96-736p
Presented
RESOLUTION
GITY OF SAINT PAUL, MINNESOTA
Council File # � - r } 3 (
Green Sheet # 3 G� o�
as
Referted To Committee Date
RESOLUT701�7iYlODIFYING THE CITY CO UNCIL PERFORMANCE AUDIT PROGRAM AND
ACCEPTIIVG THE COUNCIL RESEARCHPERFORMANCEAUDITPLANAND GUIDELI1�lES
1 WHEREAS, Council Fi1e # 95-1392 provides for the escablishment of a City Councii Performance Audit Program; and
2 WHEREAS, the Minuesota State Legislature in the Omnibus Tas Bill enacted the requirement that cities and counties
3 must implemenc performance measurement syscems in order for them to qualify to receive Local Performance Aid (LPA)
4 monies—which are Homestead Agricultural Credit Aid (I fuuds targeted for local governments with perforinance
5 measurement systems; and
6 WHEREAS, local performance aid is funded by reducing each ciry and counry's HACA by $1 per capita and cities and
7 counties who qualify for LPA will receive it on a per capita basis; and
8 WHEREAS, Council File {{95-1392 es[ablishes a performance audit program which will be integral in initiating and
9 maintaining a comprehensive performance measurement system--allowing the City to meet expected future service
10 evaluation criteria from the State; and
ll WHEREAS, the City Council directed Councii Research to prepaze a complete performance audit plan; and
12 WHEREAS, Council Research and the Administration met several times to discuss and resolve issues of mutual concern
13 in the formulation of the performance audit plan; and
14 WI�REAS, the five year cycle for conducting performance audits for all City departments and offices was deemed
15 infeasible in those discussions based on cun staffing levels and the experience of surveyed local and state legislative
16 oversight offices; now, therefore, be it
17 RESOLVED, that the City Gouncil adopt the attached "Saint Pau1 City Council Performance Audit Program and
18 Guidelines;° and be it
19 FINALLY RESOLVED, that the City Council eliminates the requirement as stated in Council File /{ 95-1392 that all
20 City departments and offices have a perEormance audit on a five year schedule. , �
Adopted by Council: Date `
Adoption Cert�ed by Council Secre
BY� � r, �. . � �
� � �_
Approved by Mayor: Date p � 2� L
By- �. ic. ���
Requested by Depariment of:
L'��
Form Approved by City Attorney
By:
Approved by Mayox for Submission to Council
�
`��. '73�
Page 2 of Resolution
(AMENDMENT- 7/24196)
BE IT FURZ`HER RESOLVED that all of the selections of�erformance audits will be
letermined at the Citv Council Organization Meeting• and
FURTHER BE IT RESOLVED any changes of the Guidelines (dated 7une 26 1996�that aze
attached to this resolufion must be aznended by resolution at the City Council levei• and
BE IF FINALLY RESOLVED that al1 findings both positive and neeative wiil be em�rically
rgported to the City Council and the Mayor
9G-� 3G
DECAflTM O/lO��ElCpUNCIL on bl29/96 � � REEN SHEE �° � 3 6 4 0 3
CONTACf PERSON & PHONE O DEPARTMENT DIRECTOR � � CIN CAUNqI ��A�IDATE
ASSIGM CT'AT70flNEY CiTYCLERK
GP' S�aCIlIDdD 2'F�-g575 NUYB£q FOR O
MUST BE ON COUNCR AQENDA BY (DATE) R��p� � BUDGET DIRECT08 � FIN. & MGT. SEflYICES DIR.
7 3 1 : onsent ORCER a MAYOR (�R ASSI57ANn ❑
TOTAL # OF SIGtiATURE PAdES (CL1P ALL LOCATIONS FOR SIGNATURE)
0.Cf10N REQUESTED:
Modifies the City Council Performance Audit Program and Accepts the City CouncIl Research Performance Audit Plan and
Guidelines.
RECAMMENDqnONS: Approve (A) a Rtiect (H) PERSONAL SERVICE CONTRACTS MUST ANSWER TXE FOl.LOWING QUESTIUN$:
_ PIANNMQ CAMMISSION _ pViL SERVICE COMMISSION S� Has this person/Fittn ever vrorked under a contract for Mis tlepartment?
_ Cie COMMmEE YES NO
� STAFF 2. Has this personlFirtn ever been a City employee?
— YES NO
_ DISTRIGT COURT _ 3. DoeS thiS pBrSOfVfirm pOS5e55 a Skill rtOt tlormdll
y possessee by any curre�t city employae?
