Limited audit finds parking agency needs reform

A draft of a pending audit of the Philadelphia Parking Authority 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 schools.

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

"Management could not produce a comprehensive list of contracts," the report reads, contending that the agency broke large contracts into smaller pieces to avoid competitive bidding requirements, a violation of state law.

The report says the agency is also forgoing $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," Butkovitz said.

The audit has not been officially released, but The Inquirer yesterday obtained a copy of a near-final draft.

The Parking Authority strongly disputed the findings, and an agency spokeswoman said yesterday that it was formally contesting many of the conclusions.

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

Miller also said the authority 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 statement.

Butkovitz said the conclusions were unlikely to be changed significantly before the audit is formally released.

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

The draft frequently mentions the difficulty of comparing the Philadelphia authority - which enforces parking laws, runs off-street garages, regulates taxis, and has other duties - with those in other cities, which generally have much smaller operations.

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 dead wood," Rendell said at the time to the Philadelphia Daily News.

The draft audit falls dramatically short of that, a fact acknowledged by the firm that did the work, Milligan & Co. L.L.C. Indeed, in the draft, the firm stresses that its examination 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 Butkovitz in 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, 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 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 e-mails and letters that laid out exactly what the controller would investigate.

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 adviser to Rendell.

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