Grading the Cities introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: San Jose Revenue Rank: 23 Form of Government: Council-Manager Mayor: Ron Gonzales (took office 1999) City Manager: Del D. Bergsdorf (appointed 1999) City Council: 10 members, elected by district FINANCIAL MANAGEMENT: B+ Investment management is notably strong in San Jose, thanks in large part to an Orange County-style disaster that occurred in the 1980s. Unwise investment decisions resulted in a $60 million loss of public funds, and most of the top finance department officials lost their jobs. In the aftermath of that episode, San Jose created oversight and reporting requirements that outdo those in almost every other large city. Annual revenue estimating is particularly strong, and a major effort goes toward keeping the budget structurally balanced for the long term. This is not an easy task, given the property tax limits and other revenue-raising constraints passed by California voters. The city makes efforts to predict the future costs of current projects; but these only go out for a single year, so long-term forecasting is one area that could use improvement. And although the city government would like to do more cost accounting, it is stymied by a financial management information system that doesn’t support this very effectively. HUMAN RESOURCES: C Old-fashioned civil service rules, which have a strong impact here, do not serve the city well. A Civil Service Reform Task Force recently held a series of meetings to pinpoint problems with San Jose’s personnel policies. It found hiring practices, the grievance system and performance appraisal all to be in need of improvement. That may sound like bad news. But the good news is that the city is now aware of its HR problems and is moving toward change. For example, there are 800 job titles, but a classification and compensation study in progress right now will probably result in a reduction of titles to a more manageable 160. Perhaps the biggest weakness is in recruiting. “We haven’t added back sufficient resources to the human resources department, and the job market around here is just amazing,” says Larry Lisenbee, the budget director. “You can’t get anyone to come work for the city. It’s very difficult to fill positions.” For those who can be enticed into municipal work, a fair amount of training is available. About 250 job-related courses are offered in-house in 13 different subject areas. There is also a tuition reimbursement program. Currently, however, there’s little direction provided to employees as to what courses they should be taking. INFORMATION TECHNOLOGY: C San Jose’s information technology is relatively weak, especially in the financial area. Budgeting and accounting aren’t integrated, so manual intervention is required to make the two systems work together. And financial management isn’t integrated with the city’s new human resources system. Although San Jose has made a concerted effort to avoid stovepiped and inconsistent information systems, some departments continue to function autonomously, including streets and traffic, the redevelopment agency, and parks and recreation. Meanwhile, if there’s political benefit to an IT investment — for example, if it will benefit a particular council member’s district — “we get stuff shoved down our throat,” says Jon Walton, deputy director of the information technology department. The city uses information technology most effectively in capital management, through a system that resides in the public works department. All assets are entered into a database when first created, then repairs over time are logged in. “We track everything that the city maintains or is considered city property,” says Walton. “Every tree is tracked by species, age and when last inspected.” CAPITAL MANAGEMENT: A- San Jose stands out as one of the few large cities with a comprehensive infrastructure asset management system that includes buildings, streets, pavement, parks, sewers and stormwater. This gives it very complete information on what it needs to keep up with assets. And it has done a good job of actually funding those needs. Some 90 percent of pavement was rated in fair to excellent condition last year. One of the outstanding features of the planning process is the integration of capital and operating budgets. All project requests are required to include estimates of operating budget impacts and maintenance costs. Summary tables of operating cost impacts are published in several places in the capital improvement planning document. Unfortunately, it can be a battle to get council members to take that information into consideration. One notable obstacle for capital management: A building boom is creating project delays and cost overruns. Fortunately, the city does frequent updates, so leaders know where the trouble spots are. MANAGING FOR RESULTS: C+ San Jose has used performance measurements for years. But they’ve been primarily workload measures and haven’t been particularly effective as management tools. Now, however, the city has embarked on a multi-year project that, if successful, will make San Jose a leader in this discipline, with a truly useful performance budgeting document in effect by 2002. According to the new plan, outcome measures will be set citywide, as will targets, until the entire government is being managed according to the measures. All major city departments appear to have bought into this process, as have the public employee unions. In the meantime, however, the city essentially has no strategic plan, although some agencies do. Its last effort to set one up, in 1994, was a dismal failure, and managers have shied away from revisiting the process since. The next shot at strategic planning may have to wait until the measurement effort has begun to bear fruit. AVERAGE GRADE: B- Copyright © 2000, Congressional Quarterly, Inc. Reproduction in any form without the written permission of the publisher is prohibited. Governing, City & State and Governing.com are trademarks of Congressional Quarterly, Inc.