Critics Assail O.C. Audit Cost, Oversight Team

The Board of Supervisors has launched a $450,000 audit aimed at overhauling county government and has appointed a committee to oversee it, but the plans are coming under attack from some critics as costly and stacked too heavily toward county insiders.

“We question putting out almost half a million dollars when the county is cutting back on front-line health and welfare services,” said Connie Haddad, president of the League of Women Voters. “There’s no guarantee that it’s going to come up with any genuine change. Many of these types of audits just end up in somebody’s file cabinets.”

The criticism has been most pointed against the committee’s chairman, former Orange County Supervisor Bruce Nestande. In a letter to fellow lawmakers last week, state Sen. Tom Hayden (D-Santa Monica) criticized Nestande for receiving $40,000 in contributions from bond and securities firms during his political tenure and asked that Nestande’s role in Orange County’s recovery be scrutinized in that light.

Hayden is on the Senate committee that has held three public hearings dissecting the causes of Orange County’s Dec. 6 bankruptcy. In addition to heading the new audit committee, Nestande also works as a lobbyist for Orange County developer George Argyros, who sits on a private panel advising the Senate committee on its inquiry.

“I am not charging Mr. Nestande with improprieties,” Hayden wrote in the Feb. 16 letter. “However, the (Senate) committee or its staff should interview him on the issues of past and present campaign contributions, the impact of contributions on Orange County investment decisions, and his present role in relation to the Senate inquiry.”

Nestande was appointed to the 18-member audit oversight committee by Supervisor Marian Bergeson. She said she asked Nestande to head the committee because he previously served on the California Transportation Commission and played a key role in overseeing a massive audit of Caltrans commissioned after years of frustration with projects coming in late and over budget.

Nestande brushed aside Hayden’s criticisms, saying his campaign contributions during his tenure on the Board of Supervisors and during his unsuccessful bid for secretary of state in 1986 are unrelated to the county audit.

“My point is, what’s the point?” said Nestande, who served on the Board of Supervisors from 1981 to 1987. “We’re talking here about an audit. We’re trying to take a government and reduce it in size. How do you make it functional? That’s the issue. It has nothing to do with bondholders or whether I’ve been in government. I think we have a very balanced team.”

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Supervisors approved the management audit--with a $450,000 cap on costs--on Feb. 10. The audit is expected to delve into almost every area of county government, reviewing how contracts are bid, what county services could be contracted to private companies, how to avoid duplication in services and the relationship between top county staff members and the elected Board of Supervisors.

Bergeson and others who support the plan say a sweeping audit by outside eyes offers the only effective opportunity to rebuild a leaner county government in the wake of the unprecedented bankruptcy filing.

“This would serve as the basis for any restructuring. You have to know where corrections can be made,” Bergeson said. “You cannot get where you want to go unless you know what is going on and you have a credible database.”

Bergeson said the audit is “really geared to be a performance audit--to determine how effective the county is in the delivery of service. . . . The position we’re in now really gives us an opportunity to take an in-depth look at all county departments.”

In approving the audit, the board named 16 people to the oversight committee, including Bergeson, Supervisor Roger R. Stanton; Westminster Mayor Charles V. Smith; Jan Mittermeier, manager of John Wayne airport; county labor leader Bill Fogarty, and several prominent business leaders.

Two more people--both local activists--were named to the committee after some residents complained that the panel was stacked with members who are too close to county government to view the task impartially.

“There’s a lot of foxes in the henhouse,” said Fogarty, of the Orange County Central Labor Council. He lobbied for his committee seat and said he feared his opinions will be outweighed by the business members who could benefit from a slimmer county work force that relies more heavily on privatizing county services.

Bergeson said the two late appointments should help balance the panel.

Bruce Whitaker, a spokesman for the anti-tax group called the Committees of Correspondence, was appointed after he and others criticized supervisors for leaving out average taxpayers. And when Orange County Common Cause President William R. Mitchell wrote a newspaper opinion column last week criticizing Bergeson for “relying exclusively on the political in-crowd,” she asked him to serve on it as well.

