San Diego Audit Committee Meeting - February 7, 2025
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San Diego Audit Committee Meeting - February 7, 2025
The Audit Committee of the City of San Diego met on February 7, 2025, at 9:00 AM (televised and live-streamed) to review financial reports, audit recommendations, and operational performance. Members present: Vice Chair Whitburn, Committee Members Halpern, Mafia, Tapsuri, and Chair Moreno. City Auditor Andy Hanao and staff presented. All consent items and discussion items were approved with votes ranging from 3-0 to 5-0.
Consent Calendar
- Item 1: Approval of committee minutes from November 20, 2024.
- Item 2: Time extension for ad hoc subcommittee on Measure A implementation.
- Item 3: City Auditor's Quarterly Fraud Hotline Report, FY2025 Q2.
- Item 4: City Auditor's monthly activity report.
- All items approved unanimously (5-0) with no items pulled.
Public Comments & Testimony
- Non-Agenda Public Comment:
- Preeta and Cesar Javier (West Bank of Chollas Creek residents) raised concerns about ceramics toxicity from a home business operating since 1984 in a residential zone, citing CDC health bulletins. They called for an audit of code enforcement and criticized lack of response to their reports.
- Blair Beekman expressed support for the city's efforts on CEQA and ADU housing, noted the pottery business could relocate, and requested discussion on tech placement and removal in communities.
- Consent Agenda Comments:
- Cesar Javier spoke on all four items, urging no extension for the ad hoc committee, criticizing the fraud hotline website error, and calling for accountability from the mayor and council.
- Blair Beekman spoke on Items 3 and 4, inquiring about the status of the Get It Done app transition and urging auditors to focus on technology issues.
- Item 5 (ACFR): Cesar Javier questioned why $2.3 billion in water fund hasn't fixed identified problems, calling for leadership change.
- Item 6 (Subcommittee Report):
- Cesar Javier expressed fear of confidentiality and lack of accountability.
- Blair Beekman noted the closed session recommendation limits public access but acknowledged cybersecurity sensitivity, urging inclusive practices.
- Items 7 & 8 (Auditor's Report & Budget):
- Cesar Javier demanded investment in citizen well-being (clean water, air, food) and called for accountability.
- Blair Beekman emphasized love and open democracy, praised the city council's direction on ADU/CEQA, and noted the schizophrenic nature of budget cuts amid multiple initiatives.
- Item 9 (Fleet Audit):
- Cesar Javier questioned where savings from audits go and demanded accountability for corruption.
- Blair Beekman commented on battery safety and bicycle use, supporting the report.
- Item 10 (Committee Priorities):
- Cesar Javier urged leadership change, citing failure in real estate management.
- Blair Beekman promoted participatory democracy and love as principles to guide audit work and local governance.
Discussion Items
- Item 5: Fiscal Year 2024 Annual Comprehensive Financial Report (ACFR)
- Jeff Peel (Finance) and Kathy Vye (Crowe LLP) presented. The city received an unmodified (clean) audit opinion with no significant deficiencies or material weaknesses. External auditor Crowe replaced MGO after 20+ years; transition was smooth. Management's financial reporting and internal controls were praised. Committee members asked detailed questions about independence, accounting policies, and future GASB standards. No corrected/uncorrected misstatements.
- Item 6: Final Report from Ad Hoc Subcommittee on Confidential Audit Recommendations
- Committee Member Halpern presented. 22 of 39 recommendations were implemented. Due to high risk and long outstanding status, the subcommittee recommended the city council discuss critical outstanding recommendations in closed session. City Attorney noted closed session must comply with Brown Act. Auditor agreed.
- Items 7 & 8: City Auditor's Annual Activities and Accomplishments (CY2024) and Proposed FY2026 Budget
- Andy Hanao and Matt Helm presented. In 2024, OCA issued 16 reports, made 61 recommendations (98% agreement rate), and management implemented 48 recommendations. Key accomplishments: audits on contract management, police overtime, pothole repairs, boat storage (quadrupling fees). National recognition (10th Knighton Award). Staff: 24 FTEs all filled, zero vacancies. Fraud hotline: 275 cases.
- Proposed FY2026 budget: Despite a requested 20% reduction, OCA proposed a 7% cut ($407,000) to preserve core functions. OCA's budget as % of city budget is <0.10% versus peer average 0.15%. The 7% cut includes reductions in leased office space, salary budget extension, and non-essential expenses. A planned software upgrade became zero-cost.
- Item 9: Performance Audit of City's Fleet Maintenance
- Presented by Nathan Otto, Nikki Kalmus, and Alberto Murillo. Key findings: Only 20% of preventive maintenance (PM) was on time (39% with 10% grace period)—far below the 90% industry goal. Safety inspections (BIT) compliance was 35%. Citywide, PM cost $2.2 million; repairs cost $19.3 million. Average turnaround time was 3 days, but actual work time averaged 2 hours; delays due to wait for labor (77% of delays). Fleet grew by ~1,000 vehicles since FY2021 without proportional technician staffing. 10 recommendations made, all accepted by management. Management noted improvements in refuse packer fleet (99% on-time safety inspections in FY2025).
