretary, I

10 guess the concern I have is those d, re good things.

11 I'm not b] aming you for these problems

I2 SECRETARY SCHMER]N: Itm not accepting that ta either.

I4 REPRESENTATIVE SAYLOR: It is a fact that

wetre not making t,he claimants go out and search for

16 j obs. lnJo I re letting them collect unemployment even t7 when the re ' s j obs that are good paying j obs with

18 bene f its.

LY We're lettinq them collect weeks and weeks

20 of extended benefits. What is the Department doing,

21 if anything, to change that? zz SECRETARY SCHMERIN: That's the second

23 part. That's unemployment compensation. When the

24 Department several years ago went to the cal-1 service z5 centers, the obligation to sign up with perspect j-ve ]-14

1 employers ceased so thatr ds you indicated, there is

2 no requirement today for a claimant to go visit an

employer to sdY, please sign my sheet that I was here

4 Iooking f or a j ob; so that the law does not make t'hat

requirement unfess that individual was receiving the

6 benefit, which, again, you made the temporary

7 extended unemployment benefit. That .benefit is no

X longer being paid

9 To answer your question, there is no'

10 requirement that's statutory and not.an issue that

11 the Department did or did not do.

T2 The issue becomes do we revert back to the

15 o1d system, that you make the individual walk in and

1A l-.1 wait in line and then file the sheets of paper weekly

15 or bi-weekly saying, I did visit prospecti-ve l-o employers. From my standpoint, f would not making a t7 step back to that system.

18 To answer yoy, we're required to follow the

LA Iaw, which we're doing. Are there individuals who

)i stay on unemployment compensation by not trying to

21 l-ook for work?

22 Well, the maximum is 26 weeks. That's the

23 issue we're confronted with. Do they extend it from

24 2 6 and look f or a j ob, that ' s the real guest j-on.

25 REPRESENTATIVE SAYLOR: Thank You. 175

1 CHAIRMAN ARGALL: Representat j-ve Myers ?

2 REPRESENTATIVE MYERS: Thank yotr,

? Mr. Chairman.

4 Mr. Secretary, good afternoon. How are

5 you ?

6 SECRETARY SCHMERIN: GOOd.

I REPRESENTATIVE MYERS: Good. A couple of

X things come to mind. When you talked about

Y statistics and data, do you have any idea of how many

10 jobs have actually been created since the

1-1 establishment of the Workforce Investment Board per t2 region?

ta SECRETARY SCHMERIN: I can obtain that for

l 'lA IA you. We have 23 workforce investment boards. I can

15 have that delineated for you. I will gladly provide

16 that information. t7 REPRESENTATIVE MYERS: I would appreciate

18 that. I just hear very Iittle with respect to what

19 is going on with the Workforce Investment Board as

20 per your remarks with I think you offered the

21 philosophy of what they can do. There may be some

22 reason for that, that's why no jobs are being built.

23 Along those lines, I have a question.

24 There was a program that was under the Department of

25 Labor and Industry that not only created jobs but ].76

1 created businesses; actually, over 1r000 businesses.

2 Each one of those businesses probably

created at least one job. I know in southeast

4 Pennsylvania that there was a creation of 401 jobl

5 I mean, 4OI businesses ' l-00 j obs; and according to

6 the information that I have, there was gross annual

n I revenue o.f almost $27 mil1j-on. This program cost

I Iess than 3 million bucks.

Y As we speak today, this program has created

10 1r 000 jobs approximately I mean, 1r 000 businesses,

11 approximately 2,000 jobs, generating almost $27 'l 12 lrrr4J+vrrtmi I'i on - for less than $3 million 1s now of f the

I5 books and h.as been deleted f rom the budget.

1A I guess I'm really trying to get a handle

15 on understanding why we would terminate a program

th that creates not just jobs but businesses' when werre

L7 saying that's the problem that we have is finding

1B j obs; you can't find businesses,. and it's like 92.4

LY million.

20 I mean, werre spending $750 million to the

2L labor yard to create a business that will shut down

.- , 22 r-n, a year. This-' is less1^-- than!L^- $3.\a milIion,*.:1'1.:^- 1,0001 nnn jobs

23 I mean, 1rOO0 businesses.

24 I guess I have two questions. Could you

25 explain to me why we woul-d be doing that, No. 1; and ]-77

1 No. 2, if you don't agree that we shouLd be doing

2 that, what do you think the legislature, on how we

could get the $3 million back in the budget?

4 SECRETARY SCHMERIN: I 'm assuming you're

making reference to the SEA program.

6 REPRESENTATIVE MYERS: Absol-ute1y

1 SECRETARY SCHMERIN: Regretfully, I canrt

X the Labor and Industry doesn't always get the

Y opportunity to fund every program they want. I echo

10 your comments.

11 SEA has produced results. I am hoping that

L2 when given the opportunity in the near future, we

13 wil-l- meet with the budqet office to convince them

I4 that this is a vital Or"nram. The numbers speak for

15 themselves.

'm 'm IO I optimistic. I hoping that we're able

1"7 to get continue the funding for the SEA program

I6 because it has produced results, as you indicated.

19 So f am an advocate for the SEA program.

20 REPRESENTATIVE MYERS: If you will-, carry a

2L message for me also to the budget secretary. Irm

22 going to reiterate the next time we meet that if we

23 are legitimatety serious about our rhetoric about

24 economic stimulus and about bringing business into

25 Pennsylvania, about creating jobs, and helping this r78

1 retarded when I say retarded -- I donrt mean

2 disabled, dysfunction. I mean this retarded growth

3 as a result of the establishment of the Workforce

4 Investment Board, that it just doesn't make senSe for

5 us to move on this Program'

6 Back to the Workforce Investment Boat9'

7 something that you had talked about in your remarks a

I 1itt1e earlier also brought another thought into my

9 mind.

does not appear and f may be wrong 10 . There

11 and I have been wrong before. ft does not appear

1.2 that there is a collective uniform strategy with

13 respect to how Workforce Investment Boards are

1-4 interacting with the commotion segment of

L5 Pennsylvania.

IO I.know in Philadelphia Irm still trying to t7 get a handle on what the commission j-s and how it's

18 being practiced and carried out. Maybe you coul-d

IY help me with that.

20 SECRETARY SCHMERIN: There are issues with

2A the Workforce Investment Boards. When you have 23

22 boards and many members, there will be problems and

23 issues; but I believe and I don't know that this

24 is the answer you want to hear -- please give us Some

2s t ime r79

l- . We have a new director for Pennsylvania

2 Workforce Investment Board, Ed Detrick. Sandy Veto

has been meeting and will be meeting with all of the

4 Workforce fnvestment Boards. We are developing a

tr J st rategy .

6 REPRESENTATIVE MYERS: I'm out of time. I

7 want to ask one fast question. Is it'true the

R Philadelphia Workforce Investment Board returned back

v to you all $S million?

10 SECRETARY SCHMERIN: I will l-et you know to

11 both of those, yes.

J,2 REPRESENTATIVE MYERS: Thank .you, Mr.

- l< Chairman - L4 s CHAIRMAN ARGALL: Representative Habay?

IJ REPRESENTATIVE HABAY: Thank Your

16 Mr. Chairman,

L7 Mr. Secretary, thank you for coming to be

tx wit,h us this af ternoon. I wanL to ask you in'January

r-9 of 2003, the backlog of UC appeals was roughly around

20 19,000. CIearly, that's something we're hearing

2L about from our decision. Many come immediately to

22 their state representative or state senator on the

23 slogan out there. -- zzr What efforts are being made right now

25 f irst of aII, you d.ecreased this number over the last 180

.L few months. And what is the current backlog right

2 now ?

SECRETARY SCHMERIN: That was probably,

4 sir, the first issue that we encountered back in

5 January. I think after meeting with my Deputy ,6 Secretary and her directors, the issue to me was we

7 had to develop a game plan.

There were approximateJ-y 42 referees, I

9 believe, that were working in, I believe it was, l-0 January 2002. We made a determination back in the l- l- last year to hire referees

L2 Today, there are over 80 I believe 86 t< referees that are hearing cases, but the issue was

14 more than that. We had to find, in Philadelphia'

15 office space.

IO We made a determination that 60 percent of l7 the appeals were in the Philadelphia and Malvern

1-B office. We allowed referees. We asked referees to

19 be temporarily relocated to the Philadelphia and

2Q Malvern offices.

21, We also extended hours. We offered

22 hearings in the evenings, oD the weekends. There was

23 an issue with over 2500 decisions had been taped by

24 the referees, but we didn't have anyone to type them.

25 We met with the union. We received their 181

l- okay to allow us to hire a temporary -- a temporary

2 outside agency to type the decisions. They have done

3 that.

4 One of the other issues we didn't even

5 foreSee was that with every favorable determination'

6 a cla j-mant receives an appeal document. We have

caose ro r, U00 appeals inI - which--r- f -L theLL ^ claimant won the

x case.

9 No one would call the claimant to sdY, do

10 you really want to f il-e an appeal ? We now call them

11 to sdy, are you sure you understand you won your

I2 decision? Nowr You can file an appeal if you donrt t< agree with the benefit amount.

1A IA Again, it made no sense not to caII the

L5 claimant to ask them why they did file their appeal.

16 We have implemented many of these new criteria to try

L7 to help. As of today, werre under 13r000-

18 The other issue is last year we had again

19 another record year. We had over, I think it was,

20 92,500 appeals. Even keeping up with that, w€'re

2T ab1e to reduce the backf og -

22 Our goal is to get to a one-month backlog

23 which j-s approximately 7500. f be.l-ieve we've made

24 good inroads. we,re constantly striving to get that

25 backlog down to at least one month, which is 7500. 182

1_ f'm optimistic that we will

2 REPRESENTATTVEHABAY: Thank you. I only

have one other brief comment and question. RecentIy, j-ves .t mysel f and a bipartisan group of representat in

AIlegheny County, both Democrat and Republican, about

20 of uS that sent a letter to the Governor to try to

'7 do anything that the Governorrs office' can, including

8 Labor and Industry.

9 We appreciate the help of Labor a.nd

10 Industry J-n the past to help keep open the Connolly

11- fechnical fnstitute, which is in the City of

1,2 Pittsburgh. It's been open for 73 years. offering a

13 variety of things for our young people that reatly we

T4 have to realize in the Pittsburgh region and

l-5 throughout the state, not everyone is going to go to

Penn State or University of Pittsburgh or CMU or

t'7 Duquesne UniversitY.

