Saturday, July 25, 2009

Pennsylvania Legislature: Another Surcharge (Natural Gas)

It seems as though there are a ton of added charges, taxes, fees (and any other name you can think of for charging money) on your utility bills.

So first, a simple statement: PLEASE READ YOUR UTILITY BILL!

As is the case with any service provider, be they a credit card company or the local gardener, make sure you understand what you are being charged for.

There are nearly three million gas customers in PA, who are served by a variety of gas utilities. A 2005 study conducted by NEADA found that 47% of LIHEAP recipients had foregone medical care because of high energy bills and 24% resorted to the dangerous use of a stove or oven to heat their homes.

Our legislature (Joe Preston) once asked "how natural gas utilities recover cost if they cannot make a profit from commodity pricing." Natural Gas Industry Hearing, March 22, 2007.

However, utilities make money on pipes and equipment that they install. That is, they make a profit on distribution, not on what they distribute.

And, Joe Preston (D-Allegheny) and Tim Solobay (D-Washington) now have suggested that residential customers pay an additional monthly surcharge to replace natural gas utilities pipes and equipment.

Surcharges, say most consumer advocates, can lead to overcharges and excessive earnings by utilities.

The role of Joe Preston and Tim Solobay is to ensure all consumers have access to the lowest reasonably price gas.

The cost of gas line replacement projects should be included in the utility’s general rates, which would get more scrutiny from the PUC.

18 charged with stealing $500,000 in LIHEAP funds

The arrest 18 people in Philadelphia who were ripping off a public assistance program of more than half a million dollars emphasizes the need for legislation that would eliminate the potential for fraud and abuse in the Low Income Home Energy Assistance Program.

The Philadelphia’s District Attorney’s office, which is prosecuting the case, pointed to poor administration and a failure of supervision and oversight over the Low-Income Home Energy Assistance Program, which provides grants to help low-income residents meet their heating bills.

Grants were awarded to people who used invalid Social Security numbers and fake addresses – meaning that tax dollars were stolen by people who were not eligible for benefits.

The arrests of twelve Department of Public Welfare (DPW) employees on fraud charges was just the latest in a series of embarrassing revelations regarding lax oversight by the department leading to cases of fraud and wasted tax dollars.

Auditor General Jack Wagner has urged the Department of Public Welfare to immediately implement all of the recommendations he made two years ago to eliminate the potential for fraud and abuse in the Low Income Home Energy Assistance Program.

Wagner renewed his call one day after the Philadelphia district attorney, relying in part on information uncovered by the Department of the Auditor General, charged 18 people – including 16 state and city employees – with stealing more than $500,000 of LIHEAP funds and related crimes.

The Department of Public Welfare, which administers the LIHEAP program, has refused to provide Wagner’s auditors with documentation to prove that it had implemented the Department of the Auditor General’s recommendations.

LIHEAP is a vital safety net that helps keep thousands of Pennsylvania families warm during the winter.

With the nation mired in its greatest recession in a generation, LIHEAP is more valuable than ever. DPW must prove that it has taken necessary action to fix LIHEAP, to assure needy families that funds will be available this winter, and to assure taxpayers that their hard-earned dollars are not being wasted or stolen.

LIHEAP provides financial grants and cash assistance to low-income families to help pay their winter heating bills. The federal government and Pennsylvania provided $280 million in LIHEAP funding for the 2008-09 winter heating season.

Wagner’s special performance audit, released in June 2007, made 25 recommendations after auditors found systemic weaknesses in LIHEAP programs in six counties -- Allegheny, Lancaster, Perry, Lehigh, Philadelphia and York.

Auditors determined DPW’s inadequate policies and procedures, insufficient supervision and inadequate oversight resulted in potential applicant and employee fraud and abuse. More than 1,000 cases of potential fraud and abuse were identified in the six counties, including more than 300 in Philadelphia County, 23 of which were cited specifically in the audit.

Auditors found applications containing invalid Social Security numbers or Social Security numbers of deceased people, as well as applicants filing multiple applications using different Social Security numbers or different addresses and applicants receiving excessive benefits.

Wagner referred over 900 LIHEAP applications to the Office of Inspector General for criminal investigation; OIG referred some of these cases to the Philadelphia district attorney.

At a press conference announcing the results of her investigation, Abraham said that the way LIHEAP was administered “practically assured that both fraud and theft would flourish. There was a total failure of supervision and oversight.”

