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15 Percent Average percentage in cost savings on overhead function that consolidation reforms have produced in other governments 80 The number of duplicative HR positions created in General Fund agencies outside of the City's centralized HR and Personnel Departments 100 The number of duplicative IT positions created in General Fund agencies outside of the City's centralized IT Dept. 10 The number of sworn police officers assigned to IT duties at the Police Department 35.5 vs. 28 The number of lifeguards employed in FY04 versus the number of City managers responsible for the lifeguards – complete with four layers of management for this function alone! 69,095 Sq. Ft. The amount of office space covered under leases that will expire in FY05 -- providing the City an opportunity for consolidation and $626,179 in cost savings

NOTE ON FOOTNOTES: The San Diego Citizens' Budget Project is committed to presenting accurate, methodical research. The Citizens' Budget Plan contains more than 100 footnotes, all of which can be found in the print and full PDF versions.

Reorganize City Government to Streamline Overhead Costs
Consolidate Similar City Functions and Reduce Administrative Support Costs through Creation of an "Office of Management and Budget"

Fragmentation and Duplication in City Organization Structure: The existing City organization chart is a bureaucratic maze (see graphic on page 10). This poses two challenges: first, the costs of providing services is increased when overhead or administrative functions are duplicated in the City. Second, fragmentation and overlap of responsibilities for basic services across City departments results in finger pointing and a general lack of accountability. All of this does not even factor in citizen frustration with trying to navigate their City’s bureaucracy for help with basic services.

Just some of the examples of the fragmentation or duplication uncovered during the review:

Poor Management of City Support Services: In addition to fragmentation and overlap in basic City services and associated support functions, the budget review revealed a poor management approach to City support services. First, the City lacks an integrated “Management Agenda” to articulate policies for cost efficient management. A review of internal management policies reveals many policies have not been updated since the 1960s! In fact, the City’s workplace injuries policy dates back to the late 1960s—despite numerous changes to “best management practices” in this area over the decades.

In addition to a lack of a strategic approach to management, there were a number of excessive expenditures for overhead functions uncovered. At the beginning of the Citizens’ Budget review, the number-one complaint received from City employees was against the excessive charges and poor customer service provided by the City’s centralized information technology support service: the SD Data Processing Corp. A review of charges demonstrated a 100-300 percent mark-up of IT support products and services from comparable market rates. Other support functions exhibited similar egregious high costs—such as the Police Department’s auto maintenance division costing $8,841 per vehicle per year!

Fortunately, a separate review of this function by City auditors has uncovered excessive and unconscionable expenditures that have been well covered in the local media. 42 In response, the City Manager has wisely moved to reform this support function—proposing a gradual dissolution plan and contracting out of major functions of DPC.

One lesson is offered by the DPC experience: where evidence of inefficiency and waste is so clear, a burning platform for change can be built. Moreover, once political leadership is under the gun, big changes—and even bigger cost savings can be achieved. Nearly $10 million in IT cost savings will be achieved in FY 2005—as DPC rushes to cut its rates under increased scrutiny and political pressure. If DPC can save $10 million after six weeks of pressure, how much more can be saved in other support functions?

Bloated Staff Ratios: Managerial and Administrative Staff: While many City departments are running lean, there are numerous examples of bloated staffs in both managerial and administrative support positions throughout the City. For example, at the City Attorney’s Office, the budget review demonstrated a support-staff-to-attorney ratio that was excessive in comparison to other city attorney offices across the nation, as well as in comparison to large law firms in San Diego. The ratio of support staff to attorneys in San Diego is 1.4, compared to .8 for the comparison cities and 1 for the ten private law firms surveyed. The City Attorney Office in San Diego could reduce support staff by 50 to meet the average ratios mentioned above.

During the debate over the Parks and Recreation budget, a number of members of the public complained about the bloated managerial staff at the Department. A review of the Park and Recreation FY 04 budget revealed in the swimming pool operation alone there were four layers of management between the lifeguards on duty at City pools and the Director of Parks and Recreation. For the 35.5 lifeguards employed by the City, there were 28 positions in management staff directly impacting these staff.

(See Reform #10 for more information on bloated staffs in the Mayor and Council Budgets.)

• Reorganize City Government to Streamline and Consolidate Functions
The Council should instruct the City Manager to study then propose a reorganization of City government consistent with the model suggested by the Citizens’ Budget Plan (see page 13 for a new organizational chart). The plan would be phased in by January 1, 2005. By way of example of the reorganization plan being proposed, the following services would be consolidated to improve efficiency and accountability:

• Create an Office of Management and Budget
Concurrent with the reorganization study above, the Council should instruct the Manager to prepare a consolidation of all support services under an Office of Management and Budget—providing all performance management, financial management, information technology, human resources management, and procurement activities into a central “shared services” operation. The “shared services” model is a cost efficient structure used by virtually every large corporation in America and increasingly used by most levels of government. All departmental staff assigned to these functions would be immediately transferred out of their respective departments into the central OMB—with a completion date no later than November 1, 2004.

In addition to the consolidation of these functions into OMB, the Council should instruct the City Manager to undertake the following management reform initiatives:

• Management De-Layering Reform Plan
The OMB HR Division should be instructed to devise a City-wide “Strategic Human Capital Plan” reflecting a “de-layering” of the City’s bureaucracy to reduce excessive layers of management. In developing this plan, the City should ensure that there are no more than three levels of personnel between the citizen seeking service and the director of each City department.

• Competitive Sourcing and Performance Contracting Initiative
See Citizens’ Budget Reform 5.

• Reform City Civil Service Rules to Enhance City Manager Authority Over City Personnel
The City’s civil service regulations are outdated and fail to provide the City Manager with appropriate authority over City personnel. For example, days after assuming his position, the new City Manager recently announced layoffs of several senior managers. Unfortunately, his decision to terminate one senior manager was overridden by civil service rules currently in place—leaving a marked senior manager in place over the objection of the City Manager.

To enhance the City Manager’s authority in hiring and firing City personnel, as well as consolidate the Personnel Department and the HR Department, the Council should put a Charter amendment before voters to reform the City’s civil service system. City employees have ample protections under the labor contracts negotiated every 2-3 years by their unions—with these contracts having grown to extraordinary lengths with detailed rights, compensation rules, and management protections included.