18 What we're looking at right now is a

l_v closing of their school, which is Representative

20 Wheatley's district. Representative Wheatley and I

21 are meetinq with the Governor's office this week to

22 see what we can do.

23 Are there any dedicated sources of funding

24 because I know L&I has been helpful in the past,

25 because I know the Governor is a'supporter of your 1 l_ department and vocational education ,. 2 Are there things that you can see within

3 your Department within the line items that you have

4 that might be able to help Connolly Technical

Institute.keep its doors open?

6 SECRETARY SCHMERIN: The previous

7 appropriation to Connolly was through a legislation'

R appropriation. That has been their funding source

9 for the last several years from Labor.and Industry.

10 The issue becomes, does Labor and Industry have any

1l- funding stream? : 1,2 Regretfully, f don't know of any; but I

IJ would gIadIy explore that to see if there are any

L4 al-ternatives to helping Connolly continue its

15 existence. I 'm familiar with the' school. I will let

16 you know what we can find, if there. is any

I7 alternati-ve source.

18 REPRESENTATIVE HABAY: Any help that we can

19 we would deeply, deeply appreciate it. 9et, Thank 2o you very much

21- SECRETARY SCHMERIN: Thank you.

22 CHAIRMAN ARGALL: Representative LaGrotta?

23 REPRESENTATIVE LaGROTTA: Thank you,

24 Mr. Chairman.

25 Mr. Secretary, I'm concerned about 184

1 unemployment. Let me just take that kind of broad

2 statement down. I rve been listening to the debate

nationally and here in Pennsylvania about

4 outsourcing. I think Chairman Evans asked some

5 rea11y good questions.

6 What I'm concerned about is that you or

7 none of us may have any answers in a globaI economy'

I where we not only al-l-ow, in this country our national

Y policy is to encourage people to take jobs to

10 countries where there are no environmental standards, l_1 there are no educational standards, there are no tax

I2 standards and allow people to work for pennies a day l_3 and j-t's cheaper to bring that stuf f back here. lzl ft's kind of hard to sdY, we'll give newer

15 iompanie s tax breaks and free land and job training '11 l-o because we always be undercutf especially now when

T7 so much of the data can move over a. wire that can be l-8 strung across the ocean.

19 What I'm most concerned about is this

20 unemployment compensation issue, because it r^ras not

2L Eoo many years ago that I asked your predecessor'

22 Johnny Butler, this same questj-on about eliminating z3 all of these walking centers and creating the call

24 centers.

25 See, I 'm l-i ke f ormer Secretary ButIer and 185

1 maybe even, unlike yourself, dt one time in my life' I

2 was on unemployment compensation. I recal1 going and

3 having to verify that I had looked for work and that

4 I was not sick and that f was avail-ab1e for work.

' Then I listen to mY good friend,

Representative Saylor, say that that's not the case,

I that we eliminated aII of those requirements when we

B eliminated the walk-in centers.

Y Even though back when I asked Secretary

t_0 Butler this, I never could have imagined how badly

1_t- the economy and the employment leveIs in this country

L2 would take.

13 What I am concerned about now is that we as

l_ .l a Commonwealth have gone so far in the other

15 direction of service aid and helping these people

16 that there may not be any way back.

1-7 Have we at the in order to saY that we

18 have saved money, modernized, and spent a lot of tax

r> dollars on somebody's brand new computers' have we

20 really taken ourselves out of the bus j-ness that we're

2L supposed to be in of helping people who lose a job

22 through no fault of their own, find another job that

23 pays them at l-east what they were making when they

24 Iost their job? Can we do this, call centers and

I 25 Internet service? 186

1 SECRETARY SCHMERIN: Can an unemployed

2 claimant develop a relationship via the telephone? I

? donrt believe s9; or filing a claim via the Internet,

a no. That's a difficult situation.

We have eight call service centers

throughout the state. If Irm calling from Beaver -t County, I may be talking to a representative in Erie. 'They a may reroute me to Harrisburg. They may reroute

v me to the Altoona calI service center.

10 You're not going to develop a relationship.

11 She may'not even know of Primanti sandwich is if t2 she's speaking from eastern versus to western.

1? You're not going to develop a relationship. t-4 The issue becomes, is the UC service center viorking.

IJ Our poIIi.g, our survey numbers say for what the

16 purpose is it was developed for, Y€sr it's doing it t7 smoothly.

1A Itfs when we started, f'm told that no

LY one thought 20 percent of the claims would be filed

20 via the Internet. In that respect, it's working-

2L Are we developing? Are we able to

22 understand or have the individual go l-ook f or a j ob?

ZJ No, we're losing in that respect. So it's a

24 balancing.

25 REPRESENTATfVE LaGROTTA: We11, mY question 187

1 for you.is this: I mean, your department and Irm

I 2 f'm not trying to impugn your department or yoUr

3 predecessorts department. You exist primarily to

4 helo disl-ocated workers.

What I'm hearing is a whole lot of

6 strategies, not j ust f rom you but f rom al-l- of us. I '7 think it's just because as elected officials, we seek

U problems to suggest a sol-ution even if it doesn't

9 work sometimes

10 We are I have had people in my district '18 11 in the .years I've been in the General Assembly

T2 retrain three times for steel jobs that went to I 13 Brazil, and then other jobs that left the country, I4 and most recently to manufacture baby diapers that

are now being made in Mexico. We can't compete. with

IO the worker who makes a do1lar a day.

T7 I was just reading in the New York Times,

18 in Banglador, India, the people who took our call

19 center jobs in this country make $200 a month, half

20 of which they spend on needing English elocution

21" classes.

22 We canrt just keep training people to do

,? j obs that next year are going to be done by somebody

24 who doesn't make a third of the amount of money. Do

25 you agree? 188

1 . SECRETARY SCHMERIN: I agree. The only

2 response as far as helping the inaividual, the

J claimant, who is getting the unemployment

4 compensation benefits, I believe our CareerLinks are

5 doing the best j ob they can. They are a source to

6 try to help them

t WitI they find a job most times at the

x CareerLinks? Regretf u11y, no. That' s the probl-ern.

Y A lot of it has to do with the outsourcing issue that t-0 you and Representative Evans mentioned. Itrs the No. l_1 1 issue facing Pennsylvania today, I believe.

L2 REPRESENTATIVE LaGROTTA: Thank vou-

13 Thank you, Mr. Chairman.

I4 CHAIRMAN ARGALL: Representative Fleagle?

It REPRESENTATfVE FLEAGLE: Thank you,

IO Mr. Chairman.

L7 Mr. Secretdry, I must admit, I don't know

TU what a Primanti sandwich is. Have you eaten hogmaw?

19 Thatrs the big question.

20 SECRETARY SCHMERIN: I haven't done that.

21, REPRESENTATIVE FLEAGLE: We'11 swap recipes zz here. I have a question, that I'.ve been looking into

23 some of the problems that are in the UC system and z4 one that constantly reoccurs as a reference is the

25 nebulous description of willful- misconduct. 189

1 1t's my understanding that .that has

2 basically in a wide range been judicially de fined.

3 It's vague and that the employer is pretty much on

.{ the defensive of that and has to very rarely, except

in drug-related cases is a person denied benefits

6 because of willfuI misconduct -

-l Ifve heard some horror stories about

x people. I know I j ust heard one where an employee

9 was tol-d not to for actually i1lega1 activity,

10 tol-d not to sel1 cigarettes to an under 18 age person

11_ and they were they did that and were consequently t2 laid off because of that or fired and that they

1-3 collected unemploYment for that '

14 Would you considering the fact that UC

1_5 is under such financial strain, would you be in favor

IO of a law, some type of statute, t,hat would further

!7 define wi11ful misconduct so that kind of abuse

1B doesn I t occur?

19 SECRETARY SCHMERIN: To define willful

20 misconduct, f don't know that -- it would be very'

2L very difficult.

22 It's interesting you ask me the question

23 you did, because r met with a labor group last week zq and they said the exact opposite, that the referees

25 had slanted so far to the employer side and also on 190

1 the drug testing issue, that it's why or what has

z happened.

3 It's very

9 working because f'm getting complaints then from both

q sides.

6 The issue is can we define willfu1

7 'misconduct? I don't believe statutorily -- I mean,

8 you know, that would be your responsibility. I could

Y defer to you; but to define that in the law, f don't

10 know that there are enough pages in the book to put a

11 definition for will-fu] misconduct and not have it

T2 challenged up through the Supreme Court of . 13 fennsylvania.

14 A11 I can te1l you is we rely upon the l-5 decisions of the referee, ul-timately, the Board of

16 Review, Commonwealth Court, and then the Supreme.

17 Court.

IO I've heard that complaint constantly about

19 that term. That's the No. 1 issue, wilIful

20 misconduct. What is it? What effect does taking

2L illegal drugs have on wilIful misconduct?

22 : The way the system operates now, our courts

23 make that determination and Labor and Industry; and

24 at the Bureau, we have the information and ultimately

25 have to make the initial determination. 191

1 I could only respond I think itrs working,

2 becau s e we're constantly getting complaints from both

3 sides. I'11 defer to al" General Assembly if they

4 want to define general misconduct, because I don't

believe r did.

6 REPRESENTATIVE FLEAGLE: Okay. I would

I look forward in the next few months to working with

B your Department to help us to come up with something

9 that we're not perhaps a fool-proof definition of

10 one, but something about the abuse that takes place

11 in that.

1"2 SECRETARY SCHMERIN: We will g1ad1y provide

I5 you with any assistance or questions you may haver w€

1A wil-I try to answer them

15 REPRESENTATIVE FLEAGLE: Thank You, Mr.

1_6 Secretary.

17 Thank you, Mr. Chairman.

18 CHAIRMAN ARGALL: Representative Frankel?

19 REPRESENTATIVE FRANKEL: ThANK YOU,

20 Mr. Chairman.

2T Good afternoon' Mr. SecretarY.