SUPPOAT3 WIiiCFf COUNCIL 0&IECf1VE? YES NO
Erzplain all yes answers on separete shcet and attaeh to green sheet
INITIATING PROBLEM, ISSUE, OPPORTUNIiV (Who. Whet. When, Wnere, Why):
The, City Council directed Council Reseazch to develop a plan and guidelines for the implementation of the City CouncIl
Performance Audit Program.
ADVANTAGESIFAPPROVED'
The City Council will Lave a plan and guidelines for the implementation of its Performance Audit Program.
�ISADVANTP.CaES IF APPROVED.
, . ' &tL7! ld�Ql�
None.
JUN 2 7 ";���;
DISADVAMAGES IF NOTAPPROVED.
The City Council will not have a plan and guidelines for the implementarion of its Perfonnauce Audit Program.
TOTAL AMOUNT OF TRANSACTON $ COSTIREVENUE BUD6ETEp (CIRCLE ONE) YES NO
FUNDIidG SOUiiCE 1�CTIVITY NUMBEA
FINANCl/LL INFORMATION: (EXPLAIN)
9L-73L
City of Saint Paul
City Council Researcfi Center
Room 310 Cify Hall
Sainf Paul, MN 55102
612 266-8575
INTER-DEPARTMENTAL MEMORANDUM
DATE: June 26, 1996
TO: Council President
FROM: Gerry
SUBJECT: Performance Audit
In Council File # 95-1392 the City Council directed Council Research to prepare a complete
performance audit plan. This plan is attached. Althou h it is based on the original guidelines, it
has been modified to reflect the consensus of three Tengthy discussions I have had with Mark
Shields, Joe Reid, Martha Larson and Marcia Moermond. I feel confident that this plan is
workable and addresses the Council's need £or a performance audit program.
There are several key issues of which you should be made aware as you consider this plan—these
are outlined below.
❑ We have eliminated the five year schedule to conduct performance audits on Ciry
departments. I suggest rather that the Council conduct two performance audits in the near
future and then review the process in terms of how many audits annually are possible given
current staffing levels. Regaxdless of the number of performance audits to be conducted in a
year, I think it is critical that the guidelines apply to the process.
❑ In the discussions it became clear that in order to maintain a viable performance audit
program, the performance audit process must be seen as professional and unbiased both in the
selection of performance audit topics and in the conduct of those performance audits. Within
the terms of the original proposal, all departments and functions would have received
'� performance audits, thus ensuring that a reduced level of potential bias. However, if only
some azeas receive a performance audit, bias in selection becomes a real concern. Therefore,
we suggest that the City Council select the performance audit topia at its organizational
meetings based on recommendations by Council Research and the Administration.
❑ Based on conversations with Mark Shields and Joe Reid, I suggest that the Council consider
the following �or its first performance audits using these guidelines:
� assessment practices for lighting and sidewalk improvements
o practices of the Purchasing Division in the Finance Department
� facilities management
o practices of the forestry division, tree trimming and management
Additionally, I would like to suggest that the Council consider the following areas which were
also discussed with the Administration and selected by legislative aides in conversation with
our analysts. These areas were listed in the previous draft guidelines, when a five year
schedule was used.
q l.-�3 C
� Public Health Code Enforcement
n Planning and Economic Development-Housing Division
� LIEP-New Operations
� LIEP-Ongoing Operations
Some interest was also expressed in these areas:
n Citizen Services
o Fire-Operations
� Parks and Recreation-Recreation Services
� Pianning and Bconomic Development-Grants Administration
o Police Administration
I suggest that the Council consider these potential topics at its organizational meeting, the
process historically employed for topic selection, and suggested in the guidelines. Because
these are the first suggested performance audit topics, the departments will not be notified far
in advance. However, plenry of advance notification will be given for subsequent
performance audits.
❑ A"Post Audit Review" has been added to the performance audit process. There was
consensus among all involved in the aforementioned discussions that such a review would
make the performance audit process more useful.
Also, an additional resolution has been drafted reflecting these changes and ideas suggested to us
by the National Association of Local Government Auditors.
Finally, I would like to clarify the differences between policy analyses, performance audits and
program evaluations, as this issue has come up in several discussions. A policy analysis is a study
of best course of policy action, taking into account the needs of decision-makers and likely policy
outcomes. A performance audit assesses whether current practices are efficient and consistent
-ce�ith policy directives. Finally, a program evaluation looks at the outcomes of policies and their
implementation. Clearly, much of the work done by Council,Research and other such
organizations crosses some of these boundaries, and may fall into more than one category.
