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Years ago, a coach for one of our daughter’s softball teams confided to us that, as a police detective who was about to retire, he was working as many hours of overtime as he could. It wasn’t that he wanted to work late into the night at a dangerous job. It was simply that he was legally feathering his retirement nest. At the time, New York City, like many others, had very liberal limits on the amount of overtime pay that could be included in final years on the job for the purposes of calculating a pension. More overtime in the last few years of employment could mean a dramatic increase in pension pay for the rest of his life. As taxpayers, we were a little dubious. But since he was a friend, and a fan of our daughter’s play, we wished him the best of luck in toting up those extra hours. In scanning audits from around the country, we’ve noticed that this particular use for overtime has come up frequently. But we’ve seen a shift in the emphasis of audits lately to ones that focus on overtime that is necessary because of reduced staffing. Sometimes, the employees aren’t even happy about getting paid a few more dollars in exchange for a diminishment in time at home with spouses and children. In our blog post last week, we noted that a hiring freeze in Pennsylvania produced costs rather than savings for the Department of Corrections because of overtime for prison security. Report highlights from the Pennsylvania Budget & Finance Committee noted that in Fiscal Year 2016, the total cost of overtime to provide prison security was $105.3 million. Overtime amounted to nearly 12 percent of total security hours in 2016 up from 6.4 percent in 2010. Although the Pennsylvania manpower shortage was substantially self-inflicted due to the hiring freeze, a number of governments are experiencing recruitment, hiring and retention problems in their police departments, sheriff’s offices and prisons. (In our Governing column in September, we covered hiring problems for police departments. In February last year, we wrote about human resource problems in jails and in November, 2014, we wrote about the shortage of correction officers.) Hiring troubles and high overtime often go hand in hand. For several years, San Jose auditor Sharon Erickson has been shining a light on police hiring woes there. In a report to the city council last fall, she noted that overtime has grown in tandem with department vacancies. It tripled in the last seven years and peaked at $36 million in Fiscal Year 2016. Interestingly, the increased use of overtime has also resulted in an increase in sick leave usage, which then increases the need for still more overtime. Talk about a vicious circle. In Syracuse, NY, an audit last fall found police overtime had doubled since 2012.  The audit targeted decreased manpower as the primary driver of greater overtime, though it also cited problems in tracking overtime usage and negotiated union rules which increased overtime hours. An audit in Buffalo found the police department there under-estimated the amount of overtime that would be used by officers by 40 percent in 2015 and 28 percent in 2014. It said that 25 percent of the Buffalo Police Department had earned more than $25,000 in overtime. A few days ago, Baltimore’s mayor called for an audit of police overtime there. Of course, there are also other intriguing issues raised in audits that focus on overtime. The most unusual audit – and audit controversy – we’ve seen recently was in Parkersburg, a small town in Butler County, Iowa. A state audit questioned $32,600 in overtime paid to the city administrator between 2009 and 2014. The audit stated that his position made the administrator ineligible for overtime based on the Fair Labor Standards Act. The city, with its population of 1,870 (as of the 2010 census), is disputing the auditor’s criticism, arguing that it has a legal opinion ruling that the city administrator has multiple city jobs that qualify him for overtime. According to the Waterloo Cedar Falls Courier, the city administrator also acts as “city clerk, public works director and cemetery sexton which includes digging graves.”