22 SECRETARY SCHMERIN: Good afternoon

23 REPRESENTATIVE FRANKEL: It's good to have

24 western Pennsylvanian in front of us today-

25 SECRETARY SCHMERIN: It's good to be here. ]-92

t_ EPRESENTATIVE FRANKEL: I|ve been on this , 2 Committee now, this is my fifth year. A.'reoccurring

3 theme that I have brought up and I know others have

4 as wel-1 and. something that resonated through the

5 Governor's campaign is getting our arms around the

6 job training.

7 fn your opening statement, you talked about

B L&I working closely with the Departments of

9 Education, Economic Development' Aging' Public

1-O Welfare to improve the workforce development system.

11 I guess one of the issues we have been

t2 wrestling with is the fact that Pennsylvania seems to o l-3 be one of the most problematically fragmented states L4 in the country when we come to dealing with workforce

ar IJ development training issues.

16 We have programs throughout all of these

17 different departments, as I understand, 26 differenL

1B programs in al-I, $l-.2 bill-ion for different funds

LJ between them

20 I guess the question is: You know, many of

2L us have believed and I believe the Governor as well-

22 that this was not the most effecti ve way to

z5 coordinate policY wit h respect to workforce

24 development.

25 So mY quesEr-on as: Is there an ongoing 1 effort to start coordinating to maybe centralize the

2 funding so that we can deal in a more strategic way

a with respect to workforce development?

4 SECRETARY SCHMERIN: Approximately, th ree

5 weeks dgo, Sandy Veto, rePresentatives from her

6 office and I met with the Governor on that'exact

I issue.

8 I believe the Governor will be scheduling a : 9 meeting wi th aII other cabinet secretaries who have l-0 wor kforce development in their department to address l-1 that very i ssue .

T2 Everything you said, I agree with. We are t< fragmented. We are spending millions and millions of

14 doIlars. The issue becomes, are we doing it in the

15 most prudent, proper, and effective way and efficient

way? Th.at I s what r believe this Governor wants to

17 address, because workforce development is a wonderful

18 term; but what is it and how are we spending that

19 money ?

20 He has given us that mandate. Irm sure in

2t the months to come, you will hear what is his take

22 and what the administration believes workforce

23 development should be in the future and in the

24 Rendell- Administration.

25 REPRESENTATIVE FRANKEL: One of the other L94

1 I think I issues that has reoccurred as weII, and don't

2 it runs counter to this, but it t"-.an" issue of

3 Workforce Investment Boards, at Ieast the ones I'm

4 familiai with in western Pennsylvania.

q The theory behind these boards was that you

6 needed to make some of the decision making with

7 respect to how funds are invested in the workforce

development closer to communities that need one

v size doesn't fit aI1 and that they were to be

1o emoowered to have some more flexibility with respect

11 to the decision making.

I2 Is that a reoccurring issue that you see?

1? Is that something also that you're looking at with

1A respect to that? Do you believe that's a problem?

15 SECRETARY SCHMERIN: I bC]iCVC iI iS AN l_6 issue. we have tried to address it. I believe the

1,1 23 Workforce Investment Boards should operate

tx autonomously. They know their issue in their

19 specific region or area. why should we be telling

20 them one size fits aIl-?

ZI I don't believe northwestern Pennsylvania

22 .should be addressing the same problems or have the

23 same problems as they may j-n the northeast so that we

24 believe

25 That's how we've tried to operate for the past year 195

1 and will continue even more openly to make sure that

2 all of the Workforce Investment Boards have us as a

3 source of information and that they operate

4 autonomously rather than vice versa, us telling them

5 how they should all operate. That will never make

6 them efficient and make them successful in their

7 specific areas.

R .Again, I agree with you; and we are making

9 strides in that effort to make sure that happens.

10 REPRESENTAT IVE FRANKEL: I recognize that

aa rl_ you fol ks have only been here a year. We were

12 talking about this since I have been here with your l-3 predeces sors l-4 I woul d hope that next year when we come

15 back and sit down and talk about that, there may be

1a IO some plan of acti on and some progress towards these

71 issues.

1_8 SECRETARY SCHMERIN: We'11 91adIy have

LY dialogue with you at any time. They are two of the

20 most important issues, I believe, facing Labor and

2T f ndustry and this st.ate.

22 REPRESENTATIVE FRANKEL: Thank you.

ZJ Thank your Mr. Chairman.

24 CHAIRMAN ARGALL: Representative Nickol?

25 REPRESENTATIVE NICKOL: Thank You. ]-96

1 .Mr. Secretaryr dIIl I correct that your

2 Department interprets the Penn National decision so

the prevailing wage applies to cases where government

4 grant funds for construction in whole or part when

the total project cost exceeds $25,000? :

t REPRESENTATIVE NICKOL:' How does the

B "administration reconcile the number of various gt.tt

Y programs in state government, everything fromr sdYr

10 qrants to a local- vol-unteer fire company. in my

.1-1- district toward, the building of a new building to the

T2 economic stimulus package when, in real-ity, applying

t< prevailing wage to them increases the total project

Iq cost?

15 In the past, I've actually had people

l-6 seeking grants walk away from government money

1,7 because of such grants.

1Q SECRETARY SCHMERIN: WeIl, you're asking me

l-9 to assume that's a correct statement.. I canrt say

20 that. I don't know that for sure. I would never

2I want to say that, you having been told that. The .. 22 issue though with prevailing wager w€ have a

23 . departmerit, .Bureau of Labor Law, that enforces that

24 law and that regulation. along with other laws within

the overtime.child labor provisions, minimum wager .so 197

1 that we are enforcing that 1aw as well as prevailing

I 2 wage

We're enforcing Prevailing wage. I made

4 that statement the first day. I met with various \ 5 Senators trying the conf j-rmation process.

6 I'bel-ieve any time you have a 1aw and a law

1 in Pennsylvania, it should be enforced. However' it

I shoul-d be enf orced uni f ormly. It should be enf orced

9 that it' s f airly across t.he board. I believe that

10 that I s what has happened in the past 13 months.

11 As far as what the costs are' as far as

T2 whether it increases costs, I cantt te11 you because

13 I'm not an exPert in that area

1A ' l- .{ REPRESENTATIVE NICKOL: So I'm correct that

l_5 if a f ire company in my district gets a $l-0,000 grant

IO through the .new revitalization systems program toward

L7 a building that may cost a quarter of a million

IU dollars, that they have to apply for a prevailing

19 wage for the entire cost of the building itself?

20 SECRETARY SCHMERIN: I've learned in the

2L last 1-3 months. I I Il- give you the advice, ask our

22 Department. We'11 give you the answer.

i-ssue becomes there is a threshold 23 . The 24 number, it's $25,000; but also, more importantly' the

25 PNI decision that was rendered in 2OO2 addressed 198

1 grants, Ioans.

2 The Supreme Court did a very thorough job

3 in outlining what is and what is not prevailing wage.

4 That's the purpose or one of the purposes of our

5 dep?rtment s .

6" If the municj-pality, if the agency will

7 contact us, we're fact driven. I mean, we cantt say

X uniformly nor can f say to you automatically

9 everything is prevailing wage or if there's a 1oan, t-0 that's prevailing wage, dlthough loans are not

11 typically prevailing wage t2 The issue is we're fact driven- We wiII

13 give you an answer based upon the specific facts.

T4 That's how we operated in the last year.

15 If the agency' if the municipality contacts

16 uSr we will give them a response as to whether we

L7 believe prevailing wage is applicable'or not

18 appticable.

19 REPRESENTATIVE NICKOL: My question was to

20 try to elicit response with regard to the level of

2L threshold. fs the total project cost in the case of

22 this fire company $250,000 for the building, for

23 example, or is the amount of the state grant the

24 $10,000 at this threshold?

25 SECRETARY SCHMERIN: WeII, I don't know aIl 199

1 of the specif ics. $25' 000 is looked tipon as a

2 threshold number.

If there are other factors involved, I

4 woul-d rather know a lot more information than what

you're telling me. I'11 gladly respond to any

6 specifics because I don't want to SaY, Y€s, it's

7 prevailing wage, Do, it isn't and find out there were.

8 other issues such dsr we11, it was a loan forgiveness

9 or it wasn't a loan or something to that effect or if

1-0 it was a grant.

1l-

I2 to make sure we've addressed all of them before we

L3 make a decision

L4 REPRESENTATIVE NICKOL: Have you made any

1q recommendation to the administration with regard to

T6 changi-ng a law perhaps for grant programs of this t7 nature and the appficable prevailing wage?

18 SECRETARY SCHMERIN: I have met with a lot

LY of the groups affected by prevailing wage. Irve

20 addressed a 1ot of the issues. I've heard the

2L issues.

22 As Irve told many of them, my Department

23 enf orces the Iaw. I don't believe it woul-d be it

24 would behoove me to say this should be done or thj-s 'done 25 shouldn't be 200

1 I I bel-ieve it's the parties who should be

2 the ones making the responses and not the Secretary

3 of Labor and Industry

4 Are there issues of prevailing wage? I t ve

heard it from both sides. Irve been asked many

times, how can you have a law without any penal-ties ?

What is the purpose of having t|. l-aw when you can't

I enforce or impose penalties on willfu1 viol-ators or

9 contractors who don't enforce or don't abide by the l_0 1aw ?

1_1 I I ve heard it from the other side that it I s t2

13 know, the bottom line is I believe we have'an

'lA l-9 obligation at the Bureau to continue to enforce the . 15 Iaw.

16 REPRESENTATIVE NICKOL: But have you made

17 any recommendations one way or the other to the

Lu administration for changes to the law that might make

19 it more even handedly in how it is applied?

20 SECRETARY SCHMERIN: No, I have not.

21 REPRESENTATIVE NICKOL: Thank You.

22 CHAIRMAN ARGALL: Representative Vfheatley?

23 REPRESENTATIVE WHEATLEY: ThANK YOUT

24 Mr. Chairman.

25 Good afternoon, Mt. SecretarY. 20r

2 REPRESENTATIVE WHEATLEY: Let me.ask you a

question. Do you have a statistical outline of who

4 the unemployed are in the Commonwealth?

