Scandal at the City … Utilities department needs an overhaul

By Craig Powell

Last month came the blockbuster news that in 2013, two employees of the city’s Department of Utilities were caught engaging in sexual activities in the backseat of a city vehicle in a city park on city time. Both were married, but not to each other. City managers gave the couple what was effectively a slap on the wrist: temporary cut in pay, loss of some vacation time and a “no fraternization” order.

But when a whistleblower complaint was filed almost two years later with the city auditor’s office, the full story started tumbling out. The two employees lied during the investigation of the original complaint, claiming that that had done no more than “kiss twice.” It turns out that they were actually spending up to three hours of their workdays in a city trailer having sex. City emails and interviews confirmed that they also bought, sold and used cocaine and alcohol while in the trailer. They admitted that it was “possible” that at least one of the employees drove city vehicles while under the influence of alcohol and cocaine. They also sometimes put in for overtime on days when they partied for hours in the trailer.

They were dumb enough to exchange sexually explicit emails and pornographic pictures and videos with one another using city email accounts. One of them even had a practice of sending pornographic emails to other DOU employees, including high-level DOU employees, none of whom apparently objected.

Out of respect for their families’ privacy, I’ve chosen not to disclose their names. But since both held senior positions with major responsibilities before they resigned, it’s entirely fair to ask: Did their extended “extracurricular activities,” which apparently went undetected by oblivious senior DOU management for at least two years, compromise public health and safety? One of the them was a project manager in charge of managing city contracts with the contractors that have been installing water meters and tearing up our streets to move backyard water service to the streets in front of people’s homes, the source of much consternation, waste and dangerous construction practices in recent years.

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City of Sacramento non-existent whistle-blower hotline largely window dressing.

Inside City Hall  Published on Wednesday, 30 Oct | Print | Email

Whistle-blower Hotline   What’s that number again?

By Craig Powell

On Oct. 11, just as absentee voters were beginning to cast their ballots on Measure U, the proposal to increase the city sales tax, city officials issued a breathless press release announcing the “launch” of a whistle-blower hotline that city employees could use to report waste, fraud and abuse in city government. The Sacramento Bee dutifully ran a story the next day reporting that the city has “launched a whistle-blower program” that “will include a 24-hour hotline for city employees.” Even Channel 13 news covered the “launch.”

But there was a rather glaring omission in the city’s press release and the resulting media coverage: No one actually reported the hotline’s phone number. Why? Because there is no whistle-blower hotline and, according to city auditor Jorge Oseguera in statements to Eye on Sacramento’s Erik Smitt, there likely won’t be one until early next year.

Why are city officials touting the launch of a whistle-blower hotline before it actually exists? To divert the public’s attention from criticism the city council has been drawing for its multiple failures to fund such a hotline since it was first proposed by Oseguera back in February. That’s when Oseguera reported to the city council that a robust hotline program could save the city as much as 5 percent of the city budget—potentially $30 million per year in savings—based on his survey of the savings realized by other cities that have robust hotline programs.

Oseguera told the council that he needed $220,000 in investigative resources to do essential follow-up on calls to the hotline without hamstringing his current staff of busy auditors. Did the council fund the $220,000 for the hotline program when it came before the council in March? Nope. Councilmembers kicked the can down the road, saying that they would consider funding the hotline as part of the council’s budget deliberations in May and June. But the city manager failed to include funding for the hotline in his proposed city budget in May, and the city council failed to fund it in the city budget they approved in June.

On Aug. 15, Oseguera reported to Smitt, Eye on Sacramento’s assistant policy director, that no funding had been authorized for a hotline, even though The Bee reported that city manager John Shirey claimed he was moving forward with the hotline back in June. If he was, he sure didn’t share any of his funding plans with Oseguera any time before Aug. 15.

After growing criticism at public forums and in the pages of this publication of the council’s repeated failures to fund the hotline proposal, Shirey decided to investigate city waste and fraud on a shoestring, asking Oseguera to line up a third-party vendor to operate what is essentially a voicemail line for the hotline at an annual cost of $15,000, but providing zero additional resources to Oseguera to investigate calls to the hotline.

Shirey’s approach to the whistle-blower hotline is akin to a police department announcing the establishment of a 911 number for police emergencies, then not hiring any actual police officers to respond to frantic calls from the public for help.

In the past year, the city council spent close to $1 million on arena consultants on an arena deal that went nowhere, more than $200,000 to hold an election on a charter review commission that no one asked for and about $750,000 on five police union leaders who perform no actual police work while collecting sizable city paychecks. But the council balked at the idea of spending $220,000 to eliminate as much as $30 million in wasteful, fraudulent and abusive city spending, ignoring its own auditor’s recommendation.

