San Diego has no auditor.
Did you catch that? San Diego has no auditor. Seriously. OK, no one seems too upset about this. That may be understandable, seeing as most folks hear words like “auditor' and “comptroller” and spontaneously fall asleep. But, remember, this is San Diego. The auditor checks the city's books. And San Diego, as some people may be aware, has had some problems with its books this last decade or so, what with underfunding the employee-pension system and investigations by the Securities and Exchange Commission and the FBI. Those scandals mean we now must cope with several billion dollars of debt, which could lead to some serious cuts in city services in the coming months-fewer recreation programs, less well-kept parks, even fewer library hours and on and on.
Not having an auditor in San Diego is like leaving the cake on a table unsupervised at a 7-year-old's birthday party: dangerous and potentially messy. So, Mayor Jerry Sanders and the City Council should just get right on that case, right? Well, as always in municipal government, the whole thing is a bit more complicated than promoting Sheldon from accounting. Among other problems, San Diego did have an auditor, Ed Ryan, when the city manager and the retirement board were perpetrating the pension mess. Trouble was, Ryan was appointed by the City Council, answered to the City Council, and held the dual role of comptroller and auditor. He was not independent and he was not effective.
Independence is the only quality of an auditor/comptroller anyone can agree on these days.
“The auditor should be as depoliticized as entirely possible,” said Donald Cohen, head of the Center on Policy Initiatives, a left-leaning think tank. “The auditor should be non-political.”
But how do you extract the politics from a fundamentally political process? In the long term, there will have to be a change to the city charter. The comptroller and auditor positions are combined into one job in San Diego, held by John Torell-who stepped in after Ryan retired in early 2004-before he left the city last month. The comptroller cuts the checks that pay for supplies and workers. The auditor examines the checkbook to make sure everything is balanced and accurate. In small cities one person can manage these two jobs, but as San Diego grows up into an adult city, it needs to separate the two functions. The guy writing the checks can still answer to management, but the person watching that guy needs to stand outside the usual structure, where he can feel confident that executives and legislators will not shoot him for being a bad-news messenger.
In 2008, San Diegans will vote on charter changes that will ensure auditor independence. But in the near term, there's an empty chair at City Hall. Sanders asked the City Council to separate the two functions back in the fall, but in a legal opinion issued Sept. 1, 2006, City Attorney Mike Aguirre said that requires a vote of the people. But according to sources CityBeat spoke to who are familiar with the finance department, Sanders could easily create a de facto separation just by executive order.
“They could just put the comptroller in one area and the auditor in another and have the audit department report to the [City Council's] audit committee,” said one source, who asked to remain anonymous. “But the mayor doesn't want to do that. He doesn't want to give up the power.”
The arrangement would not have the force of law to create the ideal independence, but it might get the city by until a charter-change election.
With Torell's departure, Aguirre, Independent Budget Analyst Andrea Tevlin and several City Council members have looked for a legal loophole to separate the auditing duties from the position of auditor/comptroller.
“We're researching it right now,” Aguirre said. He expects to have an official opinion within a month.
But what could that opinion even say? The charter confers the auditor/comptroller with responsibility for all things financial. But it also says, “Nothing shall prevent the Council from transferring to other officers matters in charge of the City Auditor and Comptroller which do not relate directly to the finances of the City.”
Does the auditor/comptroller actually do anything not related to finances? In his interview with CityBeat, Aguirre said yes, but would not enumerate. When Tevlin spoke to CityBeat, she indicated the auditor does have additional duties, such as checking departmental processes and helping everything run efficiently. City Councilmembers Toni Atkins and Kevin Faulconer both mentioned their interest in separating the two functions, but they await Aguirre's opinion.
Naturally, the mayor will have none of it-once rebuffed, twice shy.
“You can't constantly reinvent policy every week,” said the mayor's spokesman, Fred Sainz. “What would be a non-financial responsibly? Anything having to do with numbers goes back to the city's books. Anything involving money is a financial responsibility. In order to err on the side of caution, because someone from outside could sue us on this issue, the mayor is going to pursue a very conservative approach.”
When asked if there could be negotiation on this issue, Sainz said no.
But the need for an auditor is pressing-the kids could be getting into the cake, smearing it all over each other, and we have no way of knowing. Currently Torell's chief deputy, Larry Tomanek, must do his own work in addition to that of his former boss. In an interview with CityBeat last summer, Tomanek said he already works 10-hour days, plus weekends. He will be hard-pressed to stay on top of all the work during the upcoming cantankerous budget debates without some assistance.
At the moment, no search for a new auditor has even begun.
“We would launch a nationwide search for the position, advertised as it is in the charter,” Sainz said. “We would have to disclose that this position is susceptible to change depending on the outcome of a charter amendment.”
Finding a top person to move here under the threat of having her duties radically rewritten seems a long shot. Finding someone to take on the roll of “acting temporary auditor and comptroller,” as Atkins would like, seems even tougher.
Eventually, a new version of the auditor general will be crafted and proposed for charter change. Sainz said the mayor stands behind the recommendation of Kroll, the company that charged San Diego $20 million to investigate the pension fraud. The report they produced recommends an auditor general, appointed by the mayor and reporting to an audit committee made up of two citizens appointed by the mayor plus one city council member. The auditor gets a long contract and reports to the audit committee.
Tevlin has gone on the record several times expressing her concern over this system. She worries that the people writing the checks-the mayor and his financial team-are also the ones who would be checking the books. We already have that problem.
Instead, she would prefer to keep the audit committee that now exists, made up of City Council members, and an auditor appointed by the committee.
“You have to separate the auditor from management,” she said. “I prefer the expertise and professionalism of an appointed person.”
In addition to his general hatred of all things Kroll, Aguirre believes “an appointed person works for whoever appoints them.”
“We had the long-term contract thing with the city manager, and that didn't work for us,” he told CityBeat. While he has no definitive position, he leans toward having the job become an elected position. “Whether you like the current city attorney or not, there's a higher level of independence because I'm elected.”
Critics charge that an elected auditor would be too worried about getting elected to write honest reports. But Aguirre has an unexpected ally here in Carl DeMaio, head of the conservative think tank, The Performance Institute.
“There's an arrogance, an elite that seems to feel that the public is too stupid to make a good decision,” DeMaio said. “Given the caliber of leadership in San Diego, I don't think the public would do any worse. I think the public could do a hell of a lot better.”
Fortunately for all sides, when the questions of charter change are brought to the table, Sainz said the mayor is open to conversations. And considering that Sanders may be looking for other things in a charter change-like making the new executive-mayor form of government permanent-there could be a lot to discuss.