Governments considering a hiring freeze would do well to take a look at a report that was discussed at a Pennsylvania law enforcement and judiciary committee meeting this week. The report looked at overtime in the Department of Corrections. It found that a hiring freeze, which was put in place in 2014, added about $4.6 million in costs to Corrections spending in Fiscal Year 2015 and $9.1 million in costs in FY 2016. Here are the details provided for 2015: With 300 fewer new hires, Pennsylvania cut back on training costs by $15.3 million: That’s a tidy savings. But here’s the rest of the story:  With the freeze in place, overtime costs escalated by $19.9 million. (Net cost: $4.6 million). The report noted that overtime also added to ultimate pension costs for retiring corrections officers as it increased final salaries, which are part of the formula used to calculate future pension payouts. The report, which was produced by Pennsylvania’s well-respected Legislative Budget and Finance Committee had several recommendations. The first: “Avoid imposing hiring freezes on security staff.” One more note on this topic. Last spring, we did a Governing column about the positive and negative effects of overtime. There’s no question that it can be used constructively for an unexpected event (such as a blizzard) and is often regarded as a plus by cash-strapped employees. But on the downside, excessive overtime can add to an employee’s level of stress, lead to burnout and compromise performance. That’s especially true for corrections officers, police, firefighters and others whose work in tension-filled, potentially dangerous, settings.

There’s a new trend among the states to create a position called the Chief Operating Officer (COO). As we recently wrote in Governing magazine, “the COO takes on the tasks that governors simply don’t have the time to do, such as improving coordination between agencies. ‘Most of the state agency directors serve at the pleasure of the governor, but the governor doesn’t have the capacity to manage the work of agencies on a day-to-day basis,’ says Matthew Shelby, communication strategist at the Oregon Department of Administrative Services. In effect, the COO serves as a convener-in-chief who can bring agency heads around a table and facilitate conversations about operating as a single entity. ‘There’s a growing expectation,’ Shelby adds, ‘that we’re working together.'” Of course, the federal government has been using chief operating officers for years. They came into fashion during the period of time when Vice President Al Gore was “reinventing” government. And they’re also very common at the city level. But, according to a survey commissioned by the National Governors Association in 2015, they existed in relative few states including Georgia, Illinois, Nebraska, New York, Tennessee and  a handful of others. Just last January, Missouri joined the list. One of the benefits of the COO’s position is that it frees the governor up to stay out of the weeds of governance and spend more time trying to figure out what kind of flowers to plant and where to plant them. As quoted in the Governing piece, Barry Van Lare, who has held multiple high-level positions in both the state and federal governments, including a number with the National Governors Association said, Governors “legacy depends not so much on their policy objectives as on whether something went wrong from an administrative point of view during their administration and whether they were able to handle it.”

Here’s a fascinating bit of information we just learned from Bob Lavigna, the director of the Institute for Public Sector Employee Engagement at CPS HR Consulting. In a survey, the new institute did of employees in local government, state government, federal government and the private sector, there were – not surprisingly – significant differences in the level of employee engagement. All in all, the private sector had the edge on employee engagement with 44 percent of its employees engaged compared with 38 percent in the public sector. This is roughly parallel to other surveys in the past that have looked at engagement, which is, effectively, the opposite of burnout. As we recently wrote in Governing, “It means employees feel a connection with the mission of the organization, are proud of what they do, and will devote themselves to making sure the organization succeeds.” But what really intrigued us was the breakdown of employee engagement at different levels of government. It turns out that if you separate local government out, employees’ level of engagement is equal to the private sector at 44 percent engaged. The federal government brings down the public sector average somewhat with just 34 percent engaged. But the real problem group is the state employees with only 29 percent engaged. Although the extent of the difference was a bit shocking to us, the general direction parallels what we’ve talked about over the years. We used to conduct hundreds of interview each year with local and state government officials in the “Grading the States” (also cities and counties) effort at Governing magazine (funded by the Pew Charitable Trusts) and in the predecessor effort at Financial World. The two of us would often remark that local employees seemed happier and state employees more downtrodden. Our theory: At the local government level, employees see the direct results of their work, and they are more in touch with the citizens who benefit from services. We asked Bob Lavigna for more clues into the difference in the different sectors. He mulled over a few possible reasons — criticism of government that doesn’t resonate as strongly at the local level; state budget cuts and possibly less attention to engagement at the state level. He noted that the federal government has emphasized the importance of employee engagement for a decade and has continually conducted government-wide employee engagement surveys. Many local government also do employee surveys as we wrote about some months ago in Governing.  (The message of that column was that doing the surveys was just a first step, governments also have to respond to the results.) Employee surveys are far less common on the state level.  Lavigna: “Our research shows that only seven states have conducted statewide engagement surveys. If you don’t have data on the level of engagement, it’s hard to focus on it. You can’t improve what you don’t measure.” He added that  “leadership and managing change” were the top drivers of engagement across all sectors. “I think there is a message for states in this finding.” The CPS HR Institute survey was conducted in the early summer of 2016 and matched the U.S. population on key demographics. (Teachers and members of the military were excluded.) About 2,000 individuals were sampled. The full results of the engagement survey, which will be repeated annually, will be released later in March.

