Oh yeah, all right, good afternoon.

Thank you for being here.

We're going to start our budget and finance committee.

Let the record reflect.

And on today's agenda, we have Bill 55 as well as a review of our financial reports.

We'll start with our review of Bill 55.

Bill 55 and ends part one administrative legislation, Chapter 75, pensions and retirement, Article Three, Police Pension Fund by adding a new section, pension service credit for prior police service with the another police department.

Thank you.

So I'd like to hand it off to Director Patel to kind of give us a little breakdown of of what exactly is entailed in Bill 55.

Sure.

Good evening.

This was in uh in introduced long time ago.

It got approved.

Um introduced by Senate, it was approved in um twenty twenty-four.

In twenty twenty-one, I'll walk you, I'll give you a little bit of history behind how we uh uh ended up with this.

Um back in twenty twenty-one when um the mayor then was Mayor O'Connell, he had signed an uh memorandum of understanding stating that if Senate Bill four sixty four comes to fruition, um, which allows uh police officers to purchase up to five years of service they have provided with other um uh taxing authorities within Pennsylvania.

So for example, if they have served uh Upper McConji Township um five years up to five years, they will be able to purchase that time.

That's what the MOU stated that that it allows so Mayor O'Connell signed that back in twenty twenty-one, that MOU stating that if this bill comes to fruition, City of Allentown will allow the officers that have provided service to other taxing authorities within Pennsylvania to purchase that time that they served.

So that bill was um that uh act it's known as Act 49, um, that got approved in July of Twenty Twenty-Four.

We were working, the uh finance team was working with the um um uh FOP leadership to bring this to fruition.

Anytime we make any changes to our pension plan, we have to do an actual study, an actual yield study was performed uh back in um November of twenty twenty-four.

It what it does, what what the idea behind that is what is the cost of the pension plan?

That's what the actual study is done for.

So it provides a cost factor to it, and then we had our our police administration um um run um a study to see how many officers if we when we do this, um how many officers are uh have served other municipalities in Pennsylvania, what is the cost factor to it?

What is the cost factor to it?

So all of that was performed.

We have provided that for your reference as an attachment to the bill.

So that was performed.

We were working with F again FOP leadership to bring this to fruition.

We could not come to an agreement on what did the MOU state it.

So we went into an arbitration in 2025.

So we took a year to come to an agreement that the MOU states this allows you to purchase a time up to five years.

So yeah, arbitration award came out in June 29 of 2026.

And so arbitrators stated that yes, the MOU signed by Mayor O'Connell states that officers can purchase up to five years of time for pension purposes.

So it extit does not extend beyond pension.

You can purchase up to five years of service for pension purposes, and that's all the MOU stated.

So that's the agreement.

Arbitrators stated how do we verify that purchase time.

So there are forms attached to the this bill stating what do we need, how do we verify that?

And how does the officer request that?

So all of that administrative part is attached.

Any changes we make to the pension plan, the council has to approve.

And so this is uh before you today.

And this has gone through arbitration again, it only awards them to purchase the time they have served, up to five years of service.

So when the uh police administration did this survey to find out how many officers we have that qualify for this, at that time there were active 13 officers who qualified for that.

So actual year study uh took that 13 um number 13.

So if we were to implement that, it would be over 11 years.

The cost of the pension plan will be 150,000.

That's 14,000 per year for 11 years, they always do the um uh uh amortization over 11 years.

Then there were uh others on uh active officers that would qualify, and there were 50, I believe 53, 52 officers that um could be eligible in the future years.

And if if they are eligible and they wish to purchase that time, the cost of the pension plan would be uh 510 um over 11 years or 46, uh 300 per year for 11 years.

So all of that is um um broken down for you in the uh bullet points.

And so what what does the city gain by this by doing this?

We if someone has um worked, if an officer has worked for another um municipality, we gain an officer with experience.

That's the idea behind that this is this was a thought behind this MOU that we will be receiving officers who have who have experience, and that helps our our police department that helps us get better quality officers.

That's the idea behind this.

So well thought out plan by Mayor O'Connell uh to gain to help our um you know recruitment uh problems that we are having and we continuously have.

Um so I would I am um requesting that you um vote yes for this.

But I'm open to any questions you might have.

