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Changes requested for proposed audit

November 28, 2012
Morning Journal News

SALEM - City Council's Committee of the Whole tightened up the language for the terms of a proposed performance audit by the state, rewriting some of the lines related to the cost savings and the audit cost.

The committee met Tuesday night to hash out the revisions and directed Mayor John Berlin to submit the city's response to the Auditor of State regarding the requested changes in the revised letter of arrangement.

Committee Chairman Dave Nestic said the next step will be to wait for the state's reply to the city's response and see if any additional changes need to be made for a final document outlining what's expected on both sides and how the audit will be carried out.

Once the final document is ready, council will take a vote on whether to authorize the mayor to go forward with accepting state funding to cover the cost and go forward with the performance audit.

The state estimated the audit could cost up to $71,700, but under the arrangement, the city would only pay the amount of expected savings identified through audit recommendations up to $71,700, meaning the city could pay less.

The Finance Committee of city council voted in June to pursue a loan from the Leverage for Efficiency, Accountability and Performance (LEAP) Fund to defer the cost of a performance audit which will look at city government operations and whether changes can be made to realize savings.

Last fall, council voted 4-3 against accepting LEAP funding and going forward with a performance audit, but some of those members are no longer serving, with new faces on council this year. The estimated price of the audit increased this year because of a wider scope which includes the Utilities Department and the Parks and Recreation Department.

Last week, the Utilities Commission agreed to share in the cost of the audit if savings are found in the department. The Parks Commission is meeting at 5 p.m. today to address the issue. Councilman Clyde Brown and Councilwoman Cyndi Baronzzi Dickey, who both sit on the Parks Committee of city council, questioned whether the Parks Department could use any of its funding to cover any part of the cost if savings are found in the parks operation, pointing out that they didn't think the levy money could be used that way.

Nestic said that will be a separate issue from the letter of arrangement.

A spokesman for the state Auditor's office explained previously that the auditors working on the performance audit will review agreed-upon areas and benchmark the city's performance against standards and best practices and how the city performs compared to peer cities.

According to the scope outlined in the letter of arrangement, the state will look at administration operations, public safety, public works and parks and recreation. Interviews will be conducted with personnel, data will be collected and the reliability of the data and information will be tested. The city will have input to make sure the base information is correct.

Most of the points the committee tweaked dealt with the calculation of the cost savings and how it will be applied to what the city will have to pay for the audit, with Berlin pointing out that the language should specify that they only repay for the actual cost of the audit, not what was estimated.

Part of the language they clarified dealt with the fact that any savings identified excludes negotiated compensation, defining that negotiated compensation includes, but is not limited to, wages, benefits and other fringes as specified in the union contracts.

In other words, the state can't make a recommendation for an area where the city doesn't have complete control, such as a negotiated union contract, and then hold it against the city.

They also changed the wording regarding the use of peer cities for the benchmark analysis, saying the city and the auditor of state will agree upon the peer cities to be used instead of just saying the city will provide input.

Nestic also suggested wording to say that no identified cost savings that has an implementation cost twice the amount of the cost savings would qualify as an identified cost saving used in the calculation of the what the city owes.

"We're trying to tighten this up so they have to perform. They have to do their job really well to justify getting paid," he said.

Brown commented that the state's not going to go to all this trouble without an expectation of getting paid something.

"They're going to find mistakes that we made. If it saves money, I don't care," Brown said.

Before they wrapped up the discussion, Councilman K. Bret Apple questioned a section which said if the conditions to gather information can't be met, then the state will discuss revisions to the cost estimate.

"If they have a problem getting information from the peers, I don't think we should get punished for that," he said.

It was agreed to recommend taking out the word peers so that's not a consideration when it comes to the conditions and whether they can be met.



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