Others committee members said they believe the audit will be impartial and fair. Mary Ann Schulte, the owner of a Santa Ana engineering contracting firm that does business with the county, said she and other business members were sought out for their management expertise, are volunteering their time, and only hope to help reduce the costs of county government.

“I think it’s one of the fastest most efficient ways of doing things,” said Schulte, who also heads a subcommittee of county vendors in Bankruptcy Court.

“It makes a lot of sense because it brings an independent organization into the county to do it. Generally, they have widely dispersed staffing so they can go out and nail down the duplicity. I think that’s what the county is looking for most, to get rid of the redundancy.”

But some critics of the county audit, however, warn that as government struggles to reinvent itself in the wake of the bankruptcy, officials could be engaging in the same wasteful duplication of efforts they are trying to avoid.

The audit plan came after Supervisor Stanton announced intentions to launch a restructuring task force made up of a broad base of county residents. Stanton said he is concerned about the price tag of the audit but believes the two efforts can be complementary.

“This should not in any way obviate the need for a restructuring effort that brings into play community input,” Stanton said.

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Stanton said he plans to keep a close watch on audit expenses and wants “to see the expenses approved in stages. I don’t believe in signing blank checks.”

Stanton said the efforts of the restructuring task force differ because the group would look at the way the county interacts with cities and other agencies. Bergeson, however, said the outside audit will cover the same ground.

In addition, the League of California Cities has convened a “restructuring super committee” to examine relationships among cities, the county and special districts in an effort at greater efficiency, said Janet Huston, executive director of the league’s Orange County chapter.

Mayors and city managers from across the county met for the first time Friday to discuss the league’s plan, and Huston said the officials raised concerns about duplication but remain convinced that a range of voices must be heard. The league has invited two supervisors to join the group.

“They’re all pieces of the puzzle,” Huston said. “There isn’t any one group that has the entire answer.”

Nestande said the county audit committee will meet within the next 10 days to discuss how to get the effort underway. The committee will then work with the county administrative office to hone the scope of work and will being seeking bids from interested firms by March 1. The committee is expected to recommend an audit firm by April 18.

Bergeson said it is unusual to commission a management audit with such a large scope and that the only similar effort she is aware of was the $500,000 Caltrans audit, which last year led to 72 recommendations to overhaul the agencies. Caltrans officials said some of those currently are being put into place.

The Caltrans audit was spawned by state legislation introduced in 1992 by Bergeson, then a state senator, and state Sen. Quentin Kopp (I-San Francisco), who is on the state Senate committee probing the county’s bankruptcy.

Bergeson said the county’s audit is a worthwhile investment in the county’s future.

“We need a document that we can look at that is like a blueprint for defining the status of the county as it is and looking forward,” she said. “You can’t get there without that.”

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Audit Committee Roster

The Board of Supervisors has appointed a committee to define the scope of a sweeping outside audit of county government and steer the audit to completion. Supervisors say the committee represents a wide range of views and backgrounds, but some have criticized it as stacked toward county insiders. A look at the ad hoc Audit Oversight Committee:

PUBLIC SECTOR

Member Affiliation/Position Marian Bergeson Supervisor Roger R. Stanton Supervisor Frank Eley County employee/board president of Orange County Employees Assn. William J. Popejoy County interim chief executive officer Bill Fogarty Orange County Central Labor Council Jan Mittermeier John Wayne Airport manager Charles V. Smith Westminster mayor

PRIVATE SECTOR

Member Affiliation Bruce Nestande* Arnel Development/former supervisor James Doti Chapman University Doy Henley Aeromil Engineering Inc. Hugh Hewitt Hewitt & McGuire Gary H. Hunt Irvine Co. Christobel Selecky FHP Inc. Mary Ann Schulte Sukut Construction/chairs vendor subcommittee in Bankruptcy Court Wayne Wedin Orange County Business Council Laurel L. Wilkening UC Irvine (tentative)

Appointed after criticism of committee composition

Member Affiliation William R. Mitchell Orange County Common Cause Bruce Whitaker Committees of Correspondence

* Committee chairman

Source: Orange County Board of Supervisors