Thank you, Director Patel.

Um just as an overview, I know we kind of met and discussed some of the financial implications of this.

Um you broke down some values, so 150 over roughly 150 over 11 years for the 13 officers who could potentially qualify at that time, roughly 500,000 for the other potential 52 over another 11 years.

Um I think it's also important to note that this is a program that officers are also paying into as well.

So it's not like the city is taking the full brunt and cost of this program, they would have to take all the money that they would have paid the city over those five years and pay it up front.

And the only way to qualify for that is if you do pay it up front as soon as you sign up for this program, correct?

Correct.

And there's an so when a um an officer or anyone um pays into a pension fund, then pension funds starts receiving return on on that money contributed, right?

It's called return on investment.

So that bill addresses that issue as well.

It says that the it if they had worked for us, they would have contributed this amount, and we are to calculate the return on investment, and it's stating that it should be 4.75%.

So that it's also not just a contribution, but the interest the plan would have received from that contribution.

So that's addressed as well.

Excellent point.

Thank you.

Absolutely.

And I just say so people at home, people on council also recognize that as much as it is a benefit, there is also a part of the program that officers do need to pay into.

So I think it's a it's a good program that allows folks to essentially reap the benefits of having served the time that they did and entices people who you know maybe serve some length of time at another city and would say, you know, I would kind of want to go to Allentown, but I just don't want to lose out on the years that I have vested somewhere else, and it gives us the opportunity to grow our force um for what I think is a more minimal cost compared to some other programs that we've seen.

Uh anything else from the diet?

Any thoughts, questions?

Couple questions couple questions.

Um this um studies from 2024, how um there's been changes.

Um have those changes like the like the number of officers and whatnot, has that been kind of examined to see how how accurate these numbers would be?

So we we still have these officers.

Okay and and they have to be vested with us before they can um take advantage of vesting period is 12 years.

So that has not really moved the 12th.

Okay.

Um now, since there's since the the rationale of uh the previous mayor to to write the MOU was that potentially this could help with recruiting uh officers with experience.

Um in the two-year period that we didn't have this, have we recruited officers with experience without this?

I think that's a question for um Chief Roka.

Okay.

Okay, yeah, because it would be interesting to see.

I don't know, maybe we don't need it.

Maybe we've already maybe that's what we've been doing is recruiting folks with experience because Allentown pays more.

Um you know, it's where you get to actually be a police officer and go out there and fight crime, and maybe that's all it takes.

So on the when when we publish the monthly report uh 15 days after the month is over, it does show that they have continuously have vacancy factors.

So I can speak from that end, so the vacancy factor is more than 10 vacancies for officers.

So he might still be having challenge of recruitment, right?

So this helps it adds to that, yes, there's there's this benefit, it will help them uh and help us also.

So we are gaining officers with experience, and this benefit is there with which they pay into the pension plan to get this benefit.

It's not a free benefit, right?

And we are also assessing interest at 4.75%.

Um so when from both sides um to experience officers, uh officers have to pay in to purchase the time.

Do we uh um does this already exist for firefighters or any other public safety folks?

No, there's no so this this stemmed from um just Senate Bill 464, right?

And there is there's no Senate bill for firefighters.

Yeah, okay.

Oh that I am aware of.

Yeah, but there's something new going on in the uh in the um uh state budget.

Uh I'm sorry, Jen might have a comment.

Oh, so um fire doesn't allow that, but there's um our municipal, so it um non um so SEIU employees and non-bargaining employees belong to uh Pennsylvania Municipal Retirement Systems, yeah, PMRS, and PMRS allows this.

Ah, okay.

That's good to know.

And have uh since 2024, um, have other cities taken advantage of this and how is it helped with their recruiting of talented police officers?

Um I think uh I don't have that history.

Uh, because uh um hiring officers is not it's it's that challenge is faced by other municipalities as well, and um others are exploring and how to implement this.

Um I think we are um we had a previous mayor who signed this MOU and and we began this process.

Um as soon as a bill um you know what came to fruition and and we are working on it, so we are one of the earliest or are or the first ones to bring this to fruition.

So I don't have that.

Oh, we have five other municipal municipalities who who have who are offering this.

But I do know there are others exploring this, but I don't know where they are in in that process.