Additionally, Council Research will be continuing both its policy analysis and evaluation work.
Our primary objective here is to clarify the scope o£ performance audits and provide guidelines
for the implementation of the Council's PerEormance Audit Program.
If you have any questions, or would like a briefing on these guidelines, please let me know.
cc: Martha Larson, Finance Director
Marcia Moermond, Policy Analyst
Joe Reid, Budget Director
Mazk Shields, Mayor's Chief of Staff
Chron File
attachment
2
°1`-�3�
SAtNT PAUL CITY COUNCIL
PERFORMANCE AUDIT PROGRAM PLAN AND GUIDELINES
Purpose of Performance Audits
The Saint Paul City Council in File # 95-1392 created a Performance Audit Program. The
Performance Audit Progrun will be one of the major tools used to assist the City Council in
its legislative oversight responsibilities. Performance audits will also help the Council evaluate
the level and quality of City services and direct the City's limited resources towards efficient
and effective delivery of quality City services. A perfornzance audit:
� analyzes the consistency of departmentai�gsa��and objectives with overall City policy;
a makes recommendations on how to improve departmental operations and
management; and
� provides an objective assessment of the extent to which the activity being audited is
obtaining good value for money spent.
Performance auditing as a part of the City Council's legislative oversight responsibilities.
Legislative oversight is the process by which a legislative body takes an active role in
monitoring the performance of publidy funded activities, and applies this knowledge to its
three other major functions: making public policy and laws, setting spending budgets and
raising revenues. The objectives of legislative oversight are to
� evaluate and report information and recommendations for legislative decision making;
� promote more efficient and effective operations of publicly funded programs;
� assess and regort on compliance with legislative intent; and
o promote good financial management practices.
Performance audits do not cover all legislative oversight concerns. Namely, performance
audits do not provide a comprehensive firtancial audit of revenues and expenses, although some
financial analysis is necessary to determine the e�ciency of current practices. The State
Auditor conduas financiai audits on a regular basis and there is no need to duplicate this
function. Second, a performance audit does not provide a comprehensive evaluation of
programs to determine whether desired outcomes are being achieved. Finally, performance
audits do not analyze policies to determine which policy options are likely to achieve a
particular outcome. Rather, gerformance audits provide insight to policy-makers on the
efficiency with which policy directives are being implemented.
°I�,-���
Selection of PerFormance Audits
Performance audit areas will be selected by the Ciry Council at its organizational meetings
with the advice of Council Research and the Admiuistration. Audit subjecrs will be
considered based on the level of City funding involved, the relative importance of the policies
under consideration and the potential for imgrovement through the recommendations
generated by the perfarmance audit process. In order to ensure impartialiry and fairness,
performance audits will be scheduled sui months to one year in advance. This will also allow
ample notice for all involved to restructure workloads prior to the commencement of the
performance audit.
The areas eligible for performance audits anclude ali individual policies or program areas
receiving City funding, City offices, divisions and departments— with the exception of the _
Mayor's Office and City Council Offices. Also not included are agencies affiliated with the
Ciry such u the Port Authority, the Civic Center Authority, the Water Utility and the
Housing and Redevelopment Authority.
Selection of Performance Audit Questions
The specific performance audit questions will be determined by Council Research. They will
be targeted to address the interests of the Council and the obligations of the legislative
oversight function. Overall, the two areas which will be addressed in the Performance Audit
Program are:
1. Are practices consistent with City policy? and
2. Are practices efficient?
In order to assess the consistency o£ department practices with City policy, an extensive
review of overall and department-specific City policies will be made. These policies will then
be used to create a framework for the performance audit. The basis for the assessment of the
consistency between policy and practices will be information provided by departmental staff
and reviews of documentation of departmental practices. An underlying assumption of this
effort is that most practices are consistent with City policy: The audits will confarm this
assumption and identify how some practices may depart fxom City policy and why.
The primary authoritative source for guidance for reviewing policy and practice consistency,
as well as efficiency of department practices will be the General Accounting Office's
GovernmentAuditing Standards. Additionally, Council Research will be developing a
standardized format for audit questions which will apply to all departments and activities.
These will be based on a review of current City policies, and reviews of the performance audit
programs carriecl out by other major municipalities.
2
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THE PERFORMANCE AUDiT CYCLE
REQUESTAUDIT �
City Council
IDENTIFY NEED
City Council
Council Research
Departments
Public/Media
`
POST AUDIT REVIEW
City Council Research
CONDUCT AUDIT AND
ISSUE REPORT
Council Research
CONSIDER AUDIT
FINDINGS
City Council
Department
�
TAKE ACTION
City Council
Department
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Several approaches will be used to assess the efficiency of departmental practices. First,
intetviews with department staff and reviews of documentation will be used to provide
insighu for this portion of the performance audit. Second, e�usting performance measures will
be assessed for appropriateness, thoroughness, and consistency with City policy. Performance
measures aze objective indicators of program e$ectiveness and efficiency that are directly tied
to prograzn results. In cases where there are no performance measures, this deficiency will be
noted.
Finally, departmental practices will be "benchmarked" to other exemplary agencies'
performance. The benchmarking process systematically compares performance measures of a
particular activity with those of an exemplary government agency or private sector business
involved in a similar process. Benchmarking may be used to compare for efficiency,
effectiveness or outcome for a particular process against performance measures. The
systematic comparison of practices and perfor�iheasures provides the performance �
auditor with insights for potential modification of practices, and new methods for more
efficientservice delivery.
Participants and Roles
The City Council is directing that Council Research manage the Performance Audit Program.
However, Council Research will be working cooperatively with the Mayor's Office, Budget
O�ce, Finance Department, unions and employees as appropriate. The Performance Audit
Team will be led by the primary policy analyst in Councii Research assigned to the project.
Other team members will include the budget analyst from the Budget Office assigned to the
department, division or office, another Council Research policy analyst and the director of
Council Research. The Mayor's Chief of Staff and the departmental head will work with the
team in an advisory capacity. General responsibilities for team members will be
Primary Council Research Analyst
� Analyze policies which apply to the area receiving a performance audit and assess
practices to carry out those policies.
� Conduct an on-site review of the area receiving a performance audit.
� Prepare the performance audit report.
� Work with the Performance Audit Team to review and edit the report.
� Work with the department, division or office to impiement changes in practices
recommended by the report, if requested by the Council or the department.
Budget Offzce Analyst
� Advise the Performance Audit Team on departmental policies and practices.
� Provade the Performance Audit Team with budget reports when necessary.
a Acc as a liaison to the administration on performance audit progress and results.
o Participate in the performance audit repor[ review process, if requested by the Mayor's
°iG-�3�
Chief of Staff.
Secondary Council Research Analyst
� Assist the primary Council Research Analyst in the analysis of departmental, division
or office policies and practices.
o Participate in the internal performance audit report review process.
Councit Research Dzrector
� Participate in the performance audit report review process.
� Act as final arbiter for conflicting interpretations.
o Act as final editor for the performance audit report.
rYlayor's Chief of Staff (Advisory to Performance Audit TeamJ
n Act as primary Administration contacf to the�ity Council and Council Research in �
the performance audit topic and question selection phases of the performance audit
process.
�._ Assume primary responsibility for the administration's confidential review of the draft
performance audit.
� Assume primary responsibility for the administration's written response to the final
performance andit.
Department Head (Advisory to Perfornzance Audit Team)
� Advise the Performance Audit Team on departmental policies and practices.
� Act as a liaison to the department on perFormance audit progress and results.
n Comment on findings and review draft report as directed by Mayor's Chief o£ Staff.
Conducting the Performance Audit
STEP 1: Information Gatfiering
The first step in the performance audit process wi11 be to gather basic information on
departmentai, division or office practices and to analyze e�sting policies which affect the
department. Policies to be reviewed include those enumerated in the
� City Charter
� Council Resolutions
a City Budget Documents
o City Strategic Plans
� Legislative and Administrative Codes
� Executive Orders
a Comprehensive Plan
o Annual Department Plans & Mission Statements
Information will also be gathered on comparable other public/private sector organizations
which may be used as"benchmarks" for the performance of the department.
� (� - r13 �-
STEP 2: Performance Audit Planning Conference
The Performance Audit Planning Conference will be the forum where the members of the
Performance Audit Teazn discuss the practices of the department, division, office policy or
program area to be audited, as well as the performance measures already in place. The
Primary Council Research Analyst will also present the policies to be reviewed an the
performance audit process. At this planning conference the specific questions of the
performance audit will be clarified and finalized.
S7EP 3: On-Site Review
The Primary Council Research Analyst assigrie'�to tlie performance audit will spend time on�
site at the department, divisaon or office. During this time, the analyst will interview
departmental staff and review documentation relating to procedures and practices. The on-site
visit will require the department, division or office to provide a work space, as weli as
appropriate facilities for interviewing staff.
