Audit mania has hit Los Angeles City Hall.
Teams of private cost-efficiency experts are probing and challenging many of City Hall's time-honored systems and sacred cow bureaucracies, with the blessing of Mayor Richard Riordan and the budget whiz kids in his office.
The management consultants and their audits--stacked with data and decorated with charts and graphs--are proving a powerful tool for Riordan's plans to reinvent city government, and have emerged as key allies of a privatization culture gaining a foothold at City Hall.
Critics, however, view the auditors as reckless hired guns with anti-government biases willing to sacrifice city services on the altar of cost-efficiency. They say some of the audits have produced confused or pie-in-the-sky findings.
"They don't care about better, only about cheaper," complained Ken Buzzell, president of the firefighters union, whose members are up in arms about a scathing audit of the Los Angeles Fire Department.
Management audits are not new to City Hall. But the unusual twist now is that Riordan, a multimillionaire businessman, has scrapped a city-run management audit team he believed was not aggressive enough and has turned instead to hot-shot private audit consultants to root out waste at City Hall.
Also new is the furious pace of auditing. Since Riordan took office about two years ago, six management audits have been completed, with 10 more in the works, at a total cost of $3.8 million.
The reports have cost anywhere from $845,000 for an audit of the Harbor Department to a $38,500 review of the city's out-of-control workers' compensation system. Despite the costs, "we hope to get far more back in savings than the consultants' fees," said City Administrative Officer Keith Comrie, the city's top fiscal adviser.
The operations that have been put under the audit microscope or are about to be audited include the city's purchasing, payroll, fleet management and workers' compensation systems and the departments of water and power, fire, harbor, engineering and community redevelopment and the Board of Public Works.
Yet despite the money, energy and emphasis, some of the new crop of audits revisit and regurgitate cost-cutting proposals previously recommended by the old city-run audit management unit.
For example, a recent audit proposal to turn the workers' compensation system over to private administrators was originally made by in-house city auditors in 1989. Likewise, a specially commissioned 1994 audit found that the Department of Water and Power had failed to implement the most significant recommendations made in the last performance audit of the department--done only four years earlier.
Riordan Administration officials maintain the latest batch of audit findings are not likely to suffer the same dusty fate as their predecessors--particularly since voters last spring gave the mayor new powers to fire foot-dragging department chiefs.
"If they [prior audits] didn't see the light of day, that suggests there was a lack of leadership either by the departments or by the political leaders," said Michael Keeley, the Riordan Administration's chief operating officer. "This Administration, however, comes at this issue with a pronounced change agenda."
What the Audits Found
Some of the management audits--which, unlike financial audits, concentrate on performance and efficiencies--have reached conclusions that have led to dramatic changes.
Consider the case of the Department of Water and Power, which became the target of a sweeping management audit late in 1993, after embarrassing reports that it had wasted tens of thousands of dollars on catered food for its managers during a union-led strike.
After a $250,000 review of the huge city-owned utility, Barrington-Wellesley Group Inc. found DWP was ill-equipped to compete with other local utilities and energy suppliers as a new era of utility deregulation approaches and recommended that it slash a staff top-heavy with engineers and mid-level managers by up to 2,900 positions.
"Our report didn't pull any punches," said Perry Wheaton, a managing partner of the New Hampshire-based Barrington-Wellesley Group, a consulting firm that specializes in reviewing utilities.
The Barrington-Wellesley audit got results.
First, DWP launched a voluntary buyout program to sharply trim its staff. That program, completed this summer, resulted in the early retirement or resignation of 1,500 employees (although the offer stirred up a controversy after it was discovered that a handful of employees had, in the words of DWP's chief, "manipulated" the system to maximize their benefits).
Faced with the formidable task of overhauling a utility reared in a monopoly environment, DWP leadership also has embarked on a program to transform its corporate culture so it can survive in a competitive environment.