5 SECRETARY SCHMERfN: We obtain datar y€s,

6 we have. Do we break it down? That's the issue if

7 you're'asking to what extent, whether w1 determine

I high school graduates, college graduates, -.- Y prof essionals, no; but we have data that is that t-0 we have that is very useful by county' by groups.

11 Manufacturing, for instancer w€ can tel-l- t2 you the number of j ob l-osses that we've had in

13 Pennsylvania in the last year, last two years, five

I4 years. ir -- l_J REPRESENTATIVE WHEATLEY: Do you see I

16 notice the numbers show that Pennsylvania as a state 'unemployment I7 has an rate of 5.3 percent or something l-B around there. : Do you know as it relates to people of l-9 color if that's small-er or a larger number?

20 SECRETARY SCHMERIN: I donrt have that

2L number with me. If we have it, I will- gladly provide

22 it. The issue Irve always been'faced with while

23 there is a number, whether it's 5.3 percent or 6

24 percent, t: doesn't take into account the number of

25 individual-s that have exceeded or have exhausted 202

1 theirbenefitsandhavenotbeensuccessfuIin

2 finding a j ob.

J Theytre not counting when you hear that

4 number 5.3 percent, that's of individuals who are

5 colLecting .benefits. It doesn't identify those who

6 have exhausted, who are giving upr who have found a

I job that it didn't pay them anywhere near what they

I were earning previously. That number can be taken

Y many different ways.

10 REPRESENTATIVE WHEATLEY: Vie11, Iet me j ust

11 try to get these out and then have you respond to me

I2 in just a general sense.

13 I don't know if you paid attention to our

T4 hearings when we had the Department of Corrections in

15 here, but they had a number of, somewhere cl-ose to

16 42, OOO individuals in the Commonwealth that are

I7 wiII be in their facilities, 53 percent of whom are

18 Af rican-American males .

19 The No. 1 reason given from the Secretary

ZU of Corrections is that they couldn't find quality

2t work when they got out.

22 My question, and I've been hearing this

23 constantly on the streets as I walk through

24 Pittsburgh, do we have any p.rogram and do we. know how

25 effective programs are for training that hard to 203

1 train population of people?

2 How do we monitor and evaluate the success

3 of these programs when we're training them for work

4 and if they I re gett j-ng work? Do you monitor those

6 entities or do you oversee those entj-ties and how do

6 you know the success?

I SECRETARY SCHMERIN: I just signed a

X memorandum of understanding with the Department of

9 Corrections for a type of program that will help

10 those individuals who are incarcerated, so that we

11 can train them while they are incarcerated so that

T2 they can become a member of the community earning a

13 j ob.

1"4 Although, right now, we don'L keep data. I

15 don't have any data to tell you this is a percentage,

16 or Irm not aware of any other program that we have

I7 that we can util-i ze and say that this is limited

18 soIely for those individual-s who are incarcerated.

19 Are programs open ro any lndividual that is

20 rel-eased f rom prison? Yes. He or she can sign up at

21, our CareerLinks. The issue of whether they're

22 eligible for unemployment compensation benefits, z5 again, is controlled by statute'. That's an issue

24 that they would have to make or they would have to

25 view on an individual basis. 204

.1_ REPRESENTATIVE WHEATLEY: WeII, just on

2 I'm sorry.. Just on a general basis, how do you 'your J evaluate training right now, if it's effective

4 or not, if it's actually doing what the intentions

5 are ?

6 I guess the real question additionally is:

I These training opportunities is just to train them or

X to train them for employment? So how do you evaluate

9 them? How do you evaluate if people are gettingr the l-0 training they need? How do they get the work they

1_1- need?

1,2 That's the wonderful question. I think

13 what we're-looking at in workforce development, to

L4 make our performance measures to determine are we l-5 being successful- with all of the money we are

16 spending. That's something that I can't tel-1 you

17 today, that our performance measures we've tried with

18 the US Department of Labor.

19 We filed a document to change our

20 performance evaluation. We're going to continue to

2t do that because we agree with you. You know, itIs

22 wonderful to train, but what are we training them for

23 and are we being successful after they completed the

24 iraining? That's what we have to do.

25 We need the data and the performance 205

1 measures that are real-istic and to show us whether

2 we're succeeding or failing or just treading water.

3 We are constantly looking at that. f will gladly

4 provide you with the performance measures that we

5 have recommended

6 REPRESENTATIVE WHEATLEY: Thank vou.

7 CHAfRMAN ARGALL: Representative Baker?

I REPRESENTATIVE BAKER: ThanK YoU,

9 Mr. Chairman.

10 Mr. Secretary, it's my understanding that

llrL we spend or we receive and then spend approximately a

L2 billion a year in workforce training job development

:-3 .funds, fion's share mostly coming from the Federal

t4 Government and to lesser amount the state.

15 Is it stilI true that we're receivinq that

J-O Iarge amount of money and that we still have a

1,7 plethora of'various programs sprinkled'out through

18 maybe five, six state departments?

J-v I I ve been told we may have as many as six

20 different job training programs in Pennsylvania; am I

21, accurate ?

22 SECRETARY SCHMERIN: I don't want to give

23 you a specific number. I wou1d prefer to give you

24 that after havinq obtai-ned al I of that data. Yes,

25 you are accurate though as fa r as estimates. WeI re 206

1 continuing to do a lot of training, whether. it's TAA o 2 training, whether it's dislocated worker training, customj-zed training funds. They're all out there-

4 We do them at Labor and Industry. Now, which ones

5 are successful, which ones are not?

6 Again, we need and we are looking at

I performance meaSureS to make that determination. The

I money comes from the Federal Government. We have to

9 ---we are getting the best bang for our buck, but we

l-0 also have to do a good job in making Sure that we are

l_1 doing it. f will gladly provide you with specific.

L2 numbe rs .

J-9 Mr. Secretary. According to data.from your

l_5 Department's Center for Workforce fnformation

l_o Analysis, the future job growth is expected in',three

!7 top categories, healthcare being one, education, and

l_u then communication and computers thirdly.

19 Again, in follow-up to some'of the earlier

20 questions and bipartisan questions, of the

2L individuals enrolled in these government programs, if

22 you could get back with us or teIl us now which of

those or how many of those j ob retraining programs

24 are actuaJ-1y going to those f ocused j ob, areas,- those

z3 hot button areas of availabilitY? 207

1 I think it would be very destructive,

2 because I suspect as I'm hearing earlier that a lot

3 of these j obs that we're training people for are not

4 going towafd results, that a lot of these "ubstantive 5 jobs may be sporadic, transitory.

6 Theyrre not necessarily going to these

7 ful-1-time positions that reaIIy wiII be I'ife

sustaining and has longevity in the future. I lhu 9 It does sound like this task force that

10 Sandy is involved with and the Governor is involved

11 with hopefully will produce some great results.

L2 I think what you're hearing from a lot of

13 members is that we real-Iy need to focus on this t4 billion dol-l-ars to go to our programs that are going

1f l-3 to produce results and, hence, help reduce the

16 Medicaid doIIar dependency and the unemployment

I1 compensation dependency and the government outl-ays.

IX SECRETARY SCHMERIN: I agree with you. I

{ntv would be happy to give you one example, TAA. When we

20 started, we really didn't have a handle or an

2T understanding of what the dol-l-ars went f or.

22 Since then. the changes have been made so ^^ z5 that anyone who is certified by the US Department. of

24 Labor, we make that individual visit our Careerl,ink

25 Center first to try to find out where they want to do 208

1 I their training.

2 Is that training a legitimate training

program that will get a job when he or she graduates?

4 That was not done previously. We have implemented

that requirement so that we're now, starting to telt

6 those individuals , those dislocated workers, why you

7 want to get into that program.

a This is a more advantageous program. We

9 feel you will be successful, successful as far as

10 getting the job when you graduate. We recognize

1-1_ that.. I hear the message from the members of the

t2 Committee today. We'l-1 gladly work with you.

t-3 REPRESENTATIVE BAKER: Thank You,

L4 Mr. Secretary. Just 1ast1y, l-et me give you some

IJ praise for your Department's leadership in the

t6 Pennsylvania Conservatj-on Core and for the good work

1,7 that those supervj-sors provide for the retraining of

t_u those at-risk older teens and younger adults doing

IY trades and doing great public works in our parks and

20 our municipalities.

2I Let any give you kudos for your vocational

22 rehabilitat j-on program. They're really producing

23 results for peopte that are handicapped or physically

24 challenged, etc. They really have done a tremendous o and f particularly like the work that Nick 25 )ob, 209

1 Pacone's team has done.

2 SECRETARY SCHMERIN: Thank you for those

? kind remarks. f'11 Pass that on.

4 CHAIRMAN ARGALL: Representative Manderino?

q REPRESENTATTVEMANDERINO: Thank You,

R Mr. Chairman

7 Thank you, Mr. Secretary. f'11 try to be

H succinct. It's not easy for me. A comment, a

9 request, a question. t0 My comment picks up on the discussion you

11 had with Representative Myers about the

12 self-employment assistance program. I just want to

13 reiterate what a jewel f think it is, what a big bang l-4 for the buck that we get. I'm disappointed that it t-5 got cut from the Governor I s proposal. It will be on

16 my -- as one legislatorls proposal to advocate for.

T7 I I ve seen the first-hand good work that

18 they do. I; fact, I've taken a course' a continuing

19 ed course, at a university taught by somebody who ten

20 years ago went through that program. I have a new

21 business that just opened in my district from

22 somebody who just went through that program in z5 Philadelphia. I know it's good work.

24 My second is a request. I brought this up

25 to the Department of Military Affairs. I want to. 2r0

1 bring it up to you as weII. I think it's something

2 we have to work on solving together.