Okay, so we might have competition in recruiting people.

I I don't know where they're if they are within this vicinity, yes, and I don't know.

I don't have um because it's not at the final stages, I don't know where they are at in their process.

Okay, that might be and maybe that might be a ROCA thing to find out what what other police is it working because you know if it's if other folks are doing it and it's not working and people aren't being recruited.

Well yeah, so it might be cheap for a quick question.

Yeah, I think that's all I got.

Yeah.

Thank you.

I um I'm 100% yes on this.

I wrote along with Officer Leonard a couple weeks ago, and this wasn't my first time I wrote along with the officers in 10 years.

I've ridden many times, and nothing has changed.

I saw firsthand what police presence does for our city.

I saw that um that um it was on Fourth Street, the mall there.

With police presence, we didn't have the um car meet.

Uh we didn't have problems.

We had presence at Woody's that Friday, there were no problems with motorcycles.

But in the same hand, we had a stabbing, we had this noise, we had that.

We just don't have enough officers.

If and and what's good about this pro any program that we can have that we can get more officers, no matter what it is, rookies, and we can't keep pulling from Allentown and Lehigh Valley.

We need them from Philadelphia, we need them from New York, we need them from all over.

And these are seasoned officers.

The bottom line for me voting, and I've thought about this a lot, I've talked to you, is we need, I know what police presence means.

And we're supposed to have at least I think it's 300 officers for the amount of people that we have.

We have like 212 or something like that.

They are completely strained, and I saw what a difference it makes.

So I'm completely for this.

Anything we can do to entice, especially seasoned officers to come into our city that isn't gonna cause their they're buying into it.

You gave us all the figures.

So everything seems right to me.

So I'm I'm gonna vote yes for this.

For the single reason is that we need more police officers.

Thank you.

Thank you, Councilperson Alpha.

And and again, just you know, taking it from the budget and finance perspective.

I think it's it's worth harping that this is a program that is you know voluntary.

We're not necessarily mandated to pay every eligible officer essentially that difference in the pension if they don't enroll and pay into the program.

So as much as the actual study says that, you know, of the 13 that were eligible at the time and the 150,000 cost, if nobody signs up to do it, then it there's nothing.

But in the same token, you know, if people do it, they there is a cost.

And I think it's worth noting that the cost that the city essentially incurs is not you know any additional thing that we wouldn't do for new officers.

It's not a new process, it's not a and correct me if I'm wrong here, but it's not a recurring cost.

It's essentially almost like on a case-by-case enrollment basis, you're just recouping the cost of the pension from the time that it would have been active to when they joined the force.

Absolutely correct.

So they are paying into it that cost have would have incurred.

And and to kind of I don't want to bog down on too many financial details, but it's essentially the legislation from the Senate bill caps the amount of interest that we can charge.

Our um pension fund performs very well, and I think I forget the numbers at 12% roughly.

It's between 12 to 15 percent in the last three years.

Um it's it's done uh an amazing, it's providing amazing returns.

Yeah, and so the bill caps interest at 4.75%.

So any difference between how much our pension has performed since like let's say their services from 2004 to 2009, then any any interest that was gained from that time is really the difference of the cost, and that's really what we're paying, as well as the cost of services, which I believe are also capped.

Um but again, it it's it's really just on the time that they're buying back in that difference, and it's again case by case per officer, once an officer enroll, unless there's like a new eligible officer, there's no added cost once they've bought into the program, and that kind of difference has been covered by the pension, right?

Roughly, maybe.

Okay.

Well, just terminology-wise, the the pension fund is receiving money when they buy that time.

So they started with us now, 12 years from now, they'd probably buy it immediately.

So 12 years from now, the pension fund would receive additional revenue, then it would have that revenue to keep um reinvesting over the you know the next eight years, 20 years from now, or whenever the person leaves employment, that's when the pension fund starts to see that cost.

So I think you said it's not a recurring cost.

There really is no cost to the pension fund until the person retires.

So the pension fund is gonna have an immediate uh return, and then eventually it's going to have a loss.

Um CeC's point earlier, there's no reason to do another cost study right now because there is no direct impact to the MMO.

This is not a plan change as per Act 205 as per actuaries.

This is not a plan change.

