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Comprehensive Operational Review of City Government: Public- and Private-sector Cooperation in San Diego.

This article describes how the San Diego business community donated time and expertise to improve municipal efficiency and effectiveness.

Like many other cities in the United States, San Diego did not take full advantage of the expertise that existed in the private sector. Because of national trends toward privatization, relations between local government units and the private sector in the arena of service delivery had been competitive. That began to change in San Diego in 1993 when Mayor Susan Golding tapped a group of individuals from the business community to review and comment on the city's operations. Historically, San Diego business leaders have provided energy and creativity to the affairs of their city by serving on various city boards and commissions, but they had never been organized as one group focused solely on city operations.

After a full year of study, that group, known as [Change.sup.2], made more than 100 key findings, policy recommendations, and operational recommendations which had a significant impact on the city organization and operation.

A major recommendation of the [Change.sup.2] group was to institute regular programmatic reviews of all city operations every five years using citizen review teams. The purpose of these reviews of city functions was to ascertain if such functions:

* are within the scope of the city goals and purposes;

* should be done at all;

* should be done the way they are currently being done; and

* should be done where they are currently being done.

To implement the recommended programmatic reviews, officially designated as Zero-base Management Reviews (ZBMR), San Diego contracted with a local non-profit organization that specialized in providing comprehensive management assistance and consulting resources to public and non-profit organizations in the region. This group, the Support Center/Executive Service Corps (SC/ESC), was retained to recruit high-level talent to conduct the reviews and facilitate their work and produce the final reports.

The city pays SC/ESC for the cost of recruiting the volunteers, for the volunteers' mileage and meals when they are doing work related to the review, and for the cost of coordinating and producing the actual report. Those costs have been $100,000 annually.

Zero-base Management Reviews

The zero-base management review process has now been in place for nearly five years. During that time, the basic procedural steps have essentially remained the same, with some refinement.

The Work Program. Annually, the city manager presents a proposed work program encompassing 20 percent of the city's operational budget for the review teams to undertake. The proposal is presented to a working subcommittee of the city council appointed by the mayor and consisting of three council members and citizen appointees from each city council district. The committee, known as the Select Committee on Government Effectiveness and Efficiency, has approved the work program without exception each year.

Recruitment of Citizen Volunteers. SC/ESC has a strong relationship with the business community by virtue of its primary function to serve as a resource to the community. One of the original [Change.sup.2] members, who is also an SC/ESC board member, serves as the program coordinator and chief recruiter. He is a retired executive from a local company who volunteers his time.

While many of the citizen volunteers are retired executives, many others are active members of the business community who are willing to lend their time and expertise. The professional profile of these volunteers, both active and retired, varies depending on the particular operation being reviewed, but two characteristics have been constant: 1) expertise in at least one type of subject matter; and 2) a managerial or macro perspective. For example, the review of a major department with perceived morale issues had a review team consisting of a human resources director and a vice president of human resources from Fortune 500 companies. The team reviewing the Police Department's fleet operation and maintenance program included the vehicle repair operations manager of one of San Diego's largest car dealers.

The Zero-based Management Reviews. The zero-based management reviews began in the spring of 1995 and have followed the same format since that time.

1) Single or multiple teams, depending on the size and scope of the department under review, are selected consisting of two to four members each.

2) The city manager or one of the deputy city managers, the department director, and the senior staff of the function being reviewed meet with the team(s) to initiate the study. The meeting is intended to establish a working relation ship between department personnel and the teams, as well as to provide the city manager an opportunity to provide information about the process and make his expectations of city staff clear.

3) The studies generally take about six weeks with the team(s) meeting and interacting with staff a couple of times a week for up to four hours. The focus is on macro rather than micro issues, and the recommendations have generally resulted from three primary sources: a. Employees--The employees who do their work every day are one of the best sources of information in determining how to do that work more efficiently and effectively. Yet communication and opportunities to express opinions are not always what they should be in organizations. Supervision can suppress change and different ways of doing business. The ZBMR process provides an opportunity to bridge any organizational barriers.

b. Team expertise--Putting time and energy into ensuring that the citizen volunteers are highly qualified, pays off in the form of insightful observations and recommendations.

c. Collaboration--A combination of the first two sources yields a significant third source. Teams raise issues from a fresh perspective and motivate staff to revisit traditional policies or work procedures. This informal give-and-take during the review helps to shape the formal ZBMR report into practical recommendations that are more likely to be adopted.