, I had a constituent come into my'office a

4 couple of months ago. He was told that he was

5 ineligible for unemployment compensation because he

6 had been in the National Guard and called up to guard

7 our nuclear power plants in Pennsylvania. Then

o finished his guard duty, went back to work at his

Y private employ€r, got l-aid off after several months

1_0 of working back at his ol-d job, and they looked back

11 to where quarters put him during National Guard

1-2 Service and nobody had an easy solution for. how to

IJ solve his problem; but through no fault of his own

Iq and I guess through a fault of ours,.w€ have a gap in

15 our l-aw that left him with no employment history and

I6 no ability to get unemployment compensation during

L7 that period

18 r rve raised that with Military Affairs and

19 asked them to work with your Department. I suspect

20 i-t's sma1l instances where that will happen in the

27 future, but I hate to see that happen to anybody

22 else z5 SECRETARY SCHMERIN: I agree. I understand

24 and was made aware of it. My legislative director is

25 working on that issue 2lr

l_ REPRESENTATIVE MANDERINO: Wonderful

.2 Thank you. Just a quick question about the

implementation of the construction code. .One of my

4 concerns when we first passed it as it affects olderl

tr cities and Philadelphia, but Ifm sure others fe11 in

6 that category.

7 "We already.had a building code. I think,

X there was a grandfather that kind of said, if you

have something strj-cter at stake but if you have

10 something that was a lower standard, it doesnrt say.

11 I remember that that stil-1 caused us some

12 concern. I'm wondering through your implementation I 13 whether you're going to have some sort of waiver

1i _L .t process and be sensitive to, for example,

15 reconstruction of o1d row houses or total new

IO construction, but of a fill-in in the middle of a row

L7 house in an older community does not all-ow you to put

1-B in what woul-d be considered the minimum standard. for

19 staircases and pipes in an old community.

2o That was something, for example,

2L Philadelphia had where someone might consider a

''1 22 lesser standard. Irm wondering, A, if you're aware

ZJ of that and , B, how you're going to handl-e that in t ztr implementat ion . 25 SECRETARY SCHMERTN: There will be many 212

1 I l- issues beginning April 9th, 2004. It s the unknown

ferritorrr-l vvL so 2 J , to speak. The biggest issue that I see

? is the 90-day period for each municipality, each

4 city, each borough, township to tel-1 Labor and

5 Industry whether they wiII opt out or opt in. In

other words, will that municipality assume

7 j urisdiction?

I I would guess that the City of Philadelphia

9 will assume jurisdiction and enforce the code itself.

10 I then will walk away or the Department will have no

11 jurisdiction, so that it will remain an issue with

72 the City of Philadelphia. They will enforce the

I< codes or implement a more restrict j-ve code. f t's

74 l-eft to the city or the municipality.

1-5 Those that opt out, that will give:us the

IO jurisdiction. Again, that's the unknown for the 90

1-7 days after April 9th. We will- enforce the Act and

1B try to do it fairly and under the with the various t_9 international building codes so that we enforce it.

20 REPRESENTATIVE MANDERINO: If the city opts

21 in to do it themselves, though, how does that what

22 process do we need a process that would allow them

23 to make exceptions, for example, in the case I just

24 mentioned in reqards to the size of staircases?

25 SECRETARY SCHMERIN: It I s my understanding 213

1 that after having trust me not read the code,

2 it's a little too voluminous; but the issue becomes

J the city or any municipality, t!" UCC is the minimum

4 code. They can adopt more stringent provisions.

5 So what is there among the nine disciplines

A is only the minimum. They can develop or implement

7 more stringent, more requirements that are there.

U The only requirement is they cannot make ir

Y less than whqt is in the code. So I can get you an

10 answer what the code says as far as your specific

11 issue and I'11 let you know. t2 CHAIRMAN ARGALL: Representat,ive Maher?

13 REPRESENTATIVE MAHER: ThANK YOU,

14 Mr. Chairman

15 Secretary Schmerin, I'm going to be

Ib speaking specifically about the SWIF, which

17 conceptually is an insurance program of last resort l_8 for employers to provide protection for their

19 employees. zv As an insurance company which you're

21- basically operating, itrs my understanding that the

22 notion is that it should be self-sufficient. Is that

23 fair? z4 SECRETARY SCHMERIN: f agree.

25 REPRESENTATIVE MAHER: During the f irst l-L 2t4

l- months of 2003, which is the latest that.I have

2 received financial statements, for the period January

3 1 through November 3Oth, 2003, SWfF experienced a $45

4 million loss from underwriting, which is to say for

q every dol1ar per premium that was collected from : employers, there was $1.16 recognized as a loss

7 The first observation that would seem to . I rner it may be well worthwhile for sVillF to revisit

9 what its premiums are as the insurer of last resort

10 to be Sure that they're at least covering the cost of

1_1 operations. t2 To gfo f urther, if you add in the general

13 administrative costs for those first 11 months' SWIF

L4 l-ost $110 mill-ion in 11 months of operating from t-5 underwriting and administration. How do you lose $l-0

16 million a month in a program that shoul-d be

L1 self-sufficient ?

1B SECRETARY SCHMERIN: I'm not sure - I would t9 have to look at the specific numbers, but I think you

20 have to keep in mind that at SWIFr w€ are the insurer

2L of }ast resort. We don't have the right to turn down

22 an employer if they

23 REPRESENTATIVE MAHER: You have a right to

24 set premiums.

25 SECRETARY SCHMERIN: We.have the right, and 2L5

1 t.he issue becomes when you go to the rating bureau to

2 set premiums, the premiums have to be responsible and

realistic. Considering all of those issues that you

4 raised and those could be investment losses.

q REPRESENTATIVE MAHER: No, it.S not. This

6 is underwriting general administration. It amounts

7 to 50 cents on the dollar of what your premiums are.

X The premiums are way out of line in terms of

Y self -suf f iciency. I urge you to take a l-ook at that.

10 SECRETARY SCHMERfN: I will gladly look at

11 those. I guess my response would be thatfs why we t2 have actuaries and

13 REPRESENTATTVE MAHER: We| 11 come to your l_4 actuary in a minute.

1-5 SECRETARY SCHMERIN: A1SO thc

1_6 underwriting issue. I will gladly look at that.

T7 REPRESENTATIVE MAHER: In 2003, there was ld look back to t2/3I/2002, which, of course'.was the

LA end of the Ridge/Schweiker era and beginning of the

20 current administration.

21- Magically, j-n 2003, suddenly, the

22 unassigned reserves, that is sort of this loss that' s

23 out thbre and has been fully analyzed, soared by $200 zq million like that. SuddenIy, it's'6oo mil-1ion. rt

25 had been 400 million. 21"6

1 What is it that happened in the early r 2 months of 2003 that caused this number, this cushion,

3 if.you wiIl, to sore bY $200 million?

guess 4 . SECRETARY SCHMERIN: Well' I would

that the actuarial assumptions changed without

o again, I wiIl gIadly Iook at specifics but

7 REPRESENTATIVE MAHER: ANd I WOUId

B appreciate if you can investigate that and report to

9 us. As a cPA, I understand that these are sorts of

10 numbers where people can sort of rabbit hole away

L1 numbers.

L2 In an era when we have a Governor who is.

13 hungry for taxes, I think we need to be very careful

14 .about what may be down in these rabbit holes. ' 1-5 Continuing with SWIF, the total liability.

IO after considering your actuary is, their best'

I7 estimate is that your liability is $1.1.Uiflion.

1B That liability is a big number. It's a bit like a

' mortgage. It's paid out over a number of years '

20 There's nobody that is coming in to col-Iect a 1.1

2t billion debt.. zzN We have 1. 1 billion to be paid out over 20, z5 30, 4O years. You have $1.5 billion in assets. Just

24 without any further analysis, it would be akin to

25 someone who has $110,000 mortgage and $150,000 in the 2r7

l_ bank, yet your actualy' and SWIF' s of f ic j-aI " 2 conclusion is you don't have sufficient surplus to

turn anything back to the general fund

4 Now, how can it be when you have a surplus

r that by any measure is greater than the entire amount

6 of the earned income tax increase being collected

n I this year, that that amount is not significant enough

B to turn back to the general fund?

9 . SECRETARY SCHMERIN: WeII, because we have

10 to rely upon our actuary.

11 REPRESENTATIVE MAHER: Your actuary says t2 you've got an obligation of 1.1- billion. Your

13 accountant says you have $1 and a half billion in

T4 assets. The difference there is $400 mi11ion. ' 15 SECRETARY SCHMERIN: The,issue is we have l_o two actuaries. We have Mi1l j-man, the outs j-de t7 actuary. We have our in-house actuary. We try to

1B match them both. The other important issue is while

19 1.4 or $1.5 billion may seem significant when you

20 consider the liabilities, I bei-ieve also and more

2I importantly what I said in my opening statement,

22 we're now the fargest insurer in the state. We are

23 writing over $300 million of premiums a year

24 REPRESENTATIVE MAHER: That's right.

25 SECRETARY SCHMERIN: What is the exposure? 2L8

1 REPRESENTATIVE MAHER: And i_n terms' of that

z exposure , 1-.l- billion is what your your actuary's

{ estimate it's an impressive document. It looks to

4 me like they did a good job.

r J

6 years, why do you need $1.5 billion today? In fact,

7 SWIF having all of these operating losses is

self-sufficient on a cash flow basis. Why not turn

Y money over to the general fund?

t_0 SECRETARY SCHMERIN: Because f believe

11 Milliman and our in-house actuarv both said we do not

T2 have safely

L3 REPRESENTATIVE MAHER: The interestinq

l_ at thing is that is something that they don't present a

1f, calculation for. That' s j ust, 9€€ whi z, guys . We

16 don't think my suggestion, il.. Chairman, is that

17 we need to look very carefully because it seems to me

J_d that the SWIF fund, if it is if the premiums that

LY you're not going to are underwriting l-oss and if

20 you're already self-sufficient on. a cash flow basis

2t and you're sitting on one and a half bill-ion dollars

22 of assets, j-t's time to bring money back to the

23 Pennsylvania taxpayers to reduce the imposition of

z.+ taxes.