It's an increase to our benefit, it's amortized over 10 years.

There is no, you know, two years ago when we got this cost study, there was no this is your increased MMO in 2025.

If we did another another cost study right now, we wouldn't have a this is your increase to 2027.

So there's no increase to the MMO in the year after this benefit because it's a plan because it's not a plan change.

Um the MMO will just increase little by little over time as people take this benefit, and it won't increase until they leave.

So if they leave a few years earlier than what we expected, we thought they were gonna work here for 20 years.

Now they're only gonna work here for 17 years because they bought three.

That demographic loss, that's where the cost comes in.

So the cost will increase little by little over time as people leave up to five years earlier than originally intended.

Understood, and thank you for that clarification.

Go ahead.

The council person.

I um I like this bill better than the dropped because um they're gonna they're gonna um pay for the um, you know, they're gonna have we're gonna have the funds uh and they're gonna pay into it.

And at least we know how many, you know, somewhat how many people can qualify.

And it's it's not everyone, you know, and is giving the officers um a choice.

And that's what I like about this, you know.

Um we can um we're gonna be able to get um more officers and hopefully and more experienced.

So I do like Bill 55 better than the drug.

I'm sorry that I'm making the comparison.

Thank you.

Okay.

Anyone else from the day?

Council person binder?

Sorry.

Uh just one question, and this is slightly unrelated to this bill specifically, but um, since I know this this MOU was executed by a former mayor, do we have a an inventory of outstanding MOUs that were executed by previous mayors at all by chance?

I I don't want to have an answer for that.

I know.

Um this was and it was brought to our attention, we knew of it.

We um just didn't know when the Senate bin would be passed.

So I don't have an answer to your question.

Is there an are there other MOUs?

But you know what, though, I'm interested in finding out because this was you know, uh to a surprise for me.

I I I do not know.

Um did any of you guys know you know about this?

And if it's gonna help recruit officers for the last two years, we could have already been implementing it.

And we could have had so many new officers here if we would have known about it.

So there's uh there's a way that we can find out if there's others um MOU so that we don't be you know, surprise.

Just uh I'm I don't have an answer, but uh and see if we can find um any any other way to find them.

But to respond to Ms.

Gurla's uh question, we could have implemented two years ago.

We we could not because we had this Senate bill had to pass for us to implement.

So that's what the MOU that Mayor O'Connell signed.

He said if Senate bill passes, then we can offer this benefit.

But if Senate bill did not pass until 2024, we could not offer it.

Yeah, I'm guessing yeah.

So back in July 2024, if we would have known about this MOU, we could have gone, boom, let's hire new officers.

We did know about the MOU.

We were we wanted to offer it in 2024, but there wasn't that we were not coming to an agreement with the FOP and the city as to what the MOU states.

That's why it went into arbitration.

MOU states that they can purchase uh number of years of service.

Officers wanted the numbers of years of service plus the health care.

And MOU does not state that they receive it.

Health care.

That's why it went into arbitration.

So the arbitrator said the mayor O'Connell signed that you may purchase the service number of years of service, you may not receive the health care.

So there's a that is a reason it it went into arbitration and and to sort through and figure it out.

It took from uh from September 17, 2025, when we had that hearing with the arbitrator, for our trader to provide that decision or award.

It it took them that long to process, and they provided that award on June 29th of this year.

And we have to implement this within 90 days.

That's why it's in front of you.

We would have loved to um to implement that in 2024, but not outside of what the mayor signed.

The mayor signed that you may purchase a service from he did not sign that we will provide you health care.

And that's awesome that he did not, because we would have been in big pro big trouble.

So we we you are aware that the health care costs are rising and it's challenging for us to continuously provide.

We are self-insured, you're self-insured, we get few employees sick, and and on continuously last three years has been a challenge.

We have been coming to you, you approved a five million dollars transfer um a couple of years in a row.

And that was my point that we will provide you the service time.

We do not agree to provide you health care, and that's why it went into arbitration.

So I I want to make sure that you when you understand um counsel um that we only are awarding what Mayor O'Connell signed.

He signed that we'll provide you the service service, number of years of service time.

So okay, sorry.

So just kind of in closing to the because anyway I went off the tension there.

Um if it's something that could be prepared.

