Outside Audit of Employee Pay at Santa Monica City Hall Heads to Council

By Niki Cervantes
Staff Writer

May 7, 2018 -- Employee costs are higher at Santa Monica City Hall than its Southern California peers, although the same cannot necessarily be said for worker productivity, according to the final version of an outside audit headed to the City Council on Tuesday.

The audit by Moss Adams was prompted by criticism of pay and benefits for employees of Santa Monica’s city government, which by various measures are some of the costliest of municipalities statewide.

For key services from police protection to libraries and buses, the City of Santa Monica generally outspent comparable cities on a per capita basis, with residents paying more than $900 each for policing in the past fiscal year, more than $800 for public bus service and nearly $250 for “facilities maintenance.”

Even smaller departments displayed the pattern. Operating costs for the City Clerk’s Office, for instance, were $3,035,235 -- almost three times the average among peer cities included, auditors said.

The City Manager’s Office administrative division, with 12 employees, had an operating budget of $3,111,455 -- well above the average of $2,242,000.

Meanwhile, the Office of Sustainability and Environment, with 20 employees (compared to the average of 1.4 employees) had operating costs in the last fiscal year of almost $4.6 million. The average peer cost was $377,539.

The audit also determined Santa Monica has higher costs but also higher workloads than peer cities.

But productivity is only “comparable to peers,” the auditors said.

They added the caveat, however, that “productivity varies by program and service, and a comprehensive service level study was not conducted.”

The cost of Santa Monica’s City government has long worried critics.

This is especially the case as the City faces down a looming $461 million bill for unfunded pensions and red ink as spending, including for pensions, races past revenue ("Pension Costs to Climb Almost 75 Percent at Santa Monica City Hall, Think Tank Estimates," January 29, 2018).

In all, the audit raised more concern about spending at City Hall from members of a temporary special citizen committee convened as the audit was progressing.

One committee member, Dominic Gomez, pressed for freezes on wage and/or hiring to cut costs swiftly.

“To get down debt, which is what the City faces, you reduce expenses,” he said. “We are looking for some backbone here from elected officials and management."

The City’s biennial budget is $1.57 billion.

But neither talk of freezes or a proposal (by committee member Laurence Eubank) to pay off the unfunded liability by 2030 gained traction with the bosses -- the Audit Subcommittee, dominated by three council members.

Some members of the citizens committee also expressed interest in continuing on. No support was expressed, however ("Member of Santa Monica Audit Advisory Group Urges City to Pay Down $461 Million in Unfunded Pensions by 2030," February 28, 2018).

A report on the audit to the council by Finance Director Gigi Decavalles-Hughes stresses the positive. She noted all the costs associated with Santa Monica’s budgets not found in most cities, like an airport, and a municipal bus operation which has grown into a regional system.

“Additionally, among peers, Santa Monica shares a reputation, with Palo Alto and Berkeley, as ‘innovation labs’ of local government in California, because they have the employees, culture and resources to explore innovative programming and services,” her report said.

“As noted in the study, ‘Both cities reported that, similar to Santa Monica, the culture of high levels of service was driven by the community, elected officials and employees.

"'City leadership reported that new hires typically have more experience and education than a typical new hire,’” Decavalles-Hughes wrote.

These cities, the audit said, “noted their highly engaged and educated communities, with long public meetings and significant effort made to quickly respond to citizen requests.

"Several peer cities reported a perception that their public meetings are not as long as Santa Monica’s, nor do they require as much staff time to support.”

As comparable cities, the auditors used information, including interviews, from Anaheim, Beverly Hills, Burbank, Culver City, El Segundo, Glendale, Inglewood, Pasadena, Redondo Beach, Santa Barbara and Torrance.

Berkeley and Palo Alto also participated in interviews.