1. 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

2. Background

5. 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

6. Common Themes Audit for compliance Question accepted criteria
Dig a little deeper
Benchmark
Unique perspective

7. Audit of Pensionable Earnings and Time Reporting
(December 2009)

8. 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

9. Creation of Earning Codes and Time Reporting Codes

10. Pensionable Earnings Map

11. Dig Deep and Expand the Criteria

12. Key Drivers of Employee Compensation: Base Pay, Overtime, Paid Leaves and Premium Pays
(May 2011)

13. Employee Cash Compensation

14. Soaring sick leave payout

15. Existing sick leave payout provisions
Bargaining Unit
Maximum Payout Formula
Maximum Allowable
Federated ( hours)
Hours accumulated x 75% of final hourly rate
1200 hours
Federated Management ( 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)

16. Pay increases not tied to performance
Between to 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.

17. Existing criteria City of San José Civil Service Rules
The Civil Service Commission
Council Resolutions
Agreements with various bargaining units

18. Looking deeper… Abundant benchmarking opportunities
private sector employers
other jurisdictions to compare San José
original intent of some current criteria

19. Premium pays present significant costs

20. Unintended consequences?

21. Ten Years of Staffing Reductions at the City of San Jose: Impacts and Lessons Learned
(November 2012)

22. Ten years of staffing reductions at the City

23. Checking for compliance against existing criteria
City of San José Civil Service Rules
City’s administration of seniority-based procedures

24. Digging deep to quantify reductions

25. The cost of seniority-based layoffs and bumping
Impacted productivity
Rippled through the organization
Disproportionately affected some departments, jobs, and people

26. 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.

27. In conclusion…

28. 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

29. 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

30. Questions? www.sanjoseca.gov/auditor
Sharon Erickson
Michael Houston
Jazmin LeBlanc
Gitanjali Mandrekar