I 25 Thank your Mr. Chairman. 2]-9

1 CHAIRMAN ARGALL: Representative Sturla?

2 REPRE SENTAT IVE STURLA: Thank you,

3 Mr. Chairman.

4 Than k you , Mr. Secretary. A couple of

questions . One reI ating to WIBs. In LancasEerr w€

6 have one of the bet ter WIBs. One of the things we

7 have been doing workforce development is looking

X at indust ry clu rs and ramping up for j ob

shortage s l-0 We have the luxury in Lancaster County of

11_ having a rel-atively Iow unemployment rate, dlthough

L2 we have a rather high unemployment rate in the City

13 of Lancaster t4 Can you elaborate a little bit more on what

15 your Department is planning to do in terms of getting

16 other WIBs in the state and looking at cluster

1,7 industries and how that miqht work? rtt SECRETARY SCHUnnfN: I believe what we have l-9 done, we've identified nine clusters. we are relying

20 upon those -- utilizing those clusters that the other

21- WIBs wil-1 utilize to interact with each WIB, so that

22 if there are or is a need for jobs or a need for

23 employees in a certain area, they can interact.

24 They can l-ook at how they are doing to

25 recruit those employees, how they are training those 220

1 employees so that we are developing a program. not

2 only with those clusters, but to make sure there's an

3 open line of communication.

4 REPRESENTATIVE STURLA: The next question,

5 the Governor mentioned in his budget education as.

6 being one of the growth j-ndustries in Pennsylvania.

7 For several years now, Irve been talking about higher

8 education as a non-smoke stack, high-paying j9U, you.

Y know, low incidence of injury type of job here in

1_0 Pennsylvania; and also happens to attract people from

11 outside the state who oftentimes stay for 40 years,

L2 spend $100,000 and even if they do go home, spend

13 quite a chunk of change here in Pennsylvania.

I4 Do you have statistics relating to higher

15 education and the impact that it has on the economy

16 or can you get it to me?

L7 SECRETARY SCHMERIN: I will obtain whatever

18 information we have and I will get it to you.

19 REPRESENTATIVE STURLA: Thank you.

20 . CHAIRMAN ARGALL: Representative Mundy?

27 REPRESENTATIVE MUNDY: Thank you,

22 Mr. Chairman

23 Good afternoon, Mr. Secretary.

24 SECRETARY SCHMERIN: Good afternoon. ^- ZJ REPRESENTATIVE MUNDY: I suess I would take 22L

1 a 1itt1e different approach than the gentleman's with .

2 regiard to SWIF. If what he says is accurate, that we

3 have way too much money in the fund, I would suggest

4 that we give it back to the companies who put it

5 there rather than give it to the general fund to " spend in' other ways, but that's just me.

7 With regard to an issue that I asked the

'8 Secretary of Aging about, I'm beginning to hear from

9 retirees in my district who some of whom were

10 unl_on memoers.

11 Over the years in union contracts, they

1,2 were promised retiree healthcare benefits .in you

l-3 knowr ds a.bargaining chip. .It was used that way.

t4 In other words, if you'1I forego a certain amount of .. 15 salary or benefits . nowr we will guarantee that when

1-6 you retire you wil-1 get a certain l-evel- of healthcare

71 coverag.e 1ater.

18 Now we're finding that these companies

19 aren't rea11y. going out of business, they just say to

20 retirees now, weIl r sorry. f t' s too expens j-ve now,

21, we're not going to do it, anymore.

.22 I guess my question is how are theie no

z5 Sta.te or Iaws with regard to these contracts? .FederaI 24 Let's st j-ck to unions because obviouslyr' if it's a

25 private employer who has no union representing it, 222

1 then they can pretty much do whatever they want with

2 retirees.

J With regard to these union contracts, I

4 guess I don't understand how there can be no law in

.q p1 ace at either the state or federal leve1 that would

6 in an y way protect people in these circumstances.

I SECRETARY SCHMERIN: From the state

8 standpoint, I can te11 you, Representative, there are

9 no laws that would require or enforce or al1ow a

l_0 Claimant or an affected worker retiree to bring

l_l_ action'violating that 1aw.

12 From the federal- standpointr, again, we' I l_J don't have jurisdiction. I believd the only recourse 1' J- .t would be the filing of a lawsuit that that .retiree or

15 labor union or group of employees woul-d have to f il-e

l-6 against the employerr or if that employer is out of

L7 business to attempt to receive it from an agency that

18 may have provided some type of insurance. From the

19 state standpoint, we do not have any state law that

20 woul-d address that issue.

2I REPRESENTATIVE MUNDY: So when they would

22 fi Ie a lawsuit, it would be a federal- 1aw that they

23 were t rying to. access?

24 SECRETARY SCHMERIN: I would strongly

25 recommend that they contact an attorney; but from my 223

1 experience, it would be they woul-d have to f ile in

2 federal court' Y€s.

REPRESENTATIVE MUNDY: And of course,

4 that's dif f icul-t because, I mean, it's really not

5 like, I know there are certain'companies who are

bankrupt or large companies where there are a lot of

I employees. These seem to be more isolated cases

U where you only have maybe two or three retirees left

Y in my area. l_0 SECRETARY SCHMERIN: ft has happened. T'm

11 aware of the situation. I've seen lawsuits filed. t2 Irve seen many declsions relative to these type of

13 i-ssues. ,' l4 REPRESENTATIVE MUNDY: What are the

15 decis ions ?

16 , SECRETARY SCHMERIN: Well' I think they go

17 in the merits on what is the labor agreement or was

1-8 in the .gt:ement how strong that contract is oI

19 is a l_abor agreement that expired x amount of years

20 ago enforceable 10, 15 years down the road. It's up

2T to the courts. I don't want to speak for the

22 judicial system. I have enough headaches at Labor

23 and Industry.

24 REPRESENTATIVE MUNDY: Thank You-

25 CHAIRMAN ARGALL: Representative Melio? z z.I

1 REPRESENTATIVE MELIO: Thank you,

2 Mr. Chairman.

Mr. Secretary, just in response to a

.t comment that was made, I think we can satisfy the

Governor's hunger by passing the legislation that he

6 made. Ha.ving said that, you oversight BOCA, right?

I SECRETARY SCHMERIN: YeS.

8 REPRESENTATIVE MELIO: WouLd. it be possible

9 for your Department to require home improving l_0 contractors to be certified in the Commonwealth of

11 Pennsylvan j-a ?

!2 SECRETARY SCHMERIN: We11, the issue now

13 . with BOCA and the Uniform Construction Code addresses

74 what is and what isn't covered. Those contractors

15 now, will they be certif ied? I ' l-1 look into that and : 16 make every

L7 are. l-U The residential end and enforcement of the

UCC is not going to be covered by Labor and fndustry.

20 ft will be by the municipality or if they assign the

2T work to a third party agency.

22 Labor and Industry will have no invoLvement

23 with the resi-dential aspect of the Uniform

24 Construction Code. ft's an issue for that

25 municj-pality and how they enforce or require the 22s

l- 6nforcement of contractors or home remodeling

REPRESENTATIVE MELfO: We11, in my district

and all over the Commonwealth, I know Representative

4 McCa11 has a building, we're getting ripped off.

5 We have people who have no knowledge of

6 construction at alJ who rip shingles off people's

7 homes and sometimes knock on the door and tel1 them

I theyrre contractors and that they will take care of

9 that. They get $5,000 or something and the homeowner

10 never sees them again.

11 . I have one compl-aint with 66 violations '

L2 These people are still operating. It's just a big

ri n-nffv!!. r district attorney in my county I 13 !+y know the t4 is frustrated that there's nothing they can do

15 because of this oversight- She wants to have

16 Something done, some kind of a regulation or whatever

11 that has to be done to make sure these people who say

18 they're contractors are actually contractors.

L9 SECRETARY SCHMERIN: I understand the

20 issue. Beginning April 9th, that will- be the I 2t responsibilit.y of the municipality. I m not aware of

22 any law that would give us jurisdiction for that

23 problem; but again, if there are laws, there are

24 bills introduced. rt can enforce'or tighten the

25 reins on the issue You identified. 226

1 REPRESENTATIVE MELIO: I would like to give

you copy of this bill and you can look at it and :

see you can do anything.

4 SECRETARY SCHMERIN: Thank you. f wil-l.

REPRESENTATIVE MELIO: '1'nanK you.

CHAIRMAN ARGALL: Thank you very much,

7 Mr. Secretary. V,le're now going to take a five-minute

I break and alIow our stenographer .to do what she needs

Y to do and then we'11 come back with the Department of

10 Agriculture.

11 (Break. ) ' L2 CHAIRMAN ARGALL: The Committee will I 13 reconvene. WeI re now going to hear from Secretary l_ .t Wolff of the Pennsylvania Department of Agriculture.

15 Secretary, before you begin, let me welcome

1a l_o the Chairman of the House Ag Committee

t7 Representative Hershey. Pl-ease begin.

18 SECRETARY WOLFF: Thank you, Mr. Chairman.

IY I've submitted a copy of my openj-ng staternent f or the

20 record. I will not read that. Certainly, the

21- Department of Agriculture is happy with our

22 al-l-ocation this year

23 We're extremely pleased with the $100

24 million proposed for additionally new funds for farm

ZJ Iand preservation, as wel-l- as we're extremely pleased 227

1 with some of the initiatives we started last year and

2 where they're at today. So having said that, I'm

looking forward to answering any questions you may

4 have.

CHAIRMAN ARGALL: Thank you very much,

6 Mr. Secretary. f have been a strong proponent of the

7 farmland preservation program in this state and

x localIy now for many Years.

9 Can you give us an idea of what kind of

10 backlog may currently exist that the suggested

1-1 legislation would address? t2 SECRETARY WOLFF: Currently, Pennsylvania

13 has about 1800 farms that have been approved that are

14 awaiting funding for the farmland preservation

1q. program. t6 I think another rea11y interesting fact is

17 that between 1"982 and L99?, over L.1 million acres of

18 open space in Pennsylvania was developed; and of that

19 1.1 million acres' 332,000 were Class 1 and CIass 2

20 soil-s. That I s truly a problem, because Cl-ass 1 and

2'J, Class 2 soils are a wonderfulr odtural resource ' 22 Pennsylvania has. They're no Ionger in production.

23 CHAfRMAN ARGALL: Representative Miller was

24 just speaking to me about an issue in Berks County-

25 f know as one who has both family members involved in 228

1 farming, as well as one who because of this job,

2 those of us with rural constituency tend to attend a

3 lot of farmers' banquets.