Just how bad of a business decision did the city council make in refusing to fund a serious whistle-blower hotline? Let’s assume that the auditor’s projected $30 million in potential annual savings is overstated by a factor of three and that actual savings from a robust hotline would amount to only 1.5 percent of current city spending, or $10 million annually. Savings of that amount would produce a stratospheric 4,545 percent annual return on a city expenditure of just $220,000, making it perhaps the best investment in city history.

If the council had funded a robust hotline in February, when Oseguera first proposed it, and the city had the hotline and associated investigative resources in place and operational by April 1, the city would have already saved $7 million through Nov. 1 of this year (based, mind you, on a more conservative $10 million annual savings projection), roughly equal in amount to next year’s projected deficit in the city’s general fund.

City officials’ announcement of the still-nonexistent hotline was largely window dressing, designed to provide political cover for a council bent on imposing $28 million in higher sales taxes on Sacramento residents and businesses while recklessly blowing off the best idea yet for eliminating up to $30 million annually in wasteful, fraudulent and abusive city spending. City officials’ failure to take timely and responsible action on the hotline proposal is a pretty stark and compelling example of their continuing lack of seriousness in reducing waste, fraud and abuse in city spending.

Voters may want to consider city officials’ clear lack of concern with how our city taxes are spent as they decide whether they want to increase the city’s sales tax rate from 7.75 percent to 8.25 percent, making it the highest sales tax rate in the region.

Summary of Eye on Sacramento’s Transparency and Budgetary Reforms

June 12, 2012

Transparency Reform Proposals

EOS Reform #1Post the city’s organizational chart on-line.  The chart should list every city job position and the name and contact information of every city employee other than lower level employees whose jobs involve no interaction with the public.  Without such information, the public frequently has no clue whom to contact in the city hierarchy when they have a problem.

EOS Reform #2:  Post the city’s check book and other payments on-line in Excel format so that the public can see for themselves how every city dollar (general fund and enterprise funds) is being spent.  City activists and enterprising local media will pour over these records and seek out explanations for payments that strike them as potentially inappropriate.  When city check writers know that every check they write and payment they authorize will be scrutinized by the public, they will be on their best behavior.

EOS Reform #3:  Post all credit card charges and itemized travel expenditures of city council members and city staff on-line, which will ensure that public eye balls are on this most commonly misused and abused form of spending by city officials.

EOS Reform #4: Post the expenditures that city council members make out of their individual $55,000 annual discretionary accounts on the council member’s city web page.  These funds are designed to give council members some flexibility in funding local needs without going through the formal city budget process.  There is a public perception that such accounts are being misused by some council members as slush funds to advance members’ political interests.  By posting such expenditures on a council member’s web page for all to see, the funds will be less likely to be spent in self-aggrandizing ways (i.e. golf tournaments, electronic toys).

EOS Reform #5: Post all campaign contributions to a council member on that council member’s city web page so that the public can see at a glance who has invested money in each of our elected officials.  Currently such information is only available through a portal on the city clerk’s web site which is difficult to find and cumbersome to navigate.

EOS Reform #6: Create a Twitter feed for real time public comments on the action at live city council meetings and place the feed on the city council’s web page along side streaming video of council meetings, making such comments part of the public record of council meetings.  A live Twitter feed for council meetings would allow members of the public to share comments, interact with one another and raise public engagement in the policy-making process to a new level.

EOS Reform #7:  Seek city council approval for placement on the November 2012 ballot of an initiative creating an independent city redistricting commission.   This is a proposal being jointly developed by Eye on Sacramento and Empower Sacramento, a coalition of ethnic groups and leaders organized in the aftermath of the council’s redistricting decision.  Removing council members’ power to draw their own council district lines and shifting that power to an independent redistricting commission will protect the public interest from being subordinated to the narrow and often self-serving political interests of incumbent politicians.

EOS Reform #8:  Adopt an ordinance that prohibits the approval of any major contract and any labor contract until at least 14 days after its terms have been fully disclosed to the public via media release and prominently posted on the city’s web site, coupled with city staff’s good faith projections of both the short-term and long-term total costs to the city of such contract, as well as specific disclosures of the assumptions that underlie staff’s cost projections.  These disclosures will give the media and the public the time and opportunity to scrutinize and comment on the fairness of labor contracts to the city and its taxpayers.  With labor costs now constituting close to 80% of the city’s general fund budget, public scrutiny of proposed pacts is vital to democratic governance in the city.

EOS Reform #9: Require city employees who testify at city council hearings to be sworn.  Regular and close council observers have witnessed occasions, albeit rare, in which city staff making statements or presentations to council have been less than fully candid in their remarks, sometimes spinning or shading the facts or professing ignorance of embarrassing or uncomfortable matters, typically to avoid upsetting one or more council members.  To assure that the council and the public have the benefit of candid, independent and impartial information and advice from staff, city staff statements to council should be sworn under penalty of perjury to be the whole and complete truth.