A couple of days ago, our “audit watch” blog post brought up the common problem of water loss — both actual water that leaks from pipes and water revenue that leaks from questionable accounting systems. The first step in the battle to stem the leaks is to improve the data. That means establishing requirements for water utilities to build up, and publicly report, their information on where the leaks are and what’s causing them. This issue is increasingly coming up in legislatures. For example, on Valentine’s Day,  , a New Jersey legislative committee  put forward a bill requiring water companies to audit systems to locate  water leaks. According to the National Resources Defense Council (NRDC), these audits have the potential to save both millions of gallons of water and millions of dollars in revenue. Earlier this month, the NRDC published a map showing existing state policies for gathering and reporting on water loss. It has kindly given us permission to reprint that map here. Note: The states that are colored blue require “system specific volume-based performance benchmarking”; the green states require annual use of free audit software from the American Water Works Association (AWWA); the dark yellow/orange  states require annual water loss reporting using AWWA standard terminology; the light yellow states require “rudimentary water loss reporting” and the states that are not colored in require no action.

When a city, county or state releases its Comprehensive Annual Financial Report later than usual, the delay is usually for understandable reasons: a new computer system stalls action, say, or a short-staffed government is stymied by the need to revamp financial reporting due to a recently introduced accounting standard. But sometimes, the motivation for a delayed report may be different. We learned this nearly 25 years ago when we were evaluating the management of city governments in Financial World magazine. We had given a mediocre grade to Chicago, complaining about its late financial reporting. Later we met with that city’s financial officials who told us, off the record at the time, that the delay was purposefully intended to shield information from unions.  The financial report was going to reveal a surplus that could have been used by union leaders to get an edge in the then-ongoing contract negotiations. The city’s logic: Why tell the unions the city had more money in its coffers than the unions already knew? No one in that room probably remembers the conversation (except us), and most are probably off the payrolls (either because they’ve moved, retired or died). So, we feel like a quarter of a century is enough time for us to tell the story without jeopardizing anyone who didn’t want it revealed back then. (Plus, we have no reason to believe that Chicago ever used the same delaying tactic again.) Still, the revelation of that day resonated back in December, when we read an article in the Half Moon Bay Review in San Mateo County, California. The report focused on a county financial report that was due in October, but wasn’t released until late November, two weeks after Election Day, when a 20-year-extension of a half-cent sales tax increase was approved by voters. In the financial report, the county pointed to its strong economy and rising revenues, including “the sixth straight year that historic highs have been set” on the draw from its property taxes. Would voters have approved the sales tax increase if they knew that property taxes were doing so well? We think that’s a good question. The issue might have gone unnoticed except that a Civil Grand Jury had complained about the openness of the county’s finances three years before and the foreman of the jury, a retired attorney, was on hand to draw attention to this most recent issue. Said he, “I think it’s problematic and very suspicious . . . It’s problematic when the county does not provide the most current information before an election relating to taxes.” In fairness, beyond the comments in the article, we have no reason to suspect the county of purposeful delay. In fact, the Half Moon Bay Review credited the county with generally improved financial transparency and the county controller’s office said the delayed report release was due to increased financial reporting requirements for pensions. That’s totally plausible. Still, the lesson we learned from Chicago long ago, still resonates.  When government disclosures are late, it’s probably a good idea to understand exactly why.

