Vacation buybacks! Car allowances! Management Leave! Horrors!

So while I’m usually pretty quick to damn the City for perpetually wasting copious amount of money and time, I have to admit that I’m not really feeling the outrage at the recently released City Auditor’s report on payroll and compensation practices (PDF!). Certainly, Courtney Ruby’s first report as City Auditor highlights some inefficiencies that need to be addressed.

But the Chronicle story on this begins with a level of horror that I can’t quite get behind:

Oakland has paid city employees millions of dollars in bonuses, leaves, cash-for-vacation deals and auto allowances in recent years, far exceeding compensation set in labor contracts and with little or no oversight, according to a city auditor’s report obtained by The Chronicle on Wednesday.

Employees of the cash-strapped city – which is reeling from violence, a shortage of police officers and a dilapidated infrastructure – were allowed to cash out unused vacation time and received millions of dollars in perks, much of it not subject to scrutiny, according to the report, which the newspaper obtained under the California Public Records Act.

I guess so. The tone of the article seems (to me, anyway) to imply that this is some kind of revelation, exposing millions of dollars in shady expenditures. Judging from the repeated cries of corruption comments on both this and the Trib story, I think it’s safe to assume that I wasn’t the only one who read it that way. But corruption isn’t the issue. The report, available on the City Auditor’s website, examines the City’s payroll practices and makes a number of recommendations for improvements to efficiency and transparency, saying:

To ensure the integrity of City expenditures and the consistent treatment of all employees, the City needs to improve internal controls relative to off-cycle business processes.

Okay. So while the City really should act on Ruby’s findings (she makes a number of excellent recommendations), people should also relax a little bit. The report concluded that standard payroll (that would be the bi-weekly timecards submitted and checks issued for City workers) is fine, but off-cycle payroll (retroactive payments, leave buyouts, and bonuses) need improvement:

Specifically, we found the City employees conducting payroll activities have little formal guidance or written policies and procedures stipulating the roles and responsibilities for executing these varied and sensitive transactions.

The report doesn’t conclude that the transactions in questions are necessarily inappropriate, but rather that off-cycle payroll behavior tends to lack documentation justifying its necessity:

If the City established – and followed – a set of written, comprehensive procedures describing roles and responsibilites that provides specific guidance and direction, many of the issues noted during our audit could easily be corrected.

Take bonuses. I don’t see anything wrong with providing bonuses recognizing good work. Over three years, paying a total of $387,597 to 324 employees (out of almost 6,000 total) ranging from $75 to $10,000 (88% of which were less than $1,500) hardly seems unreasonable. What is a problem is that the City provides little in the way of guidelines governing issuance of the awards.

We found that City administrative guidelines and rules for cash awards and employee recognition payments are dated, non-specific, and left largely in form and practice to department heads and the City Administrator.

The report also complained that bonuses were not accompanied by written documentation explaining the reason for the bonus. Ruby found similar problems in the case of retroactive pay. In two cases of retroactive payment correcting initial underpayments, the accompanying documentation was a document detailing the initial pay rate versus the amount the were supposed to be paid. The report complains “ there was no written justification or authoritative document provided to explain the underpayment and justify the higher rate.” Of course, if no one tells you that you need to provide justification, why would you?

Both the Trib and the Chronicle made note of the annual costs of car allowances, which doesn’t seem that big a deal to me. It seems reasonable that if you have to use your private vehicle regularly to do your job, then it’s fair for your employer to reimburse some of the costs. (Such practices are routine in many private sector jobs.) City employees whose jobs involve significant amounts of car travel get monthly automobile allowances. Other employees can receive reimbursement for miles traveled if they have to drive their car to attend say, an off-site meeting. The report found that for 2006-07, the city paid out $700,000 in such allowances. That money went to a total of 238 employees, who receive allowances ranging from $137.55 to $750 per month. The report concludes that there is “little monitoring and oversight are exercised for these employees once the awards are granted.”

So once again, I agree with the conclusion that there should be more oversight. Car allowances, once awarded, are apparently rarely revisited to determine if they continue to be needed. But personally, I’m more concerned with inefficiencies in fleet management (PDF!), which the Council will be discussing next week. Although it’s more cost effective to provide automobile allowances and mileage reimbursements than to provide City-owned vehicles for employee use for vehicles driven less than 14,000 miles per year, we’re wasting money on 431 sedans that fall below that threshold. For a vehicle traveling 3,600 miles per year, it costs the City $2,663 more per year to keep and own that vehicle than to provide a car allowance and mileage reimbursement. Right now, we’re keeping 85 sedans (PDF!) driven less than 3,600 miles per year as part of our fleet. Stupid! We’re keeping all these cars for use by individual departments, wasting money on parking and maintaining them, when we really should be maximizing the usage of pool cars, which can be used when needed and will allow use by a number of drivers and departments on any given day.

I’ll conclude by defending the City (for once) against charges of wastefulness. One Chronicle commenter said:

One poster in an earlier thread mentioned that the budget of the City of Denver, which has a larger population than Oakland, is less than half of Oakland’s. There is something seriously out of whack if this is true.

Well, it isn’t true. The City of Denver’s proposed 2008 budget is $1.87 billion, significantly larger than our $1.07 billion. Denver’s population, according to the American Community Survey for 2006, is 566.974. We have a little under 400,000. Doesn’t mean that nothing’s out of whack, but that particular accusation, at least, is wrong.

3 thoughts on “Vacation buybacks! Car allowances! Management Leave! Horrors!

  1. V Smoothe Post author

    Automobile allowances are clearly defined compensatory awards, and they are budgeted for. Ruby said, in her response to the City Administrator’s letter, that “we did identify weaknesses in the monitoring and oversight of these generous allowances.” So, again, the issue isn’t that the payment are necessarily bad, but that they should be monitored better. On this theme, repeated in almost every section of the report, I can’t disagree with Ruby. But exposing a need to institute better monitoring practices is hardly what most people seem to be taking from the report.

  2. Becks

    I didn’t understand the overly critical nature of the articles either. As someone who’s worked in management/HR roles at several organizations of varying sizes, I can attest that mistakes are common when there aren’t clearly established practices. I wasn’t surprised by this report, and the problems don’t seem that huge. The only complaint I have is that this report wasn’t conducted sooner (thanks to Ruby for making this a priority immediately). Now that the report’s out, it shouldn’t be too difficult to fix the problems.