Budgetary Reform Proposal

EOS Reform #10:  Adopt an ordinance that prohibits the city from entering into multi-year labor agreements.  In recent years, the city council has been unable to effectively manage its labor costs due to the existence of multi-year labor agreements.  A city bound by multi-year labor agreements can only close deficits by threatening unions with lay-offs to secure needed labor cost concessions.  The practice has led to the decimation of city services in department after department.  Barring multi-year labor pacts will preserve the council’s vital fiscal flexibility to reduce labor costs through negotiation and, if need be, mediation and arbitration.  The city should end the practice of savaging city service levels as a response to union intransigence.  A less preferable, but acceptable alternative, would be to limit the term of labor pacts to not more than two years.

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INITIATIVES/PROPOSALS OF EYE ON SACRAMENTO

May 2012

Major Transparency Reforms

After examining transparency policies in other California communities and assessing Sacramento’s needs, Eye on Sacramento has compiled a list of ten proposals to make city government significantly more transparent to its citizens. Two of the ten proposals, however, stand out in terms of their importance to the city and the need for prompt City Council adoption:

1. Sunshine Rule on Major City Contracts. We propose that the City Council amend its Council Rules to require the full disclosure of all proposed major contracts at least 14 days before the Council takes action on such contracts. Major contracts would include all contracts with a value of over $5 million, including all labor pacts.

In addition, the Sunshine Rule would require that city staff publicly, concurrently release a complete analysis of the financial impact of every proposed major contract on city finances, as well as a disclosure of all material staff assumptions underlying its projections.

2. Ballot Initiative Creating an Independent Redistricting Proposal. We propose that the City Council refer to the November 2012 ballot an initiative to create an independent redistricting commission to draw future council district lines. Working in collaboration with other community groups, Eye on Sacramento is preparing a proposed charter amendment initiative that would create a redistricting commission whose members would be chosen by judges on the Sacramento Superior Court, a model based on the successful experience of the City of San Diego over the past 12 years. Extensive public hearings and outreach by the redistricting commission would also be mandated.

Major Budgetary Reforms

Given the complexity of the city budget and resource limitations, Eye on Sacramento has elected to focus its policy efforts on three initiatives for the balance of 2012:

3. Council Rule Prohibiting Multi-Year Labor Agreements (or “Fiscal Out”). In recent years, the City Council has been unable to manage its labor costs due to the existence of multi-year labor agreements. When faced with a budget deficit, the city can only threaten bargaining unions with lay-offs to obtain needed labor cost concessions. This practice has led to the decimation of city services in department after department. By limiting labor pacts to no more than one year, the City Council will preserve the necessary fiscal flexibility to reduce labor costs through negotiation and, if need be, mediation and would no long be compelled to savage city service levels in reaction to union intransigence. Alternatively, all labor pacts should include a “Fiscal Out” granting the city the right to terminate all labor pacts if the Council declares, in its sole and absolute discretion, a fiscal emergency.

4. Launch Task Force to Save City Pools. In next year’s budget, virtually all city pools will face closure absent major budgetary reforms. Eye on Sacramento is launching a six-month project to examine the operations and costs of city pools. It will be appointing a task force comprised of community leaders, pool industry representatives and experts, private swim club executives and parks and recreation department managers to comprehensively study ways to reduce the costs of operating city pools, to explore alternative ways of managing and maintaining city pools and to identify additional resources to support city pool operations.

5. Community Study to Restore City Parks. City parks have borne the brunt of city budget cutbacks and staff layoffs. Many city parks are dependent on volunteers for basic maintenance. The current “triage” approach to city parks is not sustainable and long-term solutions must be identified. Eye on Sacramento, in conjunction with park volunteer groups, community leaders and city staff, will launch a “community study” of alternative solutions, assessing tax options, outsourcing options and the launch of park conservancies.

General Fund Budget Analysis; “Open” Labor Pacts

In addition to pursuing the above policy initiatives, Eye on Sacramento, in discharging its “watchdog” mission, will be offering critiques of various aspects of the city manager’s proposed 2012/2013 general fund budget during budget hearings The central theme of our critiques will be to identify and advocate for long-term, multi-year budget reforms that will help arrest the city’s structural deficit and provide opportunities for the restoration of badly frayed core city services.

The city has two labor pacts expiring this year, including its pact with the city’s largest union, Local 39. The city should use these expiring pacts as opportunities to permanently realign its labor costs to conform to budgetary realities. We applaud the Library Authority for its recent action in submitting a “last, best” contract offer to Local 39 to realign labor costs in the face of union opposition. Cost-saving opportunities in labor pact re-negotiations include:

(a) controlling future pension costs by creating a lower tier of pension benefits for new hires;

(b) eliminating pension spiking by shifting “pensionable pay” from the final year of employment to the final three years of employment; and

(c) requiring employees to contribute to reserves to cover the currently unfunded cost of retiree health care costs (now over $380 million).

EOS 2012 Policy Agenda pdf