Honorable Tom Ammiano, President
and Members of the Board of Supervisors
City and County of San Francisco
Room 244, City Hall
1 Dr. Carlton B. Goodlett Place
San Francisco, California 94102-4689

Dear President Ammiano and Members of the Board of Supervisors:

Transmitted herewith is the Budget Analyst"s Performance Audit Report of the Department of Parking and Traffic.

In total, this report presents 8 findings which contain 49 recommendations. Our recommendations are detailed in each of the finding sections in our report. If fully implemented by the Department, these recommendations would result in an estimated $8.8 million to $12.9 million annually in reduced costs and increased revenues for the City.

Our findings and recommendations are organized in seven separate sections of this report addressing Parking Control Enforcement issues, Workers Compensation, Fleet Management, the Parking Meter Program, the New Contract for Parking Citation Processing Services, the Adult School Crossing Guard Program and a follow-up to our 1993 performance audit of City-Owned Parking Garages. Each of these sections of the performance audit report are summarized below.

Enforcement

As part of the Budget Analyst"s performance audit of DPT, we reviewed the deployment policies and practices, as well as the availability of Parking Control Officers (PCOs) to work their scheduled assignments in the Enforcement Division. With 354 personnel, the Enforcement Division has the greatest and most consistent exposure to the general public.

Based on our review and analysis of the operations of the Enforcement Division, we found that DPT is unable to provide an adequate level of enforcement services throughout the City for two principal reasons: (a) high absenteeism among Parking Control Officers; and (b) the failure of DPT to schedule a sufficient number of PCOs to meet its minimum staffing requirements or to adequately enforce parking regulations during all periods when coverage is needed.

Section 1.1 Parking Control Officer Productivity

Based on our analysis, we found that DPT is unable to provide an adequate level of enforcement services throughout the City primarily because of high absenteeism among PCOs.

On average, approximately 25 percent of PCOs are not available to work their scheduled shifts on any given day. This is the equivalent of 65 PCOs who are unavailable for work over the course of an entire year. Even when vacation, compensatory time off, holidays, and family leave are excluded, PCO absenteeism results in 12,157 lost days per year, or the equivalent of 47 PCOs. The total cost to the City of PCO absenteeism is nearly $9.7 million annually.

In addition, we found that policies and procedures regarding attendance are not enforced consistently by the DPT. As a result, 60 percent of PCOs do not meet acceptable standards for attendance.

There is also strong evidence indicating the abuse of paid sick leave. Our report cites examples of PCOs taking paid sick days on the day before or the day after their regular days off, their holidays, or their vacation days, thereby indicating that paid sick leave is being abused by PCOs.

DPT should formally establish and consistently enforce employee attendance standards and consider implementing incentive programs to reward employees for showing up to work. By reducing absenteeism, DPT could add the equivalent of between 11 and 32 PCOs annually (of the total equivalent of 65 PCOs unavailable over the course of a year), which would improve the enforcement of parking and traffic regulations throughout the City and result in increased turnover of parking spaces, reduced traffic congestion, and better response to complaints. Also, additional revenues of between $2.1 million and $6.2 million could be generated annually from increased parking citation revenue.

Section 1.2 Parking Control Officer Deployment

Based on our review and analysis of DPT"s deployment policies and practices, we found that DPT often does not schedule a sufficient number of PCOs to meet its minimum staffing requirements or to adequately enforce parking regulations during all periods when coverage is needed the most. This problem is further exacerbated by the high absenteeism discussed in Section 1.1.

For example, DPT falls short of its minimum staffing requirements on every day of the week, resulting in an average of 119 shifts (of the minimum requirement of 1,242 shifts) remaining unstaffed each week. In addition, DPT does not provide consistent or sufficient coverage of General Enforcement "beats" (geographic PCO assignment areas) throughout the day or of Residential Permit Parking areas during all time periods when coverage is needed.

DPT should modify current PