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Tuesday, April 24, 2007 | When the light goes out in a streetlamp in the city of San Diego, an employee in the city’s General Services Department is dispatched, light bulb in hand.
If, after the bulb’s replacement, the lamp is still inoperable, an electrician is called up to inspect the wiring within the fixture. Further failure to rectify the darkened lamp spurs the assignment of a third crew, which checks for electrical problems underground.
“That’s the kind of story everyone believes about city workers, and it’s because the processes … caused that to happen,” said Ronne Froman, the city’s chief operating officer who oversees its the day-to-day business for Mayor Jerry Sanders. “When you step back to look at it, you say, ‘We shouldn’t be doing it that way.’”
The anecdote once was only a stale punch line in a joke about the inefficiency of public employees. But Sanders sees it as a costly, slow moving reality in one of the thousands of machinations the municipal government performs everyday.
The defective lamppost is an example that Sanders and his top managers like to bandy about as a palpable example of how the city can make up its perennial funding shortfalls — like the $87 million that was projected for the coming year — by cutting costs of everyday business of the city government. Their solution: One person with all the skills of the three crews could be sent to handle the light.
Business process reengineering, or BPR, is the tool the tax-averse mayor has highlighted atop all other factors as keeping afloat the 2008 budget he unrolled two weeks ago. The mayor estimates that the city can save at least 10 percent, on average, across all the government’s myriad departments. The phrase has become a key buzzword for Sanders and his supporters, who have heralded the practice as a triumph for good government. Even the employee labor unions initially stated they support any effort to redirect the beleaguered municipality back to financial stability.
The finer points of BPR, however, are unclear. For as much fanfare as there is about many of the mayor’s other priorities, BPR, the mayor’s grandest cost-cutting initiative, has been promoted largely in name only.
The city withholds many of the facts and rationale behind the cuts it makes under the excuse that the information is necessarily confidential.
As a result, the process has served as a point of skepticism for City Hall watchers who find mystery within the mayor’s method for reviewing the government’s efficiency.
Sanders contends that departments and functions are streamlined with the intention of providing the same level of service, but the mayor acknowledges that the city cannot measure the service output of its departments.
The Process Behind the Acronym
And there are indications that BPR is being used as a catch-all buzzword for all of the cuts being made throughout the city, even if they don’t follow the finely-tuned methodology touted by Sanders’ reorganization experts.
“I think it’s confusing,” said Lani Lutar, San Diego County Taxpayers Association president.
The mayor asserts that the BPR is helping him bridge a gigantic shortfall in the city’s general fund, allowing him to spare the city services he thought he’d have to axe months earlier. Anecdotes about the program highlighted talking points during his budget proposal. But the Mayor’s Office and Sanders’ top financial aide have not been able to identify the total dollar amount the general fund would reap through BPR since the budget was rolled out two weeks ago.
Uncertainty over BPR has supportive council officials scratching their heads and the city’s 11,000-employee workforce wrestling with distrust over the process, a suspicion Sanders and his office recognize exists.
Now, Sanders’ annual financial plan, which will prove a crucial test leading up to the 2008 election, hinges on the prospect that the City Council will sign off on the BPR reviews that his office performed for seven different city departments or functions.
That strategy will mark the second time in as many years that the mayor has included a wild card in his budget. Last year, City Attorney Mike Aguirre and the City Council’s budget analyst forced Sanders to scrap a proposal to attach a $374 million borrowing package for the pension system.
Although 2008 is the first fiscal year that Sanders will count on BPR to result in a funding windfall for the city, it is not a new component of Sanders’ plans to revamp the city’s finances. Upon entering office in 2005, Sanders was faced with billions in city debt as well as a campaign promise to hold the line on taxes. The city had to fix its financial problems by tightening its spending, he said.
Some employees mock the process, dubbing it the “Big People Removal” to fit with the acronym. Joan Raymond, president of the union for blue-collar city workers, joked that business process reengineering is the newest in a long-list of other business school catchphrases that have passed through City Hall, among them “organizational effectiveness,” “optimization,” “competitivization,” and “bid-to-goal.”
Post-Its and Magic Markers
Sanders has vowed to make cuts, especially to the city’s ballooning payroll expenses, which included twin billion-dollar deficits in the employee pension plan and retiree health care. One way the city could curtail those costs was by making the city’s workforce leaner, Sanders said. Fewer employees meant a decrease in the ongoing payroll costs and would also chop extra liability from the city’s future retirement costs, he argued.
Sanders chose Froman as the day-to-day manager of the city’s operations after regularly telling voters that the ex-Navy rear admiral name would be his top lieutenant. Despite the name-dropping, Froman has largely stayed out of the public eye during Sanders’ tenure, rarely appearing at council meetings or at the mayor’s press conferences as the others do. Instead, she and Assistant Chief Operating Officer Rick Reynolds, Sanders’ management guru, have been quietly reorganizing the city into what Froman calls “a more functional organization.” Front and center to their effort is BPR.
The goal of BPR, Reynolds said, is to objectively analyze how the city performs its various functions, and to find if there are ways to make them more efficient. By eliminating the amount of time and employees it takes to perform a function, such as issuing a building permit or responding to a complaint about pothole in the street, the city can better serve the residents and businesses of San Diego.
Reynolds said BPR will create real time-saving and cost-reducing measures. Paper timecards that employees fill out in pencil will be transferred to an electronic system. The city’s contracts will be centralized within one department after being spread out between 29 departments. Building permits will be processed along parallel tracks instead of requiring certain decisions to wait, one after the other.
According to people involved in the process, a BPR begins with gathering of a cross-section of the employees from all levels within the department being reviewed. With a long sheet of butcher paper tacked to the wall, the group uses Post-Its and markers to map out the chronology, employees and time it takes to perform a service. The city refers to this diagram as “as-is.”
Once the current process is mapped out, the group sets out to identify inefficiencies, honing in on factors that are included in performing the function. These factors are measured in the numbers of decisions that employees make throughout the process, times tasks are handed off from one worker to another, and days that are spent in delay, for example. All of these areas are encouraged to be reduced when the employees put together their recommendations, known as “to-be.”
Reynolds and the top administrators discuss their own tweaks to the process before it is handed over to the Sanders’ “executive leadership team,” a brain trust of sorts that includes the top administrators in charge of all aspects of the city.
Whereas the to-be maps represent the input by the city’s non-managerial employees, who provide the services on a daily basis, management’s opportunity to shape the outcome of BPR occurs within the higher-level deliberations. Employees receive an update on the mayor’s proposed rearrangement through their unions, which are allowed to comment on management’s plan before it reaches the City Council.
The specifics of most decisions, arguments and facts offered regarding a city department up to this point in the BPR process are kept private.
The Mayor’s Office argues that the confidentiality is necessary because the possibility exists that private companies could eventually bid on that service. The business could win if its bid results in a 10 percent discount compared to city workers’ costs.
Raymond, the union president, said she agreed, but to a point. “We do have concerns about giving out our trade secrets, but I don’t want that being used as a kind of curtain for not revealing the way things are being measured.”
Reynolds said the confidentiality over facts and justification of the BPR protects city workers in the competition by not tipping the city’s hand for the private companies to see. Others are skeptical.
“I am not understanding that quite yet,” said Andrea Tevlin, the council’s independent budget analyst. Tevlin described the public reports the mayor has put out about BPR as “brief and fairly sketchy.” She continued, “I expected bolder descriptions of the process that is being reengineered.”
A Blank Yardstick
Carl DeMaio, president of the Performance Institute, a think tank that advocates for smaller government, said he is impressed with the administration’s BPR efforts so far. But he added that the city is “just crawling right now” until it is able to correctly measure the performance of the departments in providing services, a concession Sanders has readily made.
“We right now have BPR with floaties on,” DeMaio said. “We want to be able to swim on our own, but it’s going to take three years or so.”
Froman and Sanders insist BPRs are performed to make a service more efficient first, and solely for budgetary benefits. They contend, for example, that the objective is not to cut a department’s budget by a certain percentage of its funding. Rather, the city should see if that function can be whittled down in time, money and people where applicable while maintaining the same level of service. Such a process will likely jostle free millions of dollars, but a dollar amount should not be counted on until the BPR is complete, they said.
“The issue I’ve been having is that BPR should not be done for cost savings. But because the city is in the financial problem it is, we’ve used BPR to help us with cost savings,” Froman said. “Really, when you look at BPR you should be looking at efficiency and cost effectiveness.”
However, the reaping of savings for the city’s parched budget has been a major component of Sanders’ plan. The mayor is saying that $49 million will be saved next year, largely as a result of the 300 layoffs and the elimination of about 370 positions that are currently unfilled but budgeted.
Froman said she didn’t think monitoring the costs along the way tainted the process, but that “it put a little bit different spin on it.”
While the mayor touts BPR as a key driver in allowing him the plug an $87 million gap he forecasted for the general fund months ago, his office has been unable to quantify how much of the $49 million that will be saved citywide will come from the general fund.
Despite BPR, an $83 million increase in revenue from last year will be the most helpful ingredient for Sanders.
What does seem apparent is that a large amount of the cuts Sanders is proposing are to positions that have been held vacant throughout the mayor’s first full year in office so that it would produce a substantial windfall for 2008. By stockpiling the budget with these spots in the city roster, the city could then slash it for the upcoming year, when bigger bills were due elsewhere.
Froman said those vacant positions, which could have been cut during the middle of the year to free up savings for departments, were “guarded like gold.” She said she initially thought there might be enough vacant spots in the budget to not have to lay any current workers off.
Others said the strategy left them more skeptical about BPR.
“If a lot of the positions are vacant, then what are they accomplishing,” said Raymond, the union president.
It shows that the departments already adapted when vacancies opened up in their shop and that the time and effort that is spent on the streamlining process might not be about creating efficiency as much as it is about finding new funds through layoffs that had already been made anyway.
“You can cut people and call it BPR,” said Lutar of the taxpayers group, “but that’s not my understanding of what BPR is.”