4 I immediately noticed a l-ot of scars' a lot

5 of missing limbs. It's a very dangerous occupation,

A as you well know. Representative Miller was telling

7 me there's, I guess, an ongoing initiative to try to

I obtain upwards of a million dollars for a new it'

9 caIIed the anticipated farm safety occupational

10 health act expansion for a variety of farm safety

11 demonstrations, and work to get out there and try to

T2 work with farmers to learn the safest way of doing

13 what, ds I said, is an admittedly hazardous

L4 occupaEaon.

l-J f saw also that the line item for farm

16 safety in your budget dt ' I thinki l-11' O0O is a flac

T7 line and, obviously, j ust 10 percent of what they're

J-d looking for. ' IY Have you begun to look at this new number

20 as something that we can work to in the future or is

2T this very, very as new to You as perhaps it is to

22 me? I z5 SECRETARY WOLFF: It's fairly new. We ve z4 had some general discussion on the proposed new

25 program. The $11-l-,000 is a pretty substantial number 229

1 when you compare it to some of the surrounding I 2 states. We're looking at expanding that. There s

some consideration as to how this ;other program would

move forward.

tr .J CHAIRMAN ARGALL: Representative Evans?

REPRESENTATIVE EVANS: Thank Your

7 Mr. Chairman

Good afternoon, Mr. Secretary.

9 SECRETARY WOLFF: Good afterno.on.

10 REPRESENTATfVE EVANS: Bioterrorism; I'm

11 II curious, iL's listed here for 600,000 is what it's

1,2 listed. Give me a little sense exactly from your

1J perspective as Secretary what is the Department doing

14 in this area. l_5 SECRETARY WOLFF: WeII, the Department is

IO responsible for three particular areas. One is food

17 safety, and the other is plan industry, and the third

1U is animal- health and diagnostic as it relates to

LY an j-mal agriculture.

20 A1I three of those bureaus have been

2l working hard sometimes with the support of federal

22 funds. We also work with the Department of Homeland 'security, 23 as wel-l- as PEMA in trying to develop our

24 preparedness strategy

25 We do everything from surveillance to we 230

1 have been able to access some new equipment. Through

2 those programs, we feel that our program is in pretty

? good shape.

4 REPRESENTATIVE EVANS: My understanding is

the Department of Agriculture has some education

6 initiatives. Do you want to teII me a littl-e bit

7 about it?

X . SECRETARY WOLFF: We have an initiative

Y that we rol-led out last year. ft actually has about

10 two or three components to it. We brought an AGET

11 coordinator on board, Dr. Baker. With thatr w€ are

t2 working with a kindergarten through 1,2 program that

t< is focused on modern agricu.l-ture

t4 . The thing that makes it somewhat unique is

15 it actually aligns to the academic standards so the 'teachers l_o can access this j-nf ormation, download it,

L7 and teach to the academic standard.

l-B Along with that, w€fve realIy worked hard

19 to try to educate our public officials on modern

20 agriculture today.

2L We have hosted a. number of field days. In

22 particular, we have had public officials' day at the

23 Farm Show this year where we invited them to the Farm

24 Show Complex, had seminars for them, and gave them

25 the opportunity to see agriculture up cfose and 23r

'1 I personal.

'2 There basically are initiatives all about

3 trying to educate the public about modern

4 agriculture. We know that therers a very large

disconnect between our farming community and

non-farmi'ng

7 REPRESENTATIVE EVANS: Next question.

I Hardwood; tell me about how that process is going.

9 That's a very important industry to the Commonwealth

10 of Pennbylvania.

1l_ SECRETARY WOLFF: Thatrs a very large

LZ industry. Pennsylvania has the largest area of

States. That program 13 hardwood forest in the United .: . l4 is basically focused on the. export market.

15 We have been able to participate in several

L6 export markets that have returned millions of dollars

I7 1 also work

J_d very -:-

19 REPRESENTATIVE EVANS: Itrs exported to

zv where? Particularly where around the worl-d?

2L SECRETARY WOLFF: Particular1y, the Far

22 East. Thatrs where the trade missions have been

23 particularly focused. That industry is growing

24 It's important to us.

25 They have also sLarted an ag education 232

1 initiative. It's caIled the wood mobi Ie where they

2 take it around to the different school districts in

a Pennsylvania and educate the students about the

4 forestry'industry and the good things they do.

5 REPRESENTAT IVE EVANS: Thank YOU,

o Mr 1-h.a i rman

7 CHAIRMAN ARGALL: Representative Habay?

.U REPRESENTATIVE HABAY: Thank you very much,

9 Mr. Chairman

10 Mr. Secretary, thank you for coming here

11 today. Upon traveling to Europe about four years

1"2 ago, f was really astounded by the major impact mad

13 cow disease had throughout Europe, with Ireland and t4 England and Germany and France, and the measureS that

1-5 were taken.

Right now, with the Pennsylvania Department

77 of Agricul ture, do you have any strategy or

18 app ropr iat ions in place to deal with Possible

LY outbreak of mad cow disease now that it's come to the

20 United Sta tes?

2L SECRETARY WOLFF: Yes. We have regional

22 teams t hat actually are organized in case that would z5 happen. Some of the things that we're really working

24 on that we think would be extremely beneficial would

25 be GIS system for all livestock agriculture, so that 233

1 if we had an outbreak of foot, and mouth disease that

2 we would know how many specific farms there are

3 within a two-mi]e or a five-mile radius of the

4 outbreak.

q A1so, we're working with USDA in hoping

that we coul-d become part of a pilot program f or

7 national ID system. The national ID system would

B basically be one where the livestock are have an

Y ear tag that has a computer chip in it and that it is

10 that animal- is tracked from birth until it ends.up

11 through the. slaughter plant t2. REPRESENTATIVE HABAY: Okay. Now, I would l_3 take it that's in lieu of slaughtering tens of

I4 thousands of animals l-ike they decided to do in

15 Europe resulting in a heavy hardship? t_6 SECRETARY WOLFF: It I s I don't think

17 anyone could quite appreciate how devastating foot

18 and mouth disease would be here. When you think of

19 how much publicity and how much national policy has

20 been set in the last two or three months from the

2'J_ case of one animaL being tested posj-tive for BSE in

22 the,state of Washington that was act,ually imported

23 into the United States from Canada.

24 When you compare that to what an outbreak

25 of a contagious foreign animal- disease l-ike foot and 234

t_ mouth disease, it wouldn't even compare. It would

I z truly be a matter of control. The first_ step in ? control is certainly identifying your risk area

4 around an outbreak.

5 REPRESENTATIVE HABAY: The only other

6 question I have, I met.with representatives.from the

7 Pittsburgh Community Food Bank in my office on

x Friday. They were very concerned about a couple of

points concerning the state food purchase program.

1_0 Looking at I tracked the last 2l years

t_l_ in appropriations for the program. It went from its

L2 height of funding in 1998 and 1999 to about 17.8

13 million and now it's down to 16.4 million that is

T4 proposed.

If, Of course, this program supplements the

IO food supplies available for distribution for the

1,7 needy through private pantries, cupboards, and

18 kitchens. The Governor proposed f J-at f undj-ng.

19 Right now, from the studies that we've

20 seen, the l-atest USDA report on hunger and food

2T insecurity is the data col-l-ected for Pennsylvania

22 households in December of 2A0I, the prevalence of

23 hunger was up nearly 23 percent over December of

24 2001

25 Shouldn I t we be doing a little bit more to 235

1 be funding these programsr €specially since more

2 Pennsylvanians are out of work and having a little

? bit more trouble paying the food bills?

4 I happen to see this quite a bit in mY

q distrlct in Pittsburgh where there's more

6 foreclosures now than ever. Is there something we

7 can do to address this problem, especially with the

U abundance of agricul-ture that we produce in the

a state? Werre self -suf f icient j-n many ways.

10 SECRETARY WOLFF: Vfe11, I agree with you.

11 Certainly, food distribution is one of the very

L2 important things we do at the Department of

13 Agriculture.

l-9 I think when you look at it in terms of the

1- I3 state food purchase program, dt least $16.5 million,

16 it is the highe.st of any state in the United States t't as far as the amount of money that they put into any

18 program. l_9 Of course, we use that to leverage a 1": of

20 f ederal doll-ars. Vile have 10 and a half million

2T dollars in what they cal-l-ed the Feedback Program

22 which is the food emergency assistance program' as

23 well as we handle around $30 million in USDA

24 commodities and handle that for the school lunch

program. 236

1 So when you add them up, it becomes around

2 $?0 million for the program. I appreciate what

you're s.aying, that it certainly doesn I t help the

4 people who don I t have enough food, that Pennsylvania

job lu" done a pretty good compared to the other

6 states in accessing food and providing funding that

7 is avail-ab1e.

U REPRESENTATIVE HABAY: True. Obviously,

9 that's something that I would like to increase among

10 the farmers' market and nutritional- programs which

11 were created. Cou]d you tal-k a little bit about that

T2 program and how important that is to the Department

13 of Agriculture?

14 SECRETARY WOLFF: That program is a fairly

15 new program. It I s been extremely successful. It's

16 funded at the rate of about $5.2 million per year.

L7 This program targets both WIC participants, as well : 1B as seni-or citi zens .

19 We're trying to make it more user friendly.

2Q The selior citizens have a redemption rate that is

21 very high. It's over 90 percent. The WIC

22 .participantsSometimesrunSinthemid60s.

23 Werre trying to see how we may be able to

24 better, serve those folks and see that that program

25 works better. ft benefits both production of 237

1 agriculture in Pennsylvania, as well as the special

2 part of society.