We’ve been seeing quite a lot of attention lately going to the topic of water loss – either from actual leaks in aging pipes or accounting issues that cut into water revenue. The Atlanta City Auditor’s office has a water loss audit coming up  and in Kansas City, a largely unpublicized 2015 audit undertaken by the city water services department just resurfaced, thanks to an open records request filed by Flatland, a digital magazine in Kansas City. According to information pulled from the audit by Flatland, Kansas City pumped 28 billion gallons of water into its distribution system in 2015, but a third of those gallons were lost, through water theft, broken meters, leaks, or other reasons. Because of the significant water loss problem in Kansas City, the article says the audit found about 40 percent of the water pumped into the distribution system does not generate revenue. Kansas City Water Services has been working hard to resolve both the city’s leaky pipes and its leaky water accounting systems. Getting better, more accurate data, is one key. Real water loss is a particular problem in areas that have older infrastructure. The New York State Comptroller’s Office came out with a report this month that looked at the state’s challenges with aging water infrastructure. The report noted that its audit of local water systems have identified “excessive water loss” both from leaks and water main breaks. In New York City, where some of the water infrastructure was put in place in the mid-19th Century, between 350 and 600 water main breaks have occurred annually between 1999 and 2015, according to the comptroller’s report. Several audits have pinpointed problems with water meter inaccuracy, including one in Austin in 2015. Water lost to inaccurate meters does not mean that actual water is leaking, but that water to some citizens may be under-counted putting upward pressure on rates. Accounting issues were also the target of an Inspector General audit in Chicago in 2015.

Over the course of the years, we’ve repeatedly heard a series of mantras about the reality of state and local government. We’ve heard them from people at all levels of government and sometimes from established authorities. We’ve been accumulating a list of such maxims that are — unfortunately — not true. Of course, some of the ten items that follow are certainly valid  in some places. But we’ve heard them any number of times when the evidence demonstrates that they’re wide of the mark. We hate to use the word “lies” here. That seems to have become a word widely open to interpretation these days. So, just to be specific, what follows are explanations about the way things work that are frequently NOT the way things work. And the list is based on both our own experience, and the understanding of states and localities we’ve accumulated over the last quarter of a century. “We know we are in financially sound shape because we have to pass a balanced budget.” (from states) “It’s impossible to fire a public sector employee.” “We’ll solve this problem by setting up a commission. Or a study group.” “Our transparency website means our government is transparent.” “Buying new technology will be the key.” “Merit pay is pay based on merit.” “The key reason we have a huge unfunded liability in our pensions, is that our benefits are too rich.” “You should just look at the general fund in order to analyze our city or state’s financial condition.” “You can always trust our data.” “Our government can be run like a business.”

A couple of days ago we posted some details of the city benchmarking report that San Francisco’s Controller’s office put out (through its audit division). That first report focused on demographics, public safety and “livability”. Two more reports were released at week’s end. One is about transportation and finance. The other focuses on public health and the safety net. We highly recommend all three reports. The comparison should be interesting not just to San Franciscans, but to the other sixteen cities in the benchmark group: Baltimore, Boston, Chicago, Denver, Long Beach, Los Angeles, Miami, Minneapolis, Oakland, Philadelphia, Portland, Sacramento, San Diego, San Jose, Seattle and Washington D.C. (Not all cities are compared on all issues.)

“In great cities, spaces as well as places are designed and built: walking, witnessing, being in public, are as much part of the design and purpose as is being inside to eat, sleep, make shoes or love or music. The word citizen has to do with cities, and the ideal city is organized around citizenship — around participation in public life.” — Rebecca Solnit, from Wanderlust: A History of Walking.

