San Diego Audit Committee Meeting - March 20, 2019

The San Diego Audit Committee met on March 20, 2019, to review progress reports on two Public Utilities Department (PUD) performance audits, receive the City Auditor's monthly activity report, and accept the annual report on internal financial controls. The committee heard public testimony and discussed recommendations, operational changes, and next steps.

Consent Calendar

• Approval of Minutes: The committee approved the minutes of the previous meeting (motion by Mr. Hebrik, second by Mr. Valdivia; all in favor).

Public Comments & Testimony

• Dwayne Harvey (former PUD employee) criticized the water meter cover replacement program as "smoke and mirrors," claiming that many changes were already in progress before the audit. He stated that the backlog was reduced from over 20,000 work orders to under 12,000 under previous leadership, but later rose to 37,000 due to diverted crews. He argued that crews lack proper equipment and that the reported numbers are not improving. He urged the committee to seek truthful information directly from field workers.
• Rodney Fowler (President, Local 127) expressed support for the department's efforts but raised concerns. He noted that the backlog of meter lid/box service calls is about 22,000, with 500–600 new requests monthly. He emphasized the need for worker input in setting productivity standards and for providing proper tools and equipment (e.g., vehicles past their lifespan). He also requested that the new reference guide be distributed with employee sign-off.

Discussion Items

1. City Auditor's Monthly Activity Report (Information Item)

• Presenter: Kyle Elser (Interim City Auditor), with Andy Henell (Principal Performance Auditor)
• Audits in report writing stage:
  • Park and Recreation Joint Use Agreements (management response due April 5, report due April 9)
  • Employee Compensation Pay Equity (management response due March 27, report due March 29)
• Six audits in fieldwork:
  • Transportation Stormwater Tree Trimming Process
  • IT Disaster Recovery Preparedness
  • Public Utilities AMI Implementation
  • Public Utilities Call Center Operations
  • Mission Bay Fund (FY18)
  • Neighborhood Services Homelessness Efforts
• Not yet started: One performance audit, one IT audit, one annual audit.
• Committee questions: Councilmember Campbell asked about the upcoming human capital audit (planning stage, targeting summer). The auditor noted that the audit will focus on employee incentives, discipline, and pay competitiveness.

2. Performance Audit – PUD Water Billing Operations (Progress Report)

• Presenters: Matt Vespie (Interim PUD Director), Ronnie Auman (Assistant Director), Jane Arnold (Program Manager), joined by Johnny Perkins (Deputy COO for Infrastructure & Public Works)
• Status: 10 audit recommendations broken into 25 deliverables; 20 (80%) completed pending auditor verification. Seven recommendations fully implemented. Remaining five deliverables (related to recommendations 2, 3, and 8) on target for June 2019 completion.
• Completed actions:
  • New SOPs for tracking high-bill complaints, meter reader performance metrics (pending meet & confer with unions), and supervisory review.
  • Route optimization analysis using RouteSmart software (revised to include six hours for meter reading and two hours for field investigations/admin).
  • Enhanced skip-code tracking and coordination between meter shop and customer support.
• Organizational restructuring: Announced on February 20, 2019, effective April 20, 2019. Key changes include elevating customer support under a new executive assistant director, merging meter reading with water construction/maintenance, and aligning business support functions.
• Committee discussion: Members praised the department's embrace of the audit. Councilmember Campbell asked about staffing adequacy (Matt Vespie confirmed adequate staffing but noted recruitment challenges). Questions about auditor verification process were addressed by Chine Pickney (Principal Performance Auditor), who stated verification involves reviewing documentation and ensuring consistent operational integration.

3. Performance Audit – PUD Water Meter Cover Replacement Program (Progress Report)

• Presenters: Matt Vespie, Tom Howard (Deputy Director, Water Construction & Maintenance), Juan Guerrero (Interim Assistant Director, Distribution & Collection)
• Status: 7 of 11 recommendations complete; on track for full implementation by April 2019.
• Completed highlights:
  • Work standards for field crews (memorialized October 2018).
  • Training on identifying and reporting box/lid issues (February 2019), with annual refreshers.
  • New routing technique ("lassoing") to group work orders geographically, avoiding cross-city travel.
• In progress: Recommendation #1 (productivity standards) – under negotiation with Local 127. Tom Howard noted that the department is analyzing average daily production (target ~12 boxes/lids per crew) but recognizes variability by location and conditions (e.g., concrete vs. softscape).
• Backlog: Approximately 22,000 outstanding service calls; 500–600 new requests monthly. Plans to use contractors to address backlog (scope being developed, possibly combined with smart meter installation).
• Committee questions: Councilmember Campbell asked about smart meter rollout and misbilling; Steve Gomez (Principal Auditor) confirmed that smart meters were not a source of widespread errors. Discussion on Get It Done app (125 monthly reports) and potential improvements to require photos. Councilmember Hebrik asked about equipment and vehicle condition; Tom Howard acknowledged old vehicles and tools and stated improvements are underway.

4. Annual Report on Internal Financial Controls

• Presenters: Scott Clark (Assistant Director, Department of Finance), Jaile Avang (Principal Accountant), Roma Nichols (Supervising Accountant)
• Framework: Based on COSO – control environment, risk assessment, control activities, information/communication, monitoring.
• Accomplishments:
  • Administrative Regulation 95.39 established management responsibilities for internal controls.
  • Successful implementation of GASB 75 (post-employment benefits) and new CAFR software; no audit findings or significant deficiencies for FY18.
  • Finance Academy launched (March 2018) for cross-departmental leaders; held twice annually.
  • Post-transaction monitoring of procurement card, travel, tuition reimbursements, and jury duty payments.
  • 592 of 827 identified financial processes documented (~70%).
• GFOA Certificate of Excellence: Received for past four years; FY18 had three suggestions (cosmetic improvements), down from five in FY17.
• Committee discussion: Councilmember Spencer asked about coordination with City Auditor; Scott Clark confirmed participation in entrance/exit conferences but no formal MOU. Post-monitoring findings are escalated internally based on severity (up to Chief Operating Officer). IBA member Lisa Byrne asked about GFOA suggestions, which were clarified as minor formatting and labeling changes.

Key Outcomes

• Minutes of last meeting approved (unanimous).
• City Auditor's monthly activity report received as information; no action required.
• Water billing operations progress report received; committee noted 80% completion and encouraged continued collaboration with unions and on-time June 2019 deadline.
• Water meter cover replacement progress report received; committee emphasized the need for fair productivity standards and proper equipment. The department committed to finalizing negotiations with Local 127 and to providing updated numbers at the April 24 meeting.
• Annual report on internal financial controls accepted by committee and forwarded to City Council (motion by Mr. Valdivia, second by Councilmember Campbell, all in favor).
• Next meeting: April 24, 2019, at 9:00 a.m. in the same room.

Note: The meeting was originally titled by the chair as "the March twentieth, twenty nineteen meeting of the art committee," but all subsequent references and content confirm this was a meeting of the Audit Committee.