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Uploaded: Friday, September 4, 2009, 9:54 AM
Auditor: Palo Alto lax about phone oversight
City could save about $235,000 a year by adopting a more competitive rate structure
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by Gennady Sheyner
Palo Alto Online Staff
Palo Alto has been lax about charging city employees for personal calls made while on the job, a new audit has found.
The city has a policy, adopted in 1996, that requires employees to reimburse cities for phone calls not related to their work. But an investigation by City Auditor Lynda Brouchoud found that the system the city uses for calculating these reimbursements "is configured with an inaccurate rate structure and does not capture all of the city's phone calls."
The report also found that the city has more than 200 extensions that haven't been used during the April billing period; that the city's phone rates far exceed those of other surveyed jurisdiction; and that the city has been paying $100 per month for directory-assistance calls even though free directory-assistance services are available.
The audit recommends that the city should seek more competitive phone rates, enhance its oversight of telephone charges and use, and develop policies and procedures to ensure workers are given accurate information for reimbursing the city for personal calls.
"In our opinion, the current telephone billing process is inefficient and prevents a thorough review of phone charges," Brouchoud wrote in the audit. "Although the City provides some limited oversight of landline telephone charges, it does not monitor several key aspects of the service and should take steps to enhance its oversight."
The audit found that those workers who submitted reimbursements had to use inaccurate rates to calculate these reimbursements. The city uses a system called TeleMate to document employee calls and request reimbursements. But the audit found that this system is configured "does not capture all of the city's phone calls."
"As a result, the city may not be able to effectively oversee telephone use," the audit found.
The audit also found that because of "technical issues with the system," the city hadn't produced a TeleMate report for about two years. When the Administrative Service Department sent out a report to other city departments in May to request reimbursements for personal calls, the rates in the report were inaccurately listed, leading some employees to overpay.
One employee, for example, paid the city $39.60 for personal calls made between January and March, even though the actual cost for these calls was $22.55. The audit recommends that the city review its procedures and "ensure that employees are provided with accurate information when they reimburse the City for personal calls."
The audit also estimates that the city could save about $235,000 a year by adopting a more competitive rate structure. The city's current rates "are more than 2 to 13 times higher than rates paid by other jurisdictions we reviewed," the audit stated.
For example, the average surveyed jurisdiction paid 1.1 cents per minute for local calls, 2.2 cents per minute for in-state long-distance calls and 2.4 cents per minute for out of state calls. Palo Alto's rates were 2.8 cents, 18.2 cents and 32.1 cents, respectively.
Most cities, the audit states, participate in the "CALNET 2" contract, which was negotiated by the state and which could be adopted by other public agencies. A memorandum prepared by Lalo Perez, director of the city's Administrative Services Department, states that the city is currently researching its ability to join the contract and that the City Council will have a chance to approve the contract next month.
Perez's memo also states that once the city adopts the new contract, the new rates will be entered into the "Internal Call Accounting system," which would "allow the city to disperse monthly call details to departments with accurate rates, and will allow departments to review call details for appropriate use and reimbursements."
The memo acknowledges that the city's oversight for telecommunication services has been insufficient.
"This was due to staff reductions, including a frozen IT Manager position, and oversight responsibilities were not reassigned," Perez wrote.
The memo notes that the city is reviewing the existing telephone-use policy and updating it, as needed.
"For any previous reimbursements, staff is following up with individuals to determine if appropriate amounts were reimbursed and resolving any inaccuracies," Perez wrote.
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Posted by Oldtimer, a resident of another community, on Sep 4, 2009 at 2:38 pm This SHOULD be the beginning of a thorough review of the Information Technology spending during the Benest-Yates years. Wait until the Auditor opens the Pandora's Box of the SAP money pit.
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Posted by Kate, a resident of the Duveneck/St. Francis neighborhood, on Sep 4, 2009 at 5:18 pm Yes, Oldtimer, the auditor SHOULd investigate the SAP / IT contract --- and were there bonuses to employees for choosing that company which has been sued before for performance. Used to be a history of that on Google. Some managers have been vocal about its inefficiencies and downfalls and problems. SAP is a German company, and its chief rival is or was Oracle just down the road. It is known to charge big $$$ for a contract and big $$$ to fix problems later. Check it out on Google.
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Posted by Ed, a resident of the Charleston Gardens neighborhood, on Sep 4, 2009 at 5:22 pm What a waste of time. How much did the auditor charge for her report?
