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Parking Authority manager got a perk: A contract and a pension

William Schmid stands out among the Philadelphia Parking Authority's 1,111 workers. He is the only one not on the employee payroll.

William Schmid, the deputy director of the PPA's Taxicab and Limousine Division, has a no-bid contract for his $98,000-a-year position.
William Schmid, the deputy director of the PPA's Taxicab and Limousine Division, has a no-bid contract for his $98,000-a-year position.Read morePhiladelphia Parking Authority

William Schmid stands out among the Philadelphia Parking Authority's 1,111 workers. He is the only one not on the employee payroll.

Rather, the former police lieutenant has a no-bid contract for his $98,000-a-year position as deputy director of the Taxicab and Limousine Division.

The creative distinction between "independent contractor" and regular employee enabled Schmid, in 2005, to retire at 51 from the Police Department, collect a lump-sum payment through the city perk known as DROP, and begin earning a new full-time salary at the PPA in addition to collecting his $47,592 city pension.

As an independent contractor, he circumvented the restriction on employees collecting a city pension while working at the authority. The PPA is state-run, but workers are covered by the same pension fund as city employees, including police officers.

"This is of my doing," Schmid, 62, said last week. "They suggested that I could be an independent contractor, and they agreed to do it."

Beyond his PPA contract and pension, Schmid collected a $158,612 DROP payment in 2005, according to city records.

City spokesman Mike Dunn said a city employee who collects a DROP payment and then is rehired by the city - or as a regular PPA employee - would typically stop receiving pension payments until they left the job again. But, Dunn said, a "retired employee can both receive a pension and have a contract."

Schmid's unusual employment status surfaced in two recent lawsuits that taxi companies filed against the PPA. In a June hearing in Commonwealth Court, Schmid told a plaintiff's lawyer that he works "more than 40 hours, 50, 60," but is paid as a 1099 contractor under the tax code, rather than receiving a standard worker's Form W-2.

"And if you were an employee, a W-2 employee of a state agency, you would not be able to collect your pension?" asked attorney Brett Berman.

"That is correct," Schmid said.

Vincent J. Fenerty Jr., who resigned last week as PPA's executive director amid a sexual harassment scandal, said in a federal court deposition last month that Schmid's contract was approved by Joseph Egan, the former PPA executive director, who died in 2009.

"I honestly . . . can't answer why it was done that way," Fenerty said of Schmid's hiring. "Mr. Egan did that. There are no other employees of the Parking Authority who are full-time consultants."

Schmid acknowledged in an interview that he accepted the offer to be hired as an independent contractor so he could immediately begin collecting his pension.

"I don't think there's anything not kosher," he said. "They wouldn't do anything that's not legal."

The arrangement benefited him in the short term by providing immediate pension payments. But, Schmid said, he would have made out better in the long term as a regular PPA employee because his future pension payments would have been larger.

"I never expected to stay 10 years," Schmid said, "but here I am."

Norman Stein, a Drexel University law professor and pension expert, said the contract is of concern regardless of who benefits.

"It breeds a kind of disrespect for the system. It suggests that the system could be played," Stein said. "I'm sure when they did this, it was to allow him to withdraw the pension, not save them money."

Schmid has contributed $3,660 to the Philadelphia Republican City Committee and the 31st Ward Republican Committee since 2007, campaign records show. Fenerty is the leader of the 31st Ward.

In 2004, PPA employees told the Daily News that their supervisors at the GOP-controlled agency had pressured them to contribute at least $275 a year for tickets to the Republican City Committee's fund-raising events. Some employees said Fenerty, then the PPA's deputy executive director, had coordinated the Republican fund-raising and other political works.

Schmid said his contributions to the Republican City Committee and Fenerty's ward were voluntary.

"There's no pressure on me," Schmid said. "Nobody ever said, 'Your job ends if you don't buy a ticket.' "

In court testimony, Fenerty said Schmid's contract, which the PPA's board approved and later renewed, was not put out to bid. He said he was unsure if a bid was required.

PPA spokesman Marty O'Rourke said last week that the contract was not bid because "employment agreements" do not require it.

"Since Mr. Schmid is unquestionably an employee of PPA for purposes of Pennsylvania law," O'Rourke said in a statement, "the Procurement Code simply does not apply to his agreement with PPA."


Staff writers Claudia Vargas and Dylan Purcell contributed to this article.