- Item 10: Audit Committee Member Priorities for Calendar Year 2025 (Informational)
- Committee members submitted written priorities. Chair Moreno highlighted: efficient recommendation follow-up, finalizing independent counsel procedures, city preparedness for school shootings (with multiple school districts), and emergency management readiness for fires and floods. No motion needed.
Key Outcomes
- Consent Calendar: Approved unanimously (5-0).
- Item 5: Motion to receive the FY2024 ACFR and forward to City Council passed 4-0 (Vice Chair Whitburn absent).
- Item 6: Motion to approve subcommittee recommendation (closed session with council) passed 4-0.
- Item 7: Motion to accept City Auditor's Annual Activities and Accomplishments report passed 4-0.
- Item 8: Motion to recommend the FY2026 proposed budget (7% reduction) to City Council passed 4-0.
- Item 9: Motion to accept the fleet maintenance audit report and forward to City Council passed 3-0 (Committee Member Halpern and Vice Chair Whitburn absent; Committee Member Mafia absent for vote).
- No motions on Item 10 (informational).
- Notable Statistics:
- City fleet: 4,900 vehicles, $437M replacement value.
- Preventive maintenance cost: $2.2M vs. repair cost: $19.3M.
- OCA: 16 reports, 61 recommendations, 98% agreement, zero vacancies.
- OCA budget as % of city budget: 0.10% (peers: 0.15%).
- Fleet PM compliance: 20% (39% with grace period); BIT inspections: 35%.
- Next Meeting: March 12, 2025, at 9:00 AM.
Meeting Transcript
Today's meeting. Thank you, Chair. While members of the public are able to attend the meetings in person, this meeting is being televised and live streamed on the city's website, and the council administration will continue to make arrangements for the public to comment using the Zoom webinar platform. Members of the public who wish to provide virtual testimony must enter the virtual queue by raising their hand before the virtual queue closes. The queue will close when the last virtual speaker finishes speaking or five minutes after in-person testimony ends, whichever occurs first. Additionally, during the consent portion of the agenda, speakers will have one minute per item up to a maximum of three minutes if there are three or more items in that portion of the agenda. This will allow for better meeting management between the two platforms and ensure the committee is able to manage and conduct city business. We appreciate the public's cooperation. Chair. Vice Chair Whitburn. Here. Committee member Halpern. Here. Committee member Mafia. Here. Committee member Tapseri. Here. And Chair, Councilmember Moreno. Present. Also attending the meeting today is our city auditor, Andy Hanao. Uh, Christiana Gagger, Chief Compliance Officer, Aaron Noel with the IBA's office. Kevin Smith is our committee liaison, and Natalie Kessler is our committee liaison. Uh, committee member Mafia, please provide your declaration. I'm notifying the audit committee that I will be attending the meeting today remotely due to just cause related to travel while on official business. Pursuant to the Brown Act. I'm disclosing that there are no individuals 18 years of age or older present in the room with me. I will update this disclosure if it changes during the course of the meeting. Natalie, please continue with public comment instructions. If you are in person, please complete a speaker slip located at the entrance of the committee room and place it on top of the box indicated at the speaker's lecture at the front of the room. Please do so in a timely manner to ensure proper meeting management. In-person testimony will conclude before virtual testimony begins. And members of the public can join the webinar by computer, tablet, or smartphone by accessing the link listed online in the preamble language of the agenda on the city's webpage. If you need to participate by telephone, please dial 16692545252. The webinar ID is 1600337422 pound. This information is also available on the agenda and will appear on the screen during the public comment period for each agenda item. And if you wish to speak on a particular item, wait for that item to be called and then raise your hand to speak by tapping the raise your hand icon, or if you are a call-in participant, press star nine on your phone. If you raise your hand during a non-comment period, your hand will be lowered. Chair. Thank you, Natalie. Uh corn is now present, and we're gonna take up non-agenda public comment. Uh the council members respect and appreciate the public's input and are fully committed to protecting every participant's free speech right at uh council and committee meeting. Natalie, please proceed with non-agenda public comment. And we have received two speaker slips from two individuals in the committee room. We will begin with those in the committee room. Preeta Javier and Cesar Javier, please approach the elector and you will each have two minutes. Say good morning. Good morning. The ceramics toxicity case has not been addressed since our formal reporting on June 13, 2021. Not even the item for information and all agenda of council and planning commission public meetings. The owner of ceramics home business since December 17, 1984, renewed his business tax license for the year 2025.
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