Auditing Personnel Processes Sharon Erickson, San José City Auditor Michael Houston, Senior Performance Auditor, San José Jazmin LeBlanc, Senior Performance Auditor, San José Gitanjali Mandrekar, Senior Performance Auditor, San José Association of Local Government Auditors May 5, 2014
Background
Personnel Audits “Matter” Employee Medical Benefits Pensionable Earnings and Time Reporting Pension Sustainability Police Department Staffing Disability Retirement Key Drivers of Employee Compensation Supplemental Military Pay and Benefits Police Department Secondary Employment Impacts of Staffing Reductions
Common Themes Audit for compliance Question accepted criteria Dig a little deeper Benchmark Unique perspective
Audit of Pensionable Earnings and Time Reporting (December 2009)
Audit of Pensionable Earnings and Time Reporting Pension contributions are at record highs in San José Pensionable time reporting is complex: one-third of the 160+ earning codes in the City are pensionable
Creation of Earning Codes and Time Reporting Codes
Pensionable Earnings Map
Dig Deep and Expand the Criteria
Key Drivers of Employee Compensation: Base Pay, Overtime, Paid Leaves and Premium Pays (May 2011)
Employee Cash Compensation
Soaring sick leave payout
Existing sick leave payout provisions Bargaining Unit Maximum Payout Formula Maximum Allowable Federated (800-1200 hours) Hours accumulated x 75% of final hourly rate 1200 hours Federated Management (800-1200 hours) 1200 hours + 75% of the value of unused sick leave earned in final 2 years prior to retirement Police (More than 1200 hours) Hours accumulated x 100% of final hourly rate No Maximum Fire (More than 1680 hours)
Pay increases not tied to performance Between 2000-01 to 2009-10 employees received a cumulative total of 20% to 53% in raises Step increases and general wage increases accounted for these increases General wage increases were not tied to CPI and many times exceeded it.
Existing criteria City of San José Civil Service Rules The Civil Service Commission Council Resolutions Agreements with various bargaining units
Looking deeper… Abundant benchmarking opportunities private sector employers other jurisdictions to compare San José original intent of some current criteria
Premium pays present significant costs
Unintended consequences?
Ten Years of Staffing Reductions at the City of San Jose: Impacts and Lessons Learned (November 2012)
Ten years of staffing reductions at the City
Checking for compliance against existing criteria City of San José Civil Service Rules City’s administration of seniority-based procedures
Digging deep to quantify reductions
The cost of seniority-based layoffs and bumping Impacted productivity Rippled through the organization Disproportionately affected some departments, jobs, and people
Challenging criteria and benchmarking We reviewed employee personnel files, in which we found seniority-based bumping led to… Poor Matches Poor Morale Marginal employees were held harmless at the expense of exemplary employees We found other governments that pursued and implemented reforms that diminished impacts to their organizations.
In conclusion…
An auditor’s unique advantage Charter authority to examine all records of any City department, office and agency Unique cross-functional perspective Unique role and expectation that we will think critically
How do we stay objective? Think from the residents’ perspective Be aware of potential biases Discuss out loud with the team Discuss with the whole office Don’t shy away Always audit in the public interest
Questions? www.sanjoseca.gov/auditor Sharon Erickson Sharon.Erickson@sanjoseca.gov Michael Houston Michael.Houston@sanjoseca.gov Jazmin LeBlanc Jazmin.Leblanc@sanjoseca.gov Gitanjali Mandrekar Gitanjali.Mandrekar@sanjoseca.gov www.sanjoseca.gov/auditor