4) Each ZBMR team drafts a statement of findings and recommendations for the program they reviewed. Occasionally, external information or comparative benchmark data supplement the conclusions. SC/ESC staff compiles and edits these written reports, organizing the observations and recommendations of each of several teams into one overall department report.

Department Review. Before the city manager or any of his immediate staff see the report, a draft is shared with the department head and his or her staff to provide them with the opportunity to correct errors or misconceptions, challenge recommendations, and discuss the report in general.

City Manager Review. Once input from the department is incorporated into the report (if the review team agrees), the SC/ESC coordinator meets with the city manage; the deputy city manager over the particular function and the financial management director, who is the overall project coordinator for the city.

This review provides the city manager with the opportunity to have input in the report before it is finalized. It also provides the SC/ESC coordinator with the opportunity to informally discuss issues regarding the study and the overall experience of the team.

City Council Subcommittee Review. Once the city manager has had 30 days to review and comment upon the report, the SC/ESC coordinator finalizes the report, presents it at a public meeting, and makes a presentation of the principle points in the report. This allows opportunities for questions and discussion.

Department Response. Departments are provided 30 to 60 days to respond to the recommendations, prepare an implementation plan, and provide any comments they feel are appropriate.

City Council Subcommittee Review. Department responses are presented in a public meeting and discussion generally focuses on those areas where there are disagreements. Decisions are made relative to disagreements and implementation plans are approved. Any need for follow up is discussed and time frames established.

Annual Progress Review. Review recommendations and implementation plans are revisited annually by the city manager to determine progress relative to established time lines. Results are reviewed and discussed in public session at the city council subcommittee.

Cost Savings

The ZBMR process is ongoing with new recommendations and recurring savings continually adding to the overall cost savings. Exhibit 1 provides a summary of the recommendations and actual savings to date in the equipment division of the transportation department, which was the first program to be reviewed.

Initial ZBMR estimates of fiscal impact as a result of all of the first year's projects were projected to exceed $60 million from inception to date. While the city will not realize all of the projected savings, early projections indicate that approximately one-half of that amount will be achieved. When recommendations from studies in subsequent years are included, actual savings to date exceed $30 million.

The savings which actually have been achieved have been utilized for a variety of purposes as is the case in any allocation process: reducing the budget or additional expenditures for items such as new technology, better training for personnel, or reallocations to higher priorities.

A sampling of recommendations from various ZBMR reports relative to different departments is listed in Exhibit 2 to provide some perspective as to the nature and scope of typical ZBMR recommendations.

Applications for Other Jurisdictions

There are some basic issues jurisdictions must ensure are addressed before and during implementation of a program like this.

Program Champions. It is the exceptional department director that welcomes recommendations for change in his or her operation. As a consequence, all of the elements exist to create an adversarial atmosphere. To avoid the perception that this is a war, champions who can communicate that this is an opportunity to explore new ways of doing business are an absolute necessity.

The city manager or administrative leader of the organization must be the champion of this program and set the tone he or she expects from staff. Secondarily, support from the city council helps to maintain the program's momentum. Finally, a high-level coordinator on the city manager's staff must be designated to deal with day-to-day issues relative to the program.

Even with strong champions, you will have staff who will attempt to discredit the ZBMR teams and team members. Change and perceived criticism can be very threatening. Ensure that your process incorporates some type of independent internal review to identify legitimate concerns with the ZBMR recommendations.

This is a program that will thrive in a cooperative and supportive atmosphere. The concept is to create a dialogue within which ideas for improvement can be discussed without someone feeling threatened or that they "lost" or were perceived as "wrong.