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Posted by Floyd, a resident of the Green Acres neighborhood, on Sep 4, 2009 at 5:28 pm Doesn't everybody have a cell phone? So why is this happening?
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Posted by sarah, a resident of the Midtown neighborhood, on Sep 4, 2009 at 5:28 pm Seems to me that the major complaint here is poor management of the phone contract. The cost of employee phone calls is extremely trivial in comparison.
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Posted by pat, a resident of the Midtown neighborhood, on Sep 4, 2009 at 5:38 pm Brought to you by the same folks who didn't pay attention to travel spending in the Children's Theatre debacle. Who cares? It's only taxpayer money.
"This was due to staff reductions, including a frozen IT Manager position, and oversight responsibilities were not reassigned," Perez wrote.
Pretty feeble excuse. Would your manager buy it?
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Posted by Jayne, a resident of the Greenmeadow neighborhood, on Sep 4, 2009 at 6:30 pm This is a legacy of June Fleming and Frank Benest. Now we have a "take charge" City Manager perhaps all this greed and overspending will end.
It is very hard to vote in favor of a Business Tax to increase the City's revenue stream, when the City's Managers continue to disregard such money wasting.
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Posted by Walter_E_Wallis, a resident of the Midtown neighborhood, on Sep 4, 2009 at 6:39 pm
Walter_E_Wallis is a member (registered user) of Palo Alto Online When you walk through a pasture with your eyes on the stars, you are going to have dirty shoes.
Our council for years has confused election with coronation, and has proceeded to seek a separate foreign policy and to make better people of the residents. Incompetent, often absentee management is heaped with largess while fundamental needs of the city are neglected or actually shunned and the front line workers try valiantly to do a job with little support or guidance.
To repeat an old refrain, hand back the charter and reconstitute as a Municipal Service District with specifically delineated authority and obligations. Giving Palo Altans a Chartered City is like giving a drunk teenager keys to the family car. J'acuse! [Or is it Jacuzie?]
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Posted by Outside Observer, a resident of another community, on Sep 4, 2009 at 6:57 pm Bob Moss, are you out there?
If ever there was Palo Alto government situation just crying out for your exhaustive investigative abilities and dogged determination, the ongoing situation in PA's computer department is it.
The telephones are just the tip of the iceberg, and once you research, you will find that there has been a 7-figure CIP on the books for years and years to replace the 1970's phone system.... But never any action.
Old Timer and Kate 100% on target about SAP, and it all could be gleaned by a through analysis of City contracts.
Bob, you did a wonderful job exposing the financial truth behind the City's failed website.
Hope you are up to this one. In these economically troubled times fiscal scrutiny should be the number 1 priority in Palo Alto.
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Posted by pat, a resident of the Midtown neighborhood, on Sep 4, 2009 at 8:30 pm Walter,
Much has been said and written about the city council, but you say it best: "Our council for years has confused election with coronation..."
Thanks for summarizing the problem so perfectly.
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Posted by Margaret, a resident of the Community Center neighborhood, on Sep 5, 2009 at 8:30 am What's next charging City Employees for using toilet paper, come on guys this is nonsence!
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Posted by Walter_E_Wallis, a resident of the Midtown neighborhood, on Sep 5, 2009 at 12:23 pm
Walter_E_Wallis is a member (registered user) of Palo Alto Online At this point perhaps the employees should form a corporation and bid running the city to a fixed specification. Let the Council foot the bill for blue sky with their own money.
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Posted by Mike, a resident of the Crescent Park neighborhood, on Sep 5, 2009 at 1:28 pm 200 extensions that were not in use? Rates that are 'far higher' than other cities in this area?
It seems like every time someone does an audit in Palo Alto significant areas of waste are discovered. Here we are with one of the highest city budget levels per capita in this area, and currently a deficit.
We have a management problem, big time.
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Posted by a concerned resident, a resident of the Midtown neighborhood, on Sep 6, 2009 at 8:57 pm Mike is right on the source of the problem: "We have a management problem, big time."
Oldtimer and Kate: to investigate SAP is to look into another outcome of inept and poor management. Whatever the outcome of the [SAP] investigation is, Mr. Perez will come up with another feeble excuse, don't you think?
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Posted by Outside observer, a resident of another community, on Sep 6, 2009 at 11:19 pm Mr Perez is the hand picked succesor of Mr Yeats.
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