Creative Solutions to the Growing Deficit

Alyssa Sittig's picture

I think it's time for our city government to get creative about solutions to closing this budget deficit. Smarter, not greater, taxes can really help us out. Closing loopholes in corporate tax evasions is another solution. Ending wasteful spending on obsolete and ineffective programs is necessary. I'd like to see this city get smarter about spending and collecting money. And I am grateful for Phil's work on finding millions of additional dollars in uncollected revenues for the city -- we need more of this type of hard work. 

Phil Ting's picture

How do we know if government is working?

How do we know government is effective?  We need better performance measures and more accountability.  The City tolerated a poorly run Assessor's office for years.  By working with the staff, we have brought in over $200 million above our budget through hard work, reform and additional staffing.  Because no one was paying attention, we had raise taxes rather than do a better job collecting the taxes people were ready to pay.  What other departments could be reformed to better serve our City?  How do we know if government is doing its job? 

DonRoss's picture

One of the most interesting

One of the most interesting things I have learned over the years is that the Department of Public Health and Health and Human Services account for 1/3 of the 6.5 billion dollar City budget, but yet, neither of these departments have been audited.  Isn't it time to take a good look at how tax payer money is spend across the board and see how efficiently these departments are being run.  I truly believe we could find greater efficiencies rather than simply talking about cutting more services citywide. Like the Assessor's office, I'm sure there are savings to be found.

Phil Ting's picture

Audits

That's amazing.  I have been audited every year I have been in office.  I have been audited by the State Board of Equalization, the Civil Grand Jury, the Controller's office, Department of Technology and again the State Board of Equalization.  Why aren't DPH and HHS being audited?  That seems a little ridiculous.

TheRealGCS's picture

Mandated audits?

It seems that regular audits would help keep some depts from going overboard, and can shine a light on some depts that really need more funds and attention. Is there any reason we can't require a yearly review for everybody?

Another question: How expensive are these audits, and would the savings be enough to justify the cost?

bobbyh's picture

DPH

If I remember correctly, the issue of why the Department of Public Health hasn't ever been audited came up last year and the answer to the question, which I believe was delivered by the Controller's Office (may have been the Budget Analyst though), was more concerning than the question: they said that the department was too big to be audited. That is such an unsatisfactory answer and is an example of how our government has run away from us.  Reminds me of the "too big to fail" argument-- since the situation is totally out of control, let's just keep supporting the status quo because we can't do anything about it.

It's not only unfair to taxpayers, but its a disservice to the patrons of our health system who could be getting so much more out of the system but do not because the department has no idea where it could be doing better.  Imagine all the resources that could be better allocated so that vulnerable populations don't have their services cut, so that people get better care, so we serve more people, the list goes on and on.  And while it seems that while the "progressive" Supervisors pride themselves on allocating/saving funding to DPH, they ignore the very progressive goal of efficiencies within the department that would accomplish all of their progressive goals.  When we talk about a couple thousand dollars here, a few hundred thousand dollars there, its all really peanuts when you think about the millions that could be saved in DPH's budget with a simple audit.  Every San Francisco elected official should stand up for this right now, every day that passes without it is a crime against the City and its residents.

Eric Jaye's picture

On Mandatory Audits

A few years ago Washington State passed a measure requiring performance audits of government agencies.

Here's a resource link:

http://www.mrsc.org/subjects/management/performanceaudits.aspx#Reference

And here's a link to a Governing Mag story:

http://www.governing.com/topics/mgmt/Performance-Auditing-Beyond-Gotcha....

Interesting to go deeper to see how the performance audits are working up there.

nblackburn's picture

it works!

 

I like this idea. It really promotes government transparency.

 

In Washington, a statewide audit authorized by the initiative Eric mentioned (Initiative 900) really did its job of holding local governments accountable. The auditor's office asked 10 counties, 10 cities and 10 state agencies for "records that seemed easy to retrieve, including agencies' sexual-harassment policy, names and compensation for their five highest-paid employees, and one month's cellphone records for their top nonelected official."

 

Seattle had the lowest score. I've not been able to find out how Seattle citizens responded to this, but maybe some other commenters can look deeper.

 

source: http://www.thefreelibrary.com/Audit+faults+Seattle's+response+to+requests%3B+Rates+lowest+among+30...-a0179223363

Eric Jaye's picture

Making audits work in SF

 

Before you can implement performance audits, you have to look at the political hurdles.

Right now, the Board of Supervisors can call for an audit through their Budget Analyst, who is an outside contractor. While those audits usually generate a headline, they are also frequently discounted as being biased in favor of the people who commissioned them. The contractor used by the board is highly respected, so most folks don’t agree they have a subtle bias toward Board of Supervisors that signs their paychecks. But the fact is, the Board is not likely to commission an audit that makes them look bad. In most cases, they are going to ask for audits that reveal problems with their opponents.

The Mayor can ask for an audit through the Controller. We have a recent history of extraordinary public servants in that job. But even here, the Controller is appointed by the Mayor (and confirmed by the Board), so there is also a fear of bias.  And – the Mayor is not going to ask for an audit that makes him (or her) look bad.

The Civil Grand Jury also conducts audits. These are either praised or demonized depending on what you think of their findings. If you don’t agree, you say that they are the result of lay people who don’t understand the complicated issue.

For performance audits to really be meaningful, I think they need to be conducted in a regular fashion for every department – so you don’t have even the possibility of politically motivated cherry picking. They need to be conducted by professionals who are insulated from political pressure. And they need to be conducted in a way that is more value-neutral, highlighting the options but not necessarily reaching conclusions. That should be left to the policy makers.

