PICA History
The Pennsylvania Intergovernmental Cooperation Authority, or PICA, is the financial oversight board for the City of Philadelphia. It was created through the 1991 legislation, "Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class," or the PICA Act. PICA was created to provided financial assistance to the City of Philadelphia during a severe financial crisis. At that time, Philadelphia faced a growing operating deficit, mounting overdue bills, and credit ratings which were dropping below investment grade. The City had instituted a municipal hiring freeze and the quality of municipal services was eroding as a result.
PICA was founded to "foster the fiscal integrity of cities of the first class...and provide for proper financial planning procedures and budgeting practices."
PICA Bonds
At its inception, PICA had the power to issue bonds to benefit the City of Philadelphia, an important early role. These bonds were intended to provide funds so the City could avoid insolvency and continue with essential capital investments. Where as the power to issue bonds for these original purposes has expired, PICA remains authorized to issue refunding bonds, the proceeds of which can be granted or loaned to the City. PICA has made available $1.138 billion in direct assistance to the City through debt issuance and capital program earnings. This funding was allocated to deficit elimination and indemnities, capital projects, and retirement of certain high-interest debt. Currently, PICA's bond issuance powers are limited to refinancing existing PICA debt
Board Composition
The PICA Act established the PICA Board as a governing board of five voting members, and two ex-officio non-voting members. Elected State officials (Governor, President Pro Tempore of the Senate, Minority Leader of the Senate, Speaker of the House of the Representatives, Minority Leader of the House of the Representatives) appoint the voting members of the Board, while the ex-officio members are Philadelphia's Director of Finance and the Budget Secretary of the Commonwealth of Pennsylvania. The current voting Board members are Kevin Vaughan, Chair Alan C. Kessler, Esquire, Vice Chair Michael A. Karp, Secretary/Treasurer James F. Cawley, Assistant Secretary/Treasurer Tina Byles Williams
Oversight Authority
PICA was designed to assist the City of Philadelphia with short-term financing, while overseeing a long-term financial planning process in order to restore the confidence of residents, public officials, and investors in the ability of the City to maintain financial stability. The PICA Act charged the City to exercise efficient and accountable fiscal practices, such as managerial accountability, consolidation and/or elimination of inefficient programs, re-certification of tax-exempt properties, privatization of services, increased collection of City taxes, sale of City assets, improvement of procurement and competitive bidding practices, and review of compensation and benefits for City employees. The legislative intent of the Act was to assure that Philadelphia is prepared to manage not only the financial pressures the City was experiencing at the time of PICA's establishment, but to avoid such situations in the future while safeguarding for their consequences.
Thus, the PICA act provided PICA with certain financial and oversight functions over the City. In this capacity, PICA has the ability to exercise certain advisory and review powers with respect to the City's finances, in addition to its primary function of reviewing and approving annual five-year plans prepared by the City and monitoring the City's compliance with those plans. Should the City fail to adhere to the requirements of the PICA Act and/or become out of compliance with its five-year financial plan, PICA may instruct the Commonwealth of Pennsylvania's Budget Secretary to withhold substantial State financial assistance, as well as the proceeds of the PICA tax (a portion of the City's wage, earnings, and net profits tax that is returned to the City after PICA debt service has been deducted).
PICA Agreement
PICA and the City of Philadelphia entered into an agreement based on the PICA Act, known as the Intergovernmental Cooperation Agreement. It provides PICA with broad access to the City's financial data. The underlying principle of the agreement and the Act was to provide PICA with a wide purview over City financial data so it can conduct independent audits, examinations, or studies of the City's finances in order to facilitate Philadelphia's fiscal integrity.