Parking Authority faulted in long-awaited audit

A draft of a pending Philadelphia Parking Authority audit contends that the agency is top heavy with managers and "ineffective in controlling costs," and concludes that it could generate more money for the city's general fund and the School District of Philadelphia through reforms.

The long-awaited 37-page report offers only a limited examination of the state run agency. It is not a performance audit, nor is it the "desk audit" Gov. Rendell called for in 2007 following news accounts that documented overspending and rapid payroll growth at the Parking Authority.

How and why the audit's scope was scaled down is a matter of dispute between Rendell's office and City Controller Alan Butkovitz, who supervised the audit, which was executed by a local consulting and accounting firm for $122,000.

Limited as it is, the review nonetheless faults the agency for a number of shortcomings, including its lack of long-term fiscal planning and its failure to "consistently prepare business plans" as it adopts new responsibilities.

The Parking Authority is also criticized for its handling of contracts and airport parking privileges.

"Management could not produce a comprehensive list of contracts," the report reads, and it contends that the agency broke up larger contracts into smaller pieces to get around competitive bidding requirements, which is a violation of state law.

The report says the agency is also foregoing $1 million a year in airport parking revenue, by granting all-access "red badge" parking privileges to 82 unidentified employees.

"The audit finds that there's an opportunity for tighter management and increased profitability leading to higher remittances to the city," said Butkovitz.

Although the audit has not been not been officially released, the Inquirer yesterday obtained a copy of a near final draft report.

The Parking Authority strongly disputed the report's findings, and an agency spokeswoman said yesterday that they were formally contesting many of the audit's conclusions.

For instance, the red badges for airport parking privileges are used exclusively by authority workers on official agency business, such as work trucks and maintenance employees who go in and out of lots to access a maintenance facility, said PPA spokeswoman Linda Miller. The badges do not deprive the agency of a dime of revenue, she said.

Miller also contended that the authority in fact does keep comprehensive records of contracts. As for the manager-to-worker ratio, Miller noted that the report does not take into account recent reductions in the supervisory ranks.
"Standard audit procedures provide for a review process to ensure that it does not contain factual errors or incomplete information," Miller said in a prepared statement.

Butkovitz, however, said the audit's conclusions were unlikely to change significantly before it is formally released.

Although the audit identifies a number of significant problems, it is by no means a wholesale indictment of the authority's operations. For instance, the audit concludes that the salaries of agency executives — including Executive Director Vince Fenerty, whose $183,000 salary easily tops that of both Mayor Nutter and Gov. Rendell — are "within a competitive range."

The draft report frequently mentions the difficulty of comparing the Philadelphia Parking Authority — which enforces parking laws, runs off-street garages, regulates taxis among other duties — with those in other cities, which generally have much smaller operations than the PPA.

It was in part the salaries of authority bosses that prompted Rendell to call for a "desk audit" in October, 2007.

"I mean auditors come in and they say, 'All right, Mr. Jones. You get paid $120,000. Show us what you do. What did you do last week? The week before?' And let's find out if there is deadwood," Rendell said at the time to the Daily News.

The draft audit falls dramatically short of that, however, a fact acknowledged by the firm that did the work, Milligan & Company LLC. Indeed, in its draft report the firm stresses that its examination of the parking authority was so limited that its report cannot even be considered a true audit.

"Our procedures did not constitute an audit, review or compilation of the information provided and, accordingly, we do not express an opinion or provide any other form of assurance on the completeness or accuracy of the information," the draft reads.

Al Schmidt, the Republican nominee for City Controller who will face off against Butkovitz this November, said the report fell far short of what was needed.

"Taxpayers were promised an audit. Given the size and scope of the PPA, taxpayers deserved an audit. And according to the contractors who did the work, it isn't even a 'review,'" said Schmidt, who worked on performance audits as a senior analyst for the U.S. Government Accountability Office.

"The City Controller put blinders on the reviewers before the audit even began … When you only report what you are told - with no ability to audit - how much can you possibly find?"

Butkovitz acknowledged that the review was neither a desk audit nor a performance audit, instead saying it served as "a preliminary identification of issues."

But the controller and his office said repeatedly that they limited the scope of the review at the request of Gov. Rendell's staff.

"I wouldn't characterize it as a negotiation. What we were looking for was definition on what to do, and the definition we got was this," Butkovitz said.

Butkovitz aide Harvey Rice, the first deputy city controller, said "we did exactly what the governor asked for."

Rice said that, after initial talks, the governor's office "lost interest" in the audit and ignored emails and letters that laid in detail exactly what the controller would investigate.

And that characterization was, in turn, disputed by Rendell's office.

"We all would have preferred a broad based audit. The controller's office asked us to pay for it, which we didn't have the means to do, so we suggested they target the audit in a way they could afford," said Ken Snyder, a senior advisor to Rendell.

"We certainly did not suggest they do the audit in any particular way except for that it be credible and accurate."

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