STEP 4: Report Preparation
The Performance Audit Report will be prepared by the Primary Council Research Analyst in
consultation with the Performance Audit Team in the week following the On-Site Review.
STEP 5: Gouncii Research internal Review
The Performance Audit Report will be reviewed by Council Research staff thoroughiy prior
to forwarding the document to the administration for its review.
STEP 6: Administration Review
Council Research will provide a draft copy of the report to the Mayor's Chief of Staff with
the understanding that the Chief of Staff will share it with appropriate staff to identify any
errors or mis-statements. This review process should also clarify interpretation of policies and
procedures. The Chief of Staff will assume responsibility for maintaining the confidentiality
of the draft report. The administration will have a maYimum of two weeks for this review of
the report. Council Research will then incorporate any necessary changes and correaions
into the performance audit report during the following week. The Council Research Direccor
will act as the finai editor of the document. Notably, only Council Research performance
audits will be reviewed in this fashion. All other Council Research activities, such as program
evaluations, policy analyses, etc. will not be reviewed in the manner suggested by this process.
C�
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STEP 7: Release to Counciimembers
Following Council Research's review and action on the administration's comments, the final
draft report will be circulated among Councilmembers to allow them to become familiar with
the performance audit and discuss with Council Research any questions they may have. The
Council will act to maantain the confidentiality of the dra£t report findings. This process will
take one week. Simultaneously, the PvIayor's Chief of Staff will also be provided with a copy
of this final draft in order to prepaze an administration response to the audit. Again, the
Council Kesearch Director will act as the final editor of the document and take into
consideration any Councilmember comments. The report will be printed as soon as is
practicable following Council review.
Consideration and Action on Pe Audits
It is expected that performance audits will yield results in two areas. The first area is
management practices. The management of the department, division, or office being reviewed
may_implement changes in practices recommended in the performance audit report. The
second is Ciry Councii deliberation on City policies and resource allocation. The
performance audits may indicate a need for policy redirection or reallocation of existing City
resources in order to provide the highest quality City services most efficiently.
Post Performance Audit Review
One year after a performance audit is conducted, Council Research will revisit the area
audited and assess the changes which resulted from the performance audit. It is expected that
changes may have occurred through departmental initiatives, administration direction,
Council resolution or through the budget process.
RG - ?3�
BE IT RESOLVED, that all of the selections of Performance Audits
will be determined at the City Council Organization meeting,griar
• ' : and�c� (V ���
FURTF�R BE YT RESOLVED, any changes of the that is
attached to this resolution must be amended by resolution at the
City Council level; and
BE IT FINALLY RESOLVED, that all findings, both positive and
negative, will be empirically reported to the City Council and
the Mayor.
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Green Sheet # a 7� 6 j
RESOLUTION
C(TY OF SAINT PAUL, MINNESOTA
Presented by
Referred To
1
2
3
4
5
6
7
35
Committee Date � � ��
Resolution Initiating a Performance Audit Program
WHEREAS, the City Council, as the city's legislative body, bears ultimate accountability for the
budget, and
Wk�REAS, it is the responsibility of the councii to evaluate the level and quality of services and
to wisely direct limited resources towards efficient, effective and quality services, and
WIjEREAS, legislative oversight is an inherent duty of the City Council, and
WHEREAS, the City Council wishes to support measures to improve city services,
8 THEREPORE BE IT RESOLVED, that the City Council initiates a Performance Audit Program
9 for all city departments and offices to be managed by the City Council Research Office under the
10 direction of the City Councii, and
11 BE IT FI3KTHER RESOLVED, that the Performance Audit Program will act under the following
12 principles:
13
14
15
16
17
18
19
1
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The purpose of the program will be to analyze and evaluate services as a means to
improve city services and to insure that value is received for money expended.
Ail city departments and offices wili be evaluated at least once during each fave year
cycle.
3. During the audit process Council Reseach wiil work cooperatively with the Budget
Office, Finance Department, management, unions and employees as approprzate.
And
1
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BE IT
3
4
5
6
7
8
9
Yeas Nays Absent
B1akeY �
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Guerin
Harris ,/
Megazd
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Thune
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10 Adopted by Council: Date � �. . �. � ,� \ � � (�
I 1 Adoption Certified by Cauncil Secretary
Research
June 15. 1
12 By: � � a� l� ��
�
13 Approved by Mayor: Date
resent a complete audit
Requested by Department of:
�
Form Approved by City Attomey
Hy: <
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Approved by Mayor for Submission to Council
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