School District says PPA budget based on nonexistent rate increase

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The Philadelphia School District isn’t typically in the business of turning down money.

Except when it thinks that money isn’t real.

That is what happened this year with funding promised to the district by the Philadelphia Parking Authority. Uri Monson, the district’s chief financial officer, has budgeted for $3.6 million in parking revenue, about a third of what the authority says it will send, because Monson said the authority told him it can only hit its own projection if City Council agrees to hike parking rates or fees.

At a time when the authority’s books are under the probing eye of the state auditor general, that seems unlikely.

“The document they gave us showed … a rate increase from City Council in the fall,” Monson said. “We budget based on fact. There’s no expectation they’re getting a rate increase.”

Parking Authority officials deny they used optimistic accounting to paint a rosier-than-reality outlook.

Spokesman Martin O’Rourke said a $9 million “revenue-increases” line item on the authority’s financial statement is not a rate increase. He said the authority plans to meet its $10 million pledge to the district with improved collections, efficiency, and staff deployment along with reduced expenses.

Officials at the authority declined, through O’Rourke, to explain how the agency would improve in those areas or to be interviewed on the topic.

“We have not planned for a rate increase at this time,” O’Rourke said in an email.

A City Hall source familiar with the Parking Authority’s finances confirmed Monson’s take, saying the authority’s projection is “contingent on a package of fee/fine/rate increases.”

Whether the authority once planned to ask Council for a rate increase this fall, still does, or never did, the discrepancy is telling, given the authority’s reputation as less than transparent.

The authority has long been accused of letting administrative excess come at the expense of the city’s schools, which receive a portion of on-street parking revenue after the city and the PPA take cuts.

Thirty employees at the agency make six-figure salaries, and until reforms taken earlier this year, some officials were allowed to accrue massive amounts of comp and sick time that could result in six-figure payouts at retirement. Former executive director Vincent J. Fenerty Jr., who resigned last year amid a sexual harassment scandal, made $223,000 (more than Mayor Kenney) and now draws a $158,600 pension, the highest in the city’s retirement system.

Interim executive director Clarena Tolson (who makes the same salary Fenerty once did) has promised transparency and undertaken reforms, including curtailing benefits for senior employees.

Even so, according to the School District’s understanding, the authority will be unable to send the city’s schools the same amount it did last year without charging its customers more. Because the authority says there is no shortfall, there is confusion on what factors, if any, could be leading to a decrease in revenue.

If the authority isn’t looking for a rate increase now, it was a few months ago. Parking Authority officials briefly shopped the idea around during budget season this spring but got nowhere with members of Council, according to several Council staff members familiar with the discussions.

Council has little appetite for approving a rate increase, given what happened last time it did.

In 2014, Council signed off on a 50-cent-per-hour parking-rate increase meant to reap $7.5 million in new revenue for the School District. The money never materialized. The district received $13.2 million in 2013, $9.7 million in 2014, and no more than $11 million in each of the three years since, according to numbers provided by the Parking Authority.

At a Council hearing last year, authority officials said the district did not receive the additional money expected because of factors outside of their control, such as rising pension costs and lost parking revenue from snowstorms and the papal visit.

The state auditor general’s investigation of the authority, started shortly after Fenerty resigned last year, is also hanging over any discussion of a possible rate increase. A spokeswoman for the auditor general said the report should be released this fall.

Council President Darrell L. Clarke’s spokeswoman, Jane Roh, when asked about the likelihood of a rate increase being supported, declined to speculate, since a proposal hasn’t been put on the table.

“We’re all looking forward to the auditor general’s report,” she said.

Councilwoman Helen Gym, a long-time critic of the authority, called the confusion indicative of the way the Parking Authority operates.

“This is an agency that refuses any level of oversight,” she said. “And there isn’t a single agency that could get away with that, except for the Parking Authority.”

Monson said the drop in revenue he has planned for would not be backbreaking. But he said the district is anticipating a $105 million deficit by the end of fiscal year 2019 and that if the authority only provides $3.6 million annually going forward, rather than the $10 million to $11 million the district has come to anticipate, it would contribute to about 10 percent of that shortfall.

Monson said that when the district told him its $10 million projection was contingent on a rate increase, he asked for details and was told, “Their expenses are increasing over time.”

“They’re not required to give us a justification,” he said.

Monson has said the authority does not give him enough detail to fully understand its revenue projections. After voicing the concern at a Council hearing last year, he was invited to start attending the financial meetings regularly held with staff from the authority and the mayor’s office.

“They’re useful in some ways,” he said of the meetings. “It’s an opportunity for us to ask questions. We don’t always get detailed answers, but at least we’re able to ask the questions.”

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