In a move that is expected to save the embattled Philadelphia Housing Authority roughly $10 million a year — and slaughter a cash cow for some of the city’s powerful trade unions — the agency’s interim director is eliminating the PHA practice of hiring “provisional employees.”
“I recognize that it’s going to make a lot of people uncomfortable. I understand that,” said Kelvin Jeremiah, interim director of PHA. “But, I remain undeterred. For me to continue to do that would have been derelict, financial suicide.”
Jeremiah told The Tribune in an exclusive interview Wednesday morning that he planned to eliminate the longtime agency hiring practice of using provisional employees, intended to be temporary, who were then allowed to stay on for years, more than doubling PHA’s benefit costs.
Under current practice, employees hired to work at PHA, some for periods as short as three months, have stayed for more than 10 years.
“It’s unheard of,” said Jeremiah.
At the moment, the PHA has 335 provisional employees, but they will all be laid off effective Sept. 1. According to Jeremiah, 225 may then be rehired as permanent PHA employees, provided they meet PHA hiring standards — which includes a requirement that they reside in the city, a move that will allow the agency to cut its benefit costs by as much as 49 percent for that group.
As an example, Jeremiah pointed to the agreement with the carpenters’ union where between April 2011 and April 2012, its 21 “in-house” carpenters cost PHA $1.3 million in wages and an additional $547,000 in benefits — a 40 percent wage to benefit ratio. For 91 provisional carpenters, the agency paid out $6.1 million in wages and $5.4 million in benefits — a wage to benefit ratio of 89.2 percent. Those additional benefit costs were paid directly to the unions.
By converting those employees from provisional to in-house, PHA stands to save about $3 million annually.
In total, PHA has spent $28 million over the last year on provisional employees — $15 million in wages and $13 million in benefits. The total savings in converting them to in-house employees is expected to be around $10 million annually.
So far, Jeremiah said, the majority of the city’s trade unions have embraced the idea, with the exception of the carpenters’ union — the Metropolitan Regional Council of Carpenters
of Philadelphia & Vicinity.
“They want to see if [I] will go ahead and lay off 335 employees,” he said. “I would bet on … me.”
Carpenters union business manager Edward C. Coryell could not be reached for immediate comment on Wednesday.
“With the other unions, I was amazed,” said Jeremiah. “I was surprised by the willingness of the union leadership to cooperate. They understand the impact on the agency.
Jeremiah said he was uncertain exactly when the practice of allowing provisional employees to linger on the payroll started, but he estimated that it was at least 10 years ago, during the reign of former housing czar Carl Greene, who was fired two years ago amid a far ranging sex and financial scandal that is still playing out in court.
In the late 1990s, Greene apparently reached a deal with the city’s major trade unions that established the practice of using provisional employees to bolster PHA staff for short periods when extra help was needed.
“Greene had some arrangements with the various unions, to provide laborers … to come to PHA in an effort to augment PHA staff,” said Jeremiah. “The benefit was that we would have skilled laborers working at PHA.”
However, as with many other practices under Greene, the concept was soon perverted. It remained in place under Greene’s successor Michael Kelly, who left the agency in June under the cloud of his own scandal.
Jeremiah said the move was just a part of a larger reform agenda he would be implementing over the next few months.
“PHA has had a culture of splurge, of excess,” he said. “I’m going to [cut] across the agency until I’m confident that we’re not wasteful in the resources that we have.”