Audit: Mismanagement at Parking Authority cheated District out of nearly $80 million

PPA spent money on pay raises and comp time, while school budgets were slashed.

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

The state’s auditor general, Eugene DePasquale, said Thursday that mismanagement and corruption at the Philadelphia Parking Authority had cheated the School District out of nearly $78 million over the last five years.

The auditor general examined the employment and financial practices at the Parking Authority during the tenure of now-ousted executive director Vincent Fenerty.

DePasquale called the time period a “reign of terror,” when Fenerty sexually harassed multiple female employees while enriching himself and other executives.

DePasquale said he found evidence that Fenerty misled City Council when he testified in 2014 that the School District would receive an additional $7.5 million as the result of a parking-rate increase — money that never materialized.

“The whole reason why the state took [the Parking Authority] over in the first place was to help the kids in the city of Philadelphia,” DePasquale said. “My audit shows that the School District of Philadelphia potentially missed out, from mismanagement at the Parking Authority, on approximately $77.9 million over the past five years alone.”

That $77.9 million could have paid for 1,322 teachers, 779,600 textbooks, or 155,920 tablet computers, according to DePasquale’s estimate.

“This is when, I believe, there were furloughs for teachers at the School District,” DePasquale said.

Although Fenerty had said that the rate increase would provide more money for schools, DePasquale found that “the Parking Authority had no policies, methodologies, or written procedures to determine if any change in parking fees is necessary. Essentially, rate increases were at the whim of executive management.”

Harrisburg took over the Parking Authority in 2001, an effort led by Philadelphia Republican John Perzel, who was then House majority leader. He promised that the agency would send an estimated $45 million to the District each year.

Despite any talk about running the agency more efficiently, payroll ballooned. The number of employees drawing six-figure salaries rose from two to 20. And instead of $45 million annually, the schools collected a relative pittance — between $2.2 million and $14 million each year.

“With notoriously well-paid senior managers, it is outrageous that the former executive director manipulated the system to give them even more while the School District and students got less,” DePasquale said. He called the Parking Authority a “bastion for political patronage.”

The activist group Parents United organized parents to fight for funding increases from the Parking Authority to the School District and ultimately succeeded. Still, the District never got anything close to $45 million.

City Councilwoman Helen Gym, who was then with Parents United, led those organizing efforts.

“Back in 2007, I was proud to join parents and education advocates who led the campaign to force the PPA to finally put its profits toward the schools, and demand a full performance management audit of the agency,” Gym said in a statement. “In September 2016, I renewed the call for that performance audit, and I commend Auditor General DePasquale for being the first to fully embrace this effort.

“We’ve known, in theory, what the auditor general just quantified. Public school kids are being shortchanged. The Parking Authority is an operation that the auditor general said was an entity governed by waste, fraud and abuse, and the people who pay for it are our school kids.”

DePasquale said the $78 million that should have been sent to the District was traced to wasteful spending and uncollected fees.

“Remember that every expense charged to the On-Street Division reduces revenue to the School District and the city,” DePasquale said, referring to using up extra revenue through salary increases, comp time and other practices. “The School District gets penalized when expenses increase.

“I guarantee you this: If PPA staff didn’t get paid until all revenue was collected, they would find a way to get 100 percent of those funds. They should work just as hard for students in the District.”

“Unfortunately this report is not shocking,” said Uri Monson, the chief financial officer for the District, in a statement. “Now we know that during a time of budget cuts and tough choices, the PPA was choking off needed revenue that would have helped students and school communities. The question now is how will the PPA change its practices and begin to restore some of the millions in lost education funding.”

When Fenerty’s final sexual harassment scandal from 2015 finally came to light, the PPA board decided not to fire him, DePasquale said, even though members knew about previous accusations of sexual harassment from as early as 2006. Instead, they allowed him to resign.

That let Fenerty apply for a leave payout of more than $400,000, although he ultimately received $227,000 instead.

“The handling of sexual harassment complaints against the former executive director boggles the mind on so many levels,” DePasquale said. “First, there were four board members who served in 2006 and 2015. They all developed acute amnesia and forgot about the 2006 sexual harassment complaint and allowed this guy to keep his $223,000-per-year job even after he admitted to sexual harassment in 2015.”

The audit found that three women employed by the Parking Authority had filed complaints against three separate employees working at the agency between 2014 and 2016.

“At a time when millions of women are coming forward to say #MeToo,” Gym said, “the audit even more clearly reveals how the PPA’s leadership covered for a sexual predator, failed to protect its employees, refused to hold an abuser accountable, and went so far as to use taxpayer dollars to silence a survivor of Vince Fenerty’s workplace harassment and violence.

“Complicity in rampant sexual harassment and abuse is only the most grotesque indication of the total unaccountability of this agency … since the state takeover.”

DePasquale called for the Parking Authority to return to local control. The revenue that the agency sends to the city and the District is now determined by a formula that can be altered only through legislation, at a time when the Republican-dominated state legislature has not been generous with Philadelphia public schools.

“I believe it is time for the General Assembly to return control of the Parking Authority to the city of Philadelphia,” DePasquale said. “The state of Pennsylvania has clearly failed in its management of this, and the authority needs a complete overhaul. … It needs a complete restructuring of how it hires, how it fires, how it treats employees, how it does contracting, and how to make sure that it’s getting the appropriate revenue to the city of Philadelphia’s School District so that the city’s kids can have a better chance at a brighter future.”

Gym echoed his conclusion.

“First and foremost, the Parking Authority needs to come under local control,” she said. “Second, it needs to go into receivership immediately. It is clearly not capable of governing itself, and the state legislature — like they did with public schools — has shown an enormous amount of neglect and tolerance for abuse and waste, and frankly corruption.

“I hope this report makes abundantly clear that when teachers and principals were going without a contract, when school kids were left without teachers, when we were without art and music in the classroom — this is the price we pay when we let public agencies off the hook. It’s important to remember that it was Philadelphia public school parents who fought to get the Parking Authority to give the money to our schools, and the push to make this agency publicly accountable has to come with a public demand.”