"4 CHAIRMAN ARGALL: Representative Wheatley?

q REPRESENTATIVE WHEATLEY:'ThAnK YoU,

6 Mr Chairman.

7 Good afternoon, Mr. Secretary. I have a

X question for you regarding food insecurity, food

.o accessibility

t-0 As you know, you're probably aware, I serve

1_t- on the Health and Human Service.Committee; and the

t2 Health and Human Service Committee, I know Chairman

13 Frank Ol-iver.

t4 . Later during the process, I encountered

15 from some of my rural counties some of the food

1-6 accessibility issues.

t7 Could you talk to me a little bit about

IU from your Departmentrs standpoint, have you started

t_v to l-ook at this and do you know geographically

20 throughout the Commonwealth what type of

27 accessibility issues areas are having and are you .' --. .22 planning or what role were you planning to rectify 23 that situation?

z4 SECRETARY WOLFF: WeIl, I think some of the

25 accessibility situations are simila r to the ones that 238

1 t wefre talking about as far as the WIC participants

2 having a low redemption rate

Sometimes the source of the product and the

4 location of the recipient do not align very wel-I.

We're interested in trying to see with the farmers'

6 market program, seeing if some of the vendo'rs woul-d

7 be interested in locating in a specific area where we

U know that there would be a high number of WIC

9 participants avail-ab1e.

10 Obviously, in rural Pennsylvania, j-t's a

11 bigger challenge because your food distributj-on may

L2 in some cases be many miles away from where someone

13 l-ives.

14 We trv to do the best we can in terms of

15 being flexible and makJ-ng sure that we are availabl-e

16 for anyone that's in that area that qualifies.

T7 Unfortunately, sometimes there are gaps there and it'

18 doesn't work very welI. Werre always Iooking into

19 logistics to improve.

20 REPRESENTATIVE WHEATLEY: Have you thought

21_ -- as a Department, have you thought about any

22 collaborations with the Department of Public Welfare,

23 the Department of Health, the Department of Community

24 and Economic Development to try to do something

25 jointly to try to make some inroads into this issue? 239

1 SECRETARY WOLFF: Sure. That sounds a .1ike 2 very good idea. I work with those other.cabinet

? secretaried on a very regular basis. f'm sure that

4 they would be willing to work on it.

- REPRESENTATIVE WHEATLEY: Thank you.

6 CHAIRMAN ARGALL: Representative Saylor?

7 REPRESENTATIVE SAYLOR: Good afternoon'

B Mr. Secretary. The question I have for Your several

Y questions, the first one has to do with the mercy of

10 . Pennsylvania's GIS program that they have with

1-1 agri -b i oterror i sm.

L2 My understanding from the head of the

13 University of Pennsylvania veterinary school, talks l_4 about GIS program, that there I s some problems with

l- J-J confidentiality, that they could notify farmers t_6 within, sdy, an hour of an outbreak of something but

I7 tfrey can't get that information because of privacy-

1B What is the Department doing to work with

IY the University of Pennsylvania or are you or are you

20 not working, and is there anything that we need to do

21 as far as changes with the Avian flu and other things

22 that may be outbreaking?

23 SECRETARY WOLFF: Wel1, I think iL comes

24 down to the Public Information Act and how much of

25 that information was available to the public- That's 240

4 I one of the reasons that there's a confidentiality

2 issue and there was, in particular, with the Avian

f l-u situation.

4 I have to sdy, though, that the University

5 of Pe,nnsylvania in a very timely way made that

6 inf ormation available to us. We conti-nue to hold it

7 in confidence also. Without any question, the timing

a of those issues is so very critical and something we

J need to move f orward with and conti-nue to develop a

10 relationship and how we can best do that.

11 Certainly, when we l-ook at the GIS system

L2 for all livestock aqriculture being species specific, t< we have the same issues, the issues of whether the

1A I9 public had access to that or whether we can hold that

15 information in confidence.

IO Those are some of the things we have to

77 work through and work with. Yes, you may. be able to

18 help us with t,hat

19 REPRESENTATIVE SAYLOR: I l-ook forward

20 Irm sure we'l-1 be working with Representative Hershey

2I and Representative Arga}I. f would like to be kept

22 informed of what you are doing. Terrorism today is

23 important. I think we need to protect people's

24 privatism. We need to help protect other individuals

25 in the area. 247

1 The other guestion I have concerns House

2 Bill the Governor's veto message' being .1"222, 3 discussed at legislation and said he wanted to see it

4 passed but he wanted to see some mj-nor changes to

q that legislation. Could you fill in the Committee

6 where we are at on that and where we are headed?

7 SECRETARY WOLFF: Yes, sir. The Governor

a said that he would sign the legislation that was in

Y 1222, but he wanted a more comprehensive plan in

1o terms of some of the environmental issues he hoped l_1 would be addressed.

I2 He instructed Secretary McGinty and myself l-3 to sit down and develop that protocol- or to develop

14 that legislative part of 7222 that he wanted to have

15 developed.

16 We have had a number of meetings on that

L7 during the last two months. WeI re right at the point

18 of having that finalized. Hopefully, this week we

19 will have some information that we will take back to

20 the Governor's office to review it.

2t REPRESENTATIVE SAYLOR: Thank you, Mr.

22 Secretary z5 CHAIRMAN ARGALL: RepreSENtAtivC SICrN?

24 . REPRESENTATIVE STERN: Good afternoon

25 Mr. Secretary. I have a question about the Keystone 242

1 Agricultural Innovation Center.

2 As you're a\^Iare, this is a program that is

3 connected with the United States Department of ..: 4 Agricuf ture. The center itself t.u", f ocusing on

agricultural vafue enhanced products to help with the

6 ag industry.

7 Is this a one-time deal that is. set up with

I the USDA to work with them in partnership with the

9 Depa.rtment of Agriculture, and do you foresee this as

10 a cont j-nuing type of idea that, You know, You can

11 work yrrth not only them, but is this something that : 1"2 we need to l-ook at in the f uture to add value

13 enhanced products for the farming community?

L4 SECRETARY WOLFF: Let me answ'er the f irst : lf, part of that. Yes, we hope therets continued funding

1a l_o for it. know with the new budget proposed that

1,7 it's going to be a litt1e bit tiqht. Hopefully'

IU there will continue to be funds available to fund

I9 products like that.

20 We agree with your concept that we need to

2t move forward with valued products. Certainly,

22 Pennsylvania has many opportunities for that type of

2? agricul-ture, being that it kind of goes along with

24 the urban pressure and urban sprawl component.

25 We also have a very large amount of 243

1 r population that v/e can do direct marketing to. o 2 Evaluated products go together very well so that the 3 farmers can receive a larger share of the dollar for

4 the food.

5 We think that that has a lot of potential.

6 We think that that has a l-ot of opportunities. Werre

7 looking at that as being an important part of

U agriculture.

9 REPRESENTATfVE STERN: Can I ask'how your

t_0 Dairy Task Force is moving forward? I know you have

11 implemented that under your watch. How is that task'

T2 force being used to implement the dairy industry? o r_3 SECRETARY WOLFF: The task force has met 14 three or four timeq and that plan is to' have the

15 Center for Dairy Excellence in the Department of

IO Agriculture.

I7 The Center for Dairy Excel-lence would

1B basically be able to align all the things that the

l-9 Department of Agriculture does with the dairy

20 industry, as well as to align all.of the good

21, orginizations outside the Department of Agriculture,

22 organizations like Extensions, Dairy Professional

23 Dairy A1l-iance. It is aligning all of the good

24 information that is out there

25 The other two components of that that we're 244

1 working on is, No. I, an information center that

2 woul-d be web-based information that cou.l-d be accessed

through the Department of Agricul-turaI's website.

.t The other would be a coaching or a title

q programthatwou].dhaveagroupof.peop1ewhowou]-d

6 go to farms that are j-nterested in having their farm

I for review or reviewed for profitability. That is in

I the process of putting the teams together right now.

Y We have actually sel-ected the f arms. We

1_0 wil-I be doing ten pilot programs in different parts

11 of Pennsylvania to review these farms and hopefully

L2 make them more profitable and hopefully keep them as

13 an important part of the economy that agriculture is.

14 REPRESENTATIVE STERN: Are you working wj-th

1-5 Penn State in conjunction with your initiative?

16 SECRETARY WOLFF: Yes, we are. Cooperative

T7 extension is a very important component o'f thatr ds

18 are the two other.

IY REPRESENTATfVE STERN: With the Governor's

20 economic development initiative, where do you see

21, that taking agriculture?

22 SECRETARY WOLFF: I think itrs nice to have

23 agriculture at the table and to have this z.+ administration in the legisl-ation and see how

?R important agricul-ture is to the Commonwealth and the 245

1 l_ economy of the Commonwealth.

2 Certainly, having hopefully $100 million

? dedicated strictly to agriculture and the economic

4 stlmulus package is something we think will- benefit

- the farmers very much.

6 I continually hear from farmers throughout

7 Pennsylvania one of their concerns is they can't get

B funding financing.

If this program offers financing as wel-I as

10 it offers financing at a more reasonable interest

1_1_ rate, I think that some of the changes that were ' 12 recently made, changes that would, in fact, d11ow l-J land to be amortized over 15 years instead of 10 l_ rl years, would help the farmers very much as well as t-5 the smal1 business program through t.he fund; and

16 expanding that from a half a million dollars up to $5 t7 million are things that are very beneficial and wil-I

18 help the farmers very much.

IY REPRESENTATIVE STERN: ThanK YoU,

20 Mr. Chairman.

21- CHAIRMAN ARGALL: Thank you, Mr. Secretary.

22 It was pointed out to rTrer I think, in this room by

23 one of our ruraf members that it doesn't make a lot

CA of sense to do farmland preservation if people arenrt

25 workj-ng to preserve f arms f irst as weI1. It sounds 246

1 to me as if your Department is working on both ends

2 of that spectrum. I wi sh you good l-uck with what is,

3 I understand, a very difficult task.

.r We have now completed day seven of our

5 budget hearings. We will begin aga j-n tomorrow

6 morning at 9:30 promptly. We will- hear from the

7 Attorney General, the Auditor General, the Treasurer,

B the Department of State, the Department of Health,

Y and the Pennsylvania Liquor Control Board. Thank you

10 once agar_n.

' 11 (The hearing concluded at 4226 p.m. ) t2

J-O

1,7

ZJ 247

1 he reby certify that the proceedings and I 2 evidence are cont ained fu1ly and accurately in the

notes taken by me on the within proceedings and that

ct this is aco rra^r transcript of t,he same.

1-1

I2 @nolNotaries 13

1A ILl

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