As much as audits (both performance and financial) are a great idea, I don’t think they are a panacea and they also need to fit into our city culture.

For example, the city laundry comes up every budget season. An audit is going to find it is much less expensive to outsource the work to a private vendor. But that doesn’t mean an audit should conclude it is a good idea. Just because something is cheaper – doesn’t mean it is better.  While some people (and I agree) say we should find lower cost services if we can guarantee the vendor pays a living wage and benefits and is supportive of worker protection through unions, there are many others who say that preserving high-wage jobs for city workers is a benefit in and of itself, along with other reasonable arguments that must be considered.

The professional and regular audits need to be about presenting facts and proposing options. They need to be tools for the political leaders, not a replacement for their judgment. But they certainly need to be done. 

TheRealGCS's picture

What auditor wouldn't have political baggage?

The audit isn't worth much if it isn't trusted by both the public and the electeds who need to use the information to make decisions. But like the issue with who determines voting district boundaries, is it even possible to get an auditor who isn't someway politically connected? I'm not sure it is possible, since the only ways to get an auditor would be for electeds to appoint one, or for voters to elect one.

Assuming political baggage is impossible to escape from, I'd rather have the electeds appoint one (such as the Board of Sups). They need to be able to trust the information, and if it becomes an elected office it will end up being a catapult to future office through grandstanding, not necessarily factual information gathering.

One more thought: the length of this appointed post should be limited. This is a case where it's good to have an outsider's point of view, rather than an entrenched politician. This might limit the amount of political backscratching, because the next year there would be a brand new auditor.

bobbyh's picture

Independently elected?

What if a City auditor was a newly created elected position?  That person would be directly accountable to the voters and would have an incentive, if they want to be re-elected, to do their job and sniff out inefficiencies. The office would have its own budget and staff, with a specific mandate to conduct audits in a systematic way, in addition to any "special" investigations as the City auditor deems necessary.   Anyone directly accountable to the Mayor or the Board of Supervisors will have a real and crippling bias, the position needs to be as independent as possible and I see no other way than to have that person accountable to no one else but the voters.

bdw's picture

performance measure that measure controllable results

Government that works provides services that the public demands with the resources provided.  Nothing should escape an audit because it is too big, however, the performance measures need to take into account what can actually be achieved through improved efficiency rather than just counting work that is expected to be done. Good performance measures for governance ought to look to effective program budgeting, whatever the department, and the tangible, quantifiable results.  Unfortunately, this rarely happens in San Francisco because, as a City and County, we have the resources to gloss over the difficult decisions and accept headline, individual outcomes, rather than systemic improvements.  

gcotter's picture

Please rename this discussion

Because the comments here are all related to Audits, can this topic be renamed "Does SF Need Audits of All Departments?" or something similar?  We still need a separate discussion thread on Creative Solutions too the Growing Deficit, but the comments in this thread are vocal enough and valid enough to Deserve their own title.

gcotter's picture

No excuses for not auditing city departments.

I recently retired after 37 years a a large western bank with over 230,000 employees.  We had audits of every department, not just departments dealing with customer accounts, but EVERY department was audited.  Because I was in the Technology area, our areas were audited for how we spent money on technology, contracted for services, sent out and evaluated RFPs, expensed hardware and software, secured networks, paid overtime, described employee job classifications, and the list goes on.  We even got audited on department Mission Statements: "Your Mission statement says that you  blah, blah, blah, so you better be doing that or you'll get an audit finding against you."  You could get a negative finding for spending too much per person on training but you could also get a negative finding if you didn't spend enough on training (which is very important in the technology area).  

No department is too big or too small to be audited.  It is possible that a department might not be audited every year but then there are other large departments that are always being audited and may even have more than one audit going on at a time - e.g., one auditing contracts and expenses while another audits personnel procedures.  And managers were on the line when the audit findings came in.  Every negative finding had to be answered and usually needed an action plan and date by when the item would be in compliance.  Too many negative audit findings and managers could find themselves in negative territory.

Banks are not only audited by their Internal Audit Department but also get audited by the National Bank Examiners.  Fortunately I retired from one of the banks that was well managed and came through the recent meltdown in good shape - probably because Audits were taken seriously.  There is NO reason that any city or county department should not be audited on an ongoing basis.  That is simply good management that every business of every size does.

Audits not only help senior management and stockholders (read SF residents) know how their money is spent, but they also uncover poor management practices, duplication of work, inconsistent application of company (city) policy, procedural inefficiencies, and much more.

buchsons's picture

Random audits are appropriate for all governmental departments

Audits provide value by helping to maintain our system of checks and balances.

DonRoss's picture

Independent Auditor

Bobbh, I like your idea of an independent auditor who would be accountable to voters and not accountable to the elected officials for whom he or she works. This way their job is not on the line depending on the appointed persons personal and political bias and but the only thing we'd have to worry about is an overzealous auditor who "needed" to find inefficiencies to get re-elected.

Also, the idea of mandatory performance audits for every department is another excellent channel to follow because, like Eric said, this way you don't have to worry about "cherry picking" and excluding departments that are too big to audit.

Phil Ting's picture

Controller is our Independent Auditor

We have an independent auditor - its our Controller who gets appointed to a ten year term of office, so he outlasts any Mayor who appoints him or her to office.  They are also in charge of auditing and performancing planning.  The problem is the audits and performance plans have limited purpose and may or may not be create next steps and follow through.  Once the measures are in and the audits are done, its on to something else.  This creates a lack of accountability throughout all of the City right now.  We could and should definitely improve on this.

Paid for by Phil Ting for Assembly 2012. FPPC ID# 1343137