I know we have interns that go through and that kind of thing that we could maybe inventory past MOUs that were signed in preparation from laws.

I know that might be kind of ambiguous, but I think it would be helpful to as we have to make decisions, know at least what's out there.

Um I don't know if that's even possible because I don't know the structure, but it would it would be kind of helpful to not be surprised to that point.

I I don't believe this was a surprise.

Uh we knew of this MOU that that Mayor O'Connell had signed.

I I I cannot guarantee it, but I don't believe there are any other MOUs.

We would have implemented this, and Ms.

Garlag is absolutely correct back in 2024.

We did not, we did not want to agree on something uh that was not part of the MOU.

That's why it took this long to bring it to you, right?

Um there were other things in this MOU that came to fruition, you know, that the percentage increase and all of that, and you have the MOU as an attachment.

Um I don't believe Chen has a comment when you're done.

Um, but just to kind of ease your fears and assure counsel that the administration does keep good records and that these are public.

Uh the controller's office, well, I to back up an MOU and MOA is considered a contract.

The controller's office logs all contracts, they are available to you on SharePoint.

They're also available to the public on the controller's website.

So there is a full record of every MOU going back decades.

I've I personally use that as a resource many, many times.

Um to Bina's point, I don't know off the top of my head how many MOUs might have a clause in there that says if a state or federal bill passes, we will, you know, jump on the bandwagon.

But to Bina's point that it wasn't a surprise.

Hey, if this bill ever passes, this is back in summer of 2022.

If this bill ever passes, this is going to be something you're gonna have to do.

So when these things are put in there, it is definitely documented.

The people that need to know, police admin were well aware of this.

Um the minute the bill passed, we were told it was on the calendar for the day the governor signed it.

That's what started the process.

So just throwing it out there that MOUs are contracts, they're available to all city staff, they're also available to the public.

But I to your point, I think that would be great if an intern would one day start from today and go back and read every MOU with every bargaining contract to see if there's there's other stuff out there.

I'm sure a cabinet meeting would probably get that answer to you because as I said, if you had asked Chief Roca three years ago, he would have remembered that this existed.

So I do also think that these are very few and far between.

It is something that the state FOP had been pushing for many, many, many years.

Um, it just never made it to the finish line until 2024.

Okay, thank you.

All right, thank you.

If unless there's any comments from the dais.

Anyone else, any from anyone from the public?

All right, if not, can I get a motion to forward?

I would like to make a motion to move this forward in front of council.

I'll second.

Thank you.

All in favor say aye.

Aye.

All right, motion forwarded to the next council meeting.

Uh, next on our agenda, and we'll do it ever so quickly, and I apologize.

Uh, we do have the director's memo for the month of June.

Um so please, Director Patel, if you don't mind.

Um the memo does walk you through as like any other uh memos, um, just because in the uh keeping time in mind, um, I'll just state that I uh general fund um revenues are um in line with expectations, revenues are ahead of expenditures, so I I see no concern there.

So are the other funds, and they are I provided the all of the funds currently at the at you know, at the half year over or at the end of second quarter, um, are performing well.

So no concerns on that end.

Uh overall revenues are meeting our expectations and expenditures remain below budget at the at this point in the year, and um uh investments, um keeping track of them, making sure you're it's um you know the return on investments um uh the best that we could receive under our investment policy.

Uh so um PLIGIT is our uh prime investment um uh firm that we invest with and and receive uh returns between three three and a um uh um 3.72 uh and 4.27 EPY.

Uh TD Bank is is our bank for uh liquid assets where we pay our employees and our vendors from the our um return from those funds is three uh point zero uh APY.

Um as you know that we created um a housing fund and with the real reality transfer tax increase uh uh off a half a percent.

Um that fund has currently just over a million dollars.

Um just for a little bit of update on where we are with financials.

We are almost towards the end of completing the 2025 financials.

We should we plan to have that completed by the end of the month.

All right, awesome.

Okay, and I'm ready for any other questions you may have on our financials.

I have a couple that I'll just email you, but it's it's something that I'd like to look into for next year's budget.

But thank you so much.

Anybody on the dice on the report?

All right, anybody from the public?

All right, thank you so much for the report.

And with that, I'll go ahead and adjourn this meeting.

Thank you.

Thank you.