Act 55 Hearing: The Non-Profits, and Thoughts

The P-G’s Rich Lord on the hearing: LINK

The Trib’s Jeremy Boren: LINK

UPMC chief financial officer Robert DeMichiei gave what seemed to be a perfunctory presentation. Like, let’s not ruffle too many feathers, and just get off the stage quickly.

We did find it interesting that he did not once shy away from using the word “profit.” The record $618 million profit was due to a change in accounting methodology, for example, that includes investments. That leaves only about $200 million in what they call “operating profit.”

Although everybody was quick to acquiesce the brilliant work of UPMC, Ferlo in particular noted the profit-making functions: royalties, intellectual property, drug development — and investments, he seemed to note darkly, “in South Africa.”

When DeMichiei said that is all declared to the IRS, Ferlo responded that that’s great for the Feds, but not so much for the city. When it comes to profit-making activity conducted on city property, “Maybe the City should go on a hunting expedition.”

They also have the capability of making hundreds of millions of dollars in profit, based on research that was funded by the National Institutes of Health, and other public institutions.

DeMichiei conceded that UPMC does work very hard to make a profit — in order to hire more people, make more capital investments, and maintain their physical plants.

Finally, a rep from the PA Association of Nonprofits opined that “change to Act 55 could make administration much more difficult”, since the major outfits contribute more to their overhead. It could force them to divert money from their interests.

He did not seem to be persuasive; he got lectures from the Senators on the need to maintain police and fire services.

Contrary to the impressions the Comet may have left yesterday, all four Senators seemed quite engaged and interested in actually changing Act 55. It was a good mix of Democrats and Republicans, which bodes well.

What we don’t know is, where were the other seven members of the Finance Committee? Will they be acting similarly at the other hearings, held elsewhere in the state? Or did they blow it off because amending Act 55 is really a pipe dream?

Nonetheless, the Comet is now somewhat more optimistic about reform than we would have anticipated.

The consensus among media-types was a feeling of nostalgia upon seeing former City Councilman Jim Ferlo back in action. Notwithstanding the intermittent fireworks of today by Bill Peduto and maybe Jimmy Motznik, back in the day city council meetings were a lot more like Dragonball Z.

Apparently there was something called the “great vulval pain debates” involving Jim Ferlo and Alan Hertzberg, which sounds better than Cats.

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