External Program Coordinator. This position also could easily be designated

as a "program champion," but it is much more important than that. It is really the heart of the program. San Diego was lucky to have a retired high-level executive who believed in the program, orchestrated the resources necessary to involve the nonprofit organization (SC/ESC), established the process and procedures to recruit the high-level volunteers and coordinate the studies. This person is the city's point of contact for issues relative to the program. Look for executives/managers who, rather than having an ax to grind, want to contribute to the overall excellence of the operation and have a positive mental attitude.

Citizen Volunteers. Retired or active, seek the highest level personnel possible. Presidents, chief executive officers, chief finance officers, vice presidents, department directors, and program managers are the rule rather than the exception in San Diego's program.

Recognizing Volunteers. These individuals are donating their time and talents and warrant recognition. San Diego annually hosts an awards breakfast or lunch with members of the City Council presenting plaques to members of the ZBMR teams.

Establish a Process and STICK TO IT! There are two steps in San Diego's process where pressure has been exerted at one time or another to abridge the process. The first is review of the draft report by the department. The department must have the opportunity to address the report and recommendations before going to the city manager. This allows an opportunity to correct mistakes and misperceptions and an opportunity for the department to negotiate language and approach.

The second is review of the draft by the city manager. Considerable pressure has been exerted more than once to air the report at a public meeting before the city manager has had an opportunity to comment.

Followup. It is important to institutionalize the follow-up mechanism and assign the responsibility to a specific work unit to accomplish it. In San Diego, staff from the office of Management and Budget coordinate the annual review with input from reviewed departments. They are the same staff that provide support to the city manager throughout the year, and it has worked well in San Diego.


This is a program aimed at providing opportunities for professionals from the private sector and the public sector to meet, share experiences, and learn from each other. The city benefits because:

1) the primary purpose of the program is to share private sector experience and expertise with the city through the ZBMR reports; and

2) in those instances where city staff is doing an excellent job, the ZBMR teams provide validation for a job being well-done. That always carries more weight with policy bodies than saying it yourself.

With regard to benefits to the private sector, in many cases, members of the private sector enter the review process with a preconception that the city is inefficient. In general, once those individuals have interacted with city staff and completed their reviews, their perception of city staff is much higher than when they began. While it benefits them to have a more realistic understanding of city operations, their understanding also benefits the city.

The program does not boast intangible benefits alone, however for every dollar spent to date in the ZBMR process, the city of San Diego has received more than $100 in cumulative direct savings or spendable benefits.

ERNIE ANDERSON is the Financial Management Director for the City of San Diego and a member of the GFOA Committee on Governmental Budgeting and Management.
 Transportation Department-Equipment Division
ZBMR Recommendations-September 1995 Status--1999
Implement a program to reduce the size More than $11.5 million has been saved
of the city's vehicle fleet based since FY 1996 due to suspended vehicle
utilization analysis. purchases.
Standardize vehicle purchases and More than $1.5 million has been saved
implement a procedure of staggered since FY 1996 due to new procurement
procurement on a five-year cycle. and acquisition practices pertaining
 vehicle purchases.
Implement a program to maximize the More than $400,000 has been saved
receipt of vehicle repair and FY 1996 due to the division's rigorous
replacement effort
parts under standard warranty to pursue warranty repairs.


Metropolitan Wastewater Department

Implement flexible staffing practices, reduce supervisory levels, and implement cross-training programs within the operations, maintenance, laboratory, and wastewater collection functions.

Water Department

Reengineering the operations division around processes, rather than around traditional functional lines. Improve the system for issuing trucks to field personnel based on job requirements.

Police Department--Fleet Maintenance Division

Reduce police equipment accident levels through ongoing driver training and a review of vehicle lighting and safety equipment.

Engineering and Capital Projects Department

Implement a computerized project management and tracking system departmentwide in order to achieve project management process improvements and cost reductions.

Park and Recreation Department

Implement a program of increased supervisory flexibility and workforce streamlining to achieve productivity improvements in turf, horticultural and custodial maintenance.
COPYRIGHT 1999 Government Finance Officers Association
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999 Gale, Cengage Learning. All rights reserved.

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Author:Anderson, Ernie
Publication:Government Finance Review
Geographic Code:1USA
Date:Oct 1, 1999
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