The Department of the Auditor General contacted DPW in July 2008 to conduct a follow-up of the LIHEAP audit. Wagner said his auditors requested a written, detailed summary explaining the status of DPW's efforts in implementing each of the recommendations. DPW sent a letter responding to the request, but has failed to provide specific information on how it has addressed each of the 25 recommendations.

Every dollar wasted is a dollar that will not be available to families who need assistance. There are serious deficiencies in the administration of LIHEAP and the Department of Public Welfare must provide evidence that they are addressing the problems as soon as possible.

The LIHEAP special performance audit is available to the public at

In addition, known as the Home Energy Assistance in Time of Need, or HEAT ON Act, Senate Bill 352 suggested needed changes to maximize the benefits for eligible low-income households and ensure that funding is allocated in a timely and expedited fashion.

SB 352 suggested additional oversight that Auditor General Wagner deemed to be needed under the current system and directs the Department of Public Welfare to take appropriate actions if it discovers any false, misleading or inaccurate statements by applicants, participating energy vendors or state employees.

The legislation suggested several accountability provisions to ensure that funding goes to those most in need. Specifically, the bill provided provision:

•Expand the LIHEAP program year from October 1 through April 30 of the following year. The current plan began on November 5, 2007 and closed on March 21, 2008 for both the cash and crisis components;

•Require the Department of Public Welfare to verify a LIHEAP applicant's income with the Department of Revenue;

•Require the Department of Public Welfare to ensure all households receiving assistance are provided "budget billing" by their energy suppliers;

•Prohibit the Department of Welfare from discriminating in any aspect of the administration of the LIHEAP program on the basis of the heating fuel used; and,

•Require an annual audit of the LIHEAP program.

Friday, July 24, 2009

Pa. Legislature Employees Still Getting Paid, But No Timesheets Kept . . .

The following was reported by WTAE Channel 4 on July 24, 2009.

Friday was payday for Pennsylvania's 80,000 employees -- but for the second straight week, workers only got a partial salary payment because of the state's ongoing budget impasse.

Thousands of employees in the state Legislature are still getting full paychecks because the state Legislature has built up a $200 million slush fund -- but Team 4 investigative reporter Jim Parsons has learned there's no record kept of the hours those employees work.

Pennsylvania's Legislature costs taxpayers more than $300 million a year. Most of that money pays the salaries of 3,000 legislature employees. A Team 4 investigation found that those workers fill out no time sheets for their paychecks.

"You have to have a way of documenting who is working, how much time and how you're paying it," Allegheny County Chief Executive Dan Onorato said.

Recently, Team 4 submitted a public records request to the state House of Representatives. Chief clerk Roger Nick sent a letter saying the House "does not possess time and attendance records that track an employee's daily record of attendance." Team 4 got the same answer from the clerk of the Senate.

That's not the way it works in Allegheny County. For example, Parsons got the time and attendance records for workers in the county's Department of Administrative Services. It includes the date and number of hours worked for each day of the week.

"It should be consistent across the board, no matter what department you're working in," Onorato said.

Team 4 found plenty of state workers in Pittsburgh from the executive branch who must file time sheets.

"There shouldn't be a disparity," a state employee told Parsons.

"I don't think it's a positive factor. I think everyone should be accountable," another state worker told Parsons.

Onorato -- an accountant and a potential 2010 candidate for governor -- said the state Legislature employees should have to account for their time worked.

"It is efficient, and taxpayers want efficiency right now," he said.

Team 4 requested an interview with Pennsylvania Auditor General Jack Wagner for this report. His office declined, saying Wagner has no authority to audit the Legislature.

Thursday, July 23, 2009

Pennsylvania Lawmakers, Relative Lobbyists Conflict Of Interest?

The following was reported by WTAE Channel 4 on July 23, 2009.

Pennsylvania has no rule barring state lawmakers from having immediate family members who are lobbyists and no rules that forbid them from talking business at home, but critics maintain that’s too cozy of a relationship when decisions are being made about how to spend tax dollars.

Team 4 investigative reporter Jim Parsons raised that question to three local legislators with lobbyist relatives and found all three voted in favor of more than $300 million in appropriations for their relatives’ lobby clients.

But the lawmakers argue no conflict of interest exists because they have their own personal set of ethics rules prohibiting their relatives from lobbying them.

The following report by Parsons first aired July 23, 2009, on WTAE Channel 4 Action News at 5 p.m.