We have always been fans of benchmark reports. They put performance measures into context, allowing cities, counties or states to see how they compare to their peers. Benchmarking isn’t easy, of course. Since the details behind government statistics vary there’s always a risk of comparing the quality of an apple to that of a pear. Or even a watermelon. They also require a certain amount of courage as there’s always the possibility that the benchmarking city will find itself in an unflattering position. That said, there’s a lot states and localities can learn from their neighbors. And there’s a big bonus for the peer entities. They get to take advantage of the results as well, without putting in the work. With that in mind, we would like to bring San Francisco’s benchmarking report, which was released on Valentine’s Day, to the attention of its comparison cities: Baltimore, Boston, Chicago, Denver, Long Beach, Los Angeles, Miami, Minneapolis, Oakland, Philadelphia, Portland, Sacramento, San Diego, San Jose, Seattle and Washington D.C. (Not all cities are compared on all issues.) Some selected facts that San Francisco’s controller’s office presented on how it compares to the other cities: San Francisco has the smallest percentage of residents who are under 18 – just 13 percent. Long Beach had the highest percentage under 18. Miami had the highest percentage of residents over 65 and Minneapolis had the lowest percentage over 65. San Francisco has the highest average income ($112,459) and (not surprisingly) the highest housing costs as a percent of income. Miami had the lowest average income and Denver had the lowest housing costs as a percent of income. Seattle had the highest number of library visits per resident (8) with San Francisco coming in second. Denver had the highest percentage of its population registered as library card holders (74 percent) and Los Angeles had the lowest (31 percent) D.C. had the highest percentage of the population over 25 to hold graduate degrees. Chicago spent the most per resident on parks ($354 for operating costs); Miami spent the least ($31 in operating costs). San Francisco was fifth on the list. ($148) D.C. had the highest number of street cleaning employees, (48 per 100,000 population); San Jose had the least (1 per 100,000). Oakland had the highest number of violent crimes per 100,000 daytime population, while San Diego had the lowest. Philadelphia had the highest police staffing per 100,000 daytime population while San Jose had the lowest. Philadelphia also had the highest jail population while Hennepin County, which handles jails for Minneapolis, had the lowest. There’s lots more in the report and the city controller’s office will be releasing two more benchmark reports this week. The next will be on transportation and finance and the third about population health and the safety net.

In early February, the U.S. Department of Transportation released its annual compilation of transportation stats, a document we always find fascinating. For readers who didn’t have the chance to sift through the 245 pages of data themselves, we’ve selected out the stats that particularly caught our eye(s). The good: • The percentage of structurally deficient bridges declined from 12.0 percent in 2010 to 9.6 percent in 2015. • The majority of airport runways are in good condition. Only 2 percent are considered poor. • About 4.8 million people walked or biked to work in 2014, about half a million more than in 2000. (Boston stands out among larger cities for people walking to work – about 15 percent do.) • Close to 2 million more people worked at home in 2014 than in 2000. • Less than 2 percent of passengers (14.1 million) waited in airport security lines for more than 20 minutes. • In terms of household expenses, transportation declined from 12.3 percent of the total in 2000 to 9.6 percent in 2015. • Deaths per hundred million miles of highway travel fell from over 5.50 in 1966 to 1.12 in 2015. The bad: • The use of carpooling has declined. Nearly 11 million more people drove alone to work in 2014 than in 2000. • Census Bureau reports show that in 1960, 10.3 percent of people walked to work, compared to 3.9 percent in 1990 and 2.7 percent in 2014. • The average annual delay per commuter rose from 37 hours in 2000 to 42 hours in 2014, a 13.5 percent increase, • Although the long-term decline in fatalities is still impressive, highway motor vehicle fatalities rose 7.2 percent in 2015. The highway injury count also increased in 2015 for the first time since 2012. • Pedestrian fatalities have increased from 12.3 percent of the total in 2010 to 14.5 percent in 2015. • Motorcycle injuries increased 62.7 percent from 2000 to 2014.