PHILADELPHIA FIRE DEPARTMENT

HEADQUARTERS

GENERAL MEMORANDUM #09-35 March 19, 2009

TO : All Officers and Members

REF/AUTHORITY : Fire Commissioner

SUBJECT : MAYOR NUTTER’S BUDGET INFORMATION FOR THE

CITY WORKFORCE AND SPECIFIC INFORMATION
REGARDING THE PHILADELPHIA FIRE DEPARTMENT

Our nation is in the midst of a global financial crisis. These economic conditions are affecting the City of
Philadelphia. This has caused us to make hard budget decisions that affect Philadelphia citizens and our
workforce. In arriving at these difficult decisions, the City solicited input from the public and our
workforce. The input we received from our employees was thoughtful and specific and truly helped us
shape our proposed budget. You can review those suggestions on the City’s website:
http://www.phila.gov/budgetUpdate/reformAgenda/PDFs/EngagementSurveyEmployeePDF.pdf

In closing the projected $1.4 billion dollar deficit shortfall over the FY10-FY14 Five Year Plan, and in
managing the operations of the City, we have looked for efficiencies first—before we cut services or
raised revenue. We have found ways to provide services smarter, faster and better, but they are not
enough to close the deficit. The City has proposed closing the remaining gap through changes in
pensions, health care and work rules, departmental budget cuts, and temporary tax increases. The
employee-related changes are projected to generate over $315 million in savings over the five year plan.
Those changes are described below.

WAGES:
o The Mayor and city managers took salary cuts and furlough days during the November 2008
rebalancing. These reductions continue through fiscal year 2010.
o The $180 million reserve for improvements in wage and benefits has been deleted. On top of
that, the City needs to find an additional $125 million in savings from wages, benefits or work
rule changes in this Five Year Financial Plan.

PENSION:
o The pension fund is significantly underfunded.
o The City will introduce a new, less expensive pension plan for all new employees. This plan
will also apply to certain existing non-vested exempt employees hired after January 8, 2008.
o We are asking the unions to agree that existing employees will pay more of the cost to keep
their existing pension benefits.
o We have asked City Council to reinstate a 76% minimum funding level of the pension fund
before pension adjustment fund payments can be made.
o We have also asked City Council to eliminate the 4.5% guaranteed rate of return for Deferred
Retirement Option Plan (DROP) and instead, the rate of return will depend on what the
pension fund earns for the previous year, with a maximum return of half the fund’s assumed
earnings rate.
o These measures are necessary to save money today and in the long-term to provide employees
with retirement security.
LAYOFFS:
o Some layoffs will be unavoidable.
o The number of layoffs will ultimately depend on the degree to which we achieve our other
savings and revenue enhancements, through state and city legislation, the City Council budget
process and labor negotiations.

The budget submitted to City Council depends on a number of things. Changes in state and local law will
be required for some of the proposed revenue enhancements and other efficiencies. Some proposed
changes to wages, benefits and pensions will require negotiation with elected union officials. If any of
these proposals are not approved, more spending and service reductions will be necessary. We will work
with you and with municipal union leaders to find the best solutions to these difficult issues.

The Mayor’s budget being introduced to City Council today contains the following reductions for the
Philadelphia Fire Department:

¾ Reduce staffing at the Fire Training Academy by 1 Lieutenant position.

¾ Reduce staffing in the Safety Office by 1 Lieutenant position.
¾ Reduce staffing in EMS Administration by 1 Fire Service Paramedic Lieutenant position.
¾ Reduce staffing in the Technical Support Unit by 1 Lieutenant position.
¾ Reduce staffing in the Fire Marshal’s Office by 1 Lieutenant position.
¾ Reduce staffing in the Fire Code Unit by 1 Lieutenant position
¾ Reduce staffing in the Employee Relations Unit by 1 Firefighter position
¾ Reduce staffing in the Fire Prevention Unit by 1 Captain and 1 Lieutenant position
¾ Change the Battalion Chief Aides working hours to day work only positions.
¾ Renegotiate/rebid medical transport billing contract to obtain cost savings.

Should economic conditions worsen, or if sections of the Philadelphia Fiscal Year 2010 budget plan are
not adopted, further budget reductions may be necessary. Examples of further reductions, as mentioned in
the contingency plan, are the possible deactivation of three (3) engine companies, two (2) ladder
companies and three (3) medic units.

These budget initiatives are being enacted with the Mayor’s future plans for our City in mind. The details
are as follows:
PHILADELPHIA PLAN

MISSION

To improve the lives of people in Philadelphia: people who live, work, learn, invent and play here.

VALUES

Respect, Service, Integrity Smarter, Faster, Better

GOALS

1. Economic Recovery and Jobs

Philadelphia grows as a green city.
* Create and retain jobs: more than 14,000 construction jobs, including 300 Green
Jobs, and 4,000 permanent jobs.
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 * Prepare the Delaware Waterfront and the Philadelphia International Airport to
be the centers of the next wave of economic development
* Make Philadelphia a leading center of innovation in educational, medical,
research institutions and sustainable technology.
* Increase high school graduation rates by 50% in 5-7 years
* Double the number of residents with a 4 year Bachelor's degree in 5-10 years
* Add 75,000 people to Philadelphia's population in 5-10 years

2. Enhancing Public Safety

Philadelphia becomes the safest large city in the country.
* Increase the feeling of safety at home, in school, in the neighborhood, at work
and at play
* Reduce homicide rate by 50% in 5 years

3. Investing in Youth and Protecting the Most Vulnerable

Philadelphia's youth and vulnerable populations have the opportunity to thrive.
* Assure that all children are ready to learn by the time of school entry
* Improve life expectancy and the health and safety of children and adults
* Provide housing opportunities for 25,000 households, including Foreclosure
Prevention
* Provide housing and supportive services for all homeless people in Philadelphia

4. Reforming Government
Reforming city government to work better and cost less.
* Meet customer service standards for all city services, including redress for the
customer when standards are not met
* Improve citizen evaluation of services and the trustworthiness of government
* Build a sound fiscal foundation for stable public services now and in the future
* Promote sustainable city services that save money today while avoiding costs
tomorrow

A PowerPoint demonstration (read-only) has been posted on the “P” drive. The file is titled “Mayor’s
Budget Address March 2009” and is located below the sub-directories. This demonstration will provide a
more thorough look at the budgetary process being presented today.

LLOYD AYERS
FIRE COMMISSIONER
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