State Rep. Randy Vulakovich, of Shaler, has a son who is a registered lobbyist in Harrisburg.

When asked by Parsons if it would be a delicate balancing act, Vulakovich replied, “No, it’s not. It’s just not a problem for me.”

The wife of Indiana County state Rep. Dave Reed is a lobbying in the state capital, and until recently, so was the wife of state Sen. John Pippy, of Moon Township.

“She wouldn’t lobby me and I wouldn’t talk about health care policies with her,” said Reed.

Pippy said “There’s no preferential treatment ever.”

Parsons reported that in October 2007, Pippy gave a $500,000 ceremonial check to officials at St. Clair Memorial Hospital.

At the time, his wife Katherine was listed as a registered lobbyist for the hospital.

Also in October 2007, Pippy secured a $250,000 grant for the Pittsburgh Zoo, another client of his wife’s lobbying firm.

In 2007 and 2008, Pippy voted in favor of a capital budget bill that included more than $300 million for some of his wife’s clients, such as UPMC, Norfolk Southern Railroad, the National Aviary, Point Park University and the Port Authority of Allegheny County.

Pippy's wife quit her lobbying job recently to take on another career.

Pippy told Parsons he never discussed business with his wife.

The following is a transcript of an interview Parsons conducted with Pippy prior to his wife’s resignation.

PIPPY: You don't want to have any appearance of that at all. You just don't want to have to deal with it.

PARSONS: Well, you don't want to have an appearance, but can you understand why some people might think there's an appearance here?

PIPPY: Well that's why it's so important to say that there is no lobbying going on.

Pippy said he and his wife previously agreed that she would not lobby him or anyone else in the state senate, but other lobbyists with his wife's firm -- representing the same clients -- could.

PARSONS: Let me ask you this, have you ever been lobbied by Randy Vulakovich's son?

PIPPY: Yeah, Randy comes in.

Lobbyist Randy Vulakovich is listed as representing the same clients as Kathy Pippy, including Saint Vincent College.

Last year, the state legislature approved a capital budget bill that included $15 million for a new science pavilion at the college.

Lobbyist Vulakovich is the son of the state representative of the same name, who voted in favor the appropriations bill.

PARSONS: Saint Vincent College got $15.6 million dollars in that bill. Why did a private Catholic university get $15 million?

VULAKOVICH: Well, they lobby for that. I know that my son lobbies for them.

Vulakovich said he doesn’t allow his son to lobby him and said he wasn’t in favor of the money for Saint Vincent, but still voted for the bill because it funded dozens of projects he did support.

“That's why when you see these things, you make your decision on if there is more good than bad, and if you weed out what you thought was all bad and leave in what was all good, it's not going to be the same good/bad for somebody else, and that's part of the compromise that you make,” said Vulakovich.

Representative Reed’s wife Heather also represents Indiana Regional Medical Center.

“We have generally had the policy that we don't talk about political issues. We have had the policy from the very beginning that I would not submit any projects on behalf of Indiana Regional Medical Center because of the possible conflict of interest between my wife and myself,” said Reed.

Heather Reed's lobbyist disclosure statement lists an affiliation with a lobbying firm from Virginia. Alan Mauk Associates lobbies for the medical center in Washington, while Reed, who is an employee of the hospital, lobbies for it in Harrisburg and Washington.

Alan Mauk also lobbies for Indiana County Development Corporation, which last year got a $750,000 state grant to buy this 30-acre property along Route 119.

PARSONS: Did you have something to do with obtaining that grant?

REED: Yes.

Reed said that it is not a conflict of interest because even though his wife works with Mauk Associates on behalf of her employer, she's not paid by that firm.

“Yeah, she had no financial gain in any way from Alan Mauk and Associates,” said Reed.

University of Pittsburgh law professor Tom Ross, an expert on ethics, believes the state has a problem.

“There's a serious conflict of interest there. I know that my spouse makes her living by trying to influence legislation that benefits her private clients? And I happen to be one of those legislators?” said Ross.

But Ross doesn’t expect lawmakers to change the lobbying rules on their own.

“Until we have sort of a larger sense of outrage about this, politicians themselves don't seem very interested in taking the initiative on their own,” said Ross.

Public outrage about the legislature pay raised issue in 2005 did bring about better public record keeping by lobbyists, but the legislature stopped short of passing new rules prohibiting a family connection between lawmakers and lobbyists.

Parsons reported that all three lobbyists he spoke with said they would support such a ban.