San Diego Audit Committee Meeting - December 2, 2020
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San Diego Audit Committee Meeting - December 2, 2020
The special audit committee meeting of Wednesday, December 2, 2020, was called to order by Chair Sherman. Members participated via Zoom due to COVID-19, with no public in attendance. The meeting addressed the city auditor's monthly activity report, two performance audits, and included farewells for outgoing Chair Sherman and committee member Valdivia. All votes were unanimous.
Consent Calendar
- Approval of minutes from the October 21, 2020 meeting. Motion by Vice Chair Moreno, second by Mr. Halpern, passed unanimously.
Public Comments & Testimony
- Martha Wells (non-agenda and on item 1): Expressed general criticism of the city's performance audits, stating they are insufficient without financial audits, and referenced past misconduct. Her comments were not specific to agenda items.
- Mike McMahon (Associated General Contractors): On item 2, stated agreement with the audit's findings regarding construction projects and offered industry cooperation to increase contractor participation. He submitted a detailed letter.
Discussion Items
City Auditor's Monthly Activity Report (Item 3)
- City Auditor Andy Hanell reported on three issued products (SLBE audit, human capital audit Part 2, memo on independent legal counsel). He noted progress on a pilot project for audit recommendation implementation plans and ongoing work to secure independent legal counsel via a ballot measure.
- Independent Legal Counsel Debate:
- Chair Sherman, Vice Chair Moreno, Mr. Halpern, Mr. Tabshuri, and Mr. Valdivia expressed support for the auditor's independence and concern over perceived retaliation when outside counsel's contract was terminated after reaching a different opinion.
- Deputy City Attorney Joan Dawson argued that a charter amendment is required for independent counsel, citing Charter Section 40, and that the city attorney's office is willing to provide second opinions through panel counsel. She denied retaliation, stating the scope was completed.
- Auditor Hanell countered that the structural conflict arises because the city attorney advises the same management being audited, and that the auditor should have discretion to seek outside counsel when necessary.
- No formal action was taken; the issue will continue toward a March 2022 ballot measure.
Performance Audit of City Strategic Human Capital Management Part 2 – Employee Performance (Item 1)
- Presented by Nathan Otto and Jeff Teal. Key findings:
- Employee Performance Reviews: An average of 1 in 5 classified employees did not receive annual reviews (FY16-FY20), correlating with higher quit rates (6% vs 4% overall). Recommendations for better tracking and reporting.
- Rewards and Recognition: 43% of employees received discretionary leave (average 2 days) and 20% received cash awards (average $100). Participation varied widely by department; no strong correlation with satisfaction or retention.
- Discipline: Discharge rates under 1% annually; probationary pass rates near 100% (except police/fire). Low use of supplemental performance reviews. Recommendations to expand training and data-driven oversight.
- Motion to accept and forward to city council by Vice Chair Moreno, second by Mr. Halpern, passed unanimously.
Performance Audit of Purchasing and Contracting Department Small Local Business Enterprise (SLBE) Program (Item 2)
- Presented by Chris Kime and Carissa Nash. Key findings:
- Stagnant Participation: SLBE participation rate around 26% for five years, with majority of funds going to a small number of Caucasian-owned firms. Minority- and women-owned SLBE shares declined.
- Caps Not Updated: Caps on subcontracting requirements (e.g., 22% on pipeline projects) were well below available SLBE capacity and unchanged since 2011.
- Lack of Oversight: Program lacks effective oversight and transparent reporting; goods and services contracts (2.2% SLBE) excluded from participation rate.
- 12 recommendations made, including better performance measures, repositioning oversight, and considering race/gender conscious preferences after disparity study (expected March 2021).
- Vice Chair Moreno expressed concern over low diversity and stagnant performance. Mr. Halpern raised structural barriers like access to capital. Interim procurement director Claudia Barca noted the city is exploring bonding assistance and awaiting the disparity study.
- Motion to accept and forward to council by Vice Chair Moreno, second by Mr. Halpern, passed unanimously.
Key Outcomes
- All three agenda items (minutes, human capital audit, SLBE audit) were accepted and forwarded to city council with unanimous votes.
- Committee members and staff thanked outgoing Chair Sherman and member Valdivia for their service. Chair Sherman highlighted the importance of the audit committee in improving government efficiency.
- The next meeting date will be set by the incoming committee chair.
Meeting Transcript
Hi, this is Jack Edwards, and I'm using an iPhone. Thank you. Okay, now we're live to open. All right. Perfect. Good morning, everybody. Per executive order 2990, which suspends certain requirements of the Brown Act. The members will be participating via Zoom. And no members of the public will be in attendance here at City Hall in the interest of public health and safety. In addition, this meeting is being televised and live streamed on the city's website, and the council committee liaison has made arrangements for the public to comment via telephone and electronically. We appreciate the public's cooperation, and I'll now call the special audit committee meeting of Wednesday, December 2nd, 2020 to order. We have our members on Zoom now in attendance. We have Vice Chair Councilmember Moreno. Committee members Tabshuri Veldivi, I think I saw Ricardo in there. Ricardo in here down. No, he's currently not in here yet. Mr. Halpern. Oh, he's not in. So we're we're missing uh Ricardo. Mr. Halpern is here, and Mr. Tapshori is here. And I think uh from the mayor's office, we have Matt Helm, our chief compliance officer. I see Lisa from the IBA. Dan Manley uh better be up there, audit committee consultant. And I think Andy Hanell, who has a much larger title than he did before, and is now our uh official city auditor is with us today as well. And congratulations again, Andy, on your uh on your appointment to be the city's second city auditor. Thank you. Anything you'd like to say? Sure, yeah, I think we can make a few comments. Um, first I mean, let me just thank you, Chair Sherman, uh, and the entire audit committee, you know, really for your support, not just of me, uh, but of our entire uh office. I've been in the office here for about 10 years. And I've really seen over that time how critical um the audit committee and city council's support is in maintaining uh a world class and independent city auditors office, and this committee has certainly uh done that and we all really uh appreciate it. I want to thank Chair Sherman especially for everything he's done to protect the independence uh uh of our office. And in addition, I I have to obviously recognize the first two independent city auditors the city had uh Eduardo Luna from the ground up award-winning uh audit shop and Kyle Elster, who's uh kept the office uh performing at a high level the last two years, and he's really done uh an amazing job. And just uh last I'd I want to recognize and thank our our really talented and dedicated staff that we have uh in the office. They're really the foundation of everything we do here, uh, and it's because of all their their passion and their hard work that this office is known nationwide for the results that we get uh to improve the efficiency effectiveness and accountability of city government. You're gonna see two great examples of that later this morning with the small local business uh enterprise program audit and uh our audit on employee uh performance. Um you know, so given that I I think this office is already doing doing great. My vision for the office really is continuity, uh, but also continuous improvement. I think we're still continuing to get better, and that's gonna be my my goal as the auditor. So thank you. Thank you. You've done a great job uh while you've been there, and I think it will continue as as the official auditor for the city of San Diego. So thanks again, buddy. Um that will take us. Let's see, we'll go on to public comment now, which is gonna be fully remote, still operate the same as public call-in. Once I do some in an item, we'll uh begin the call-in period. That number makes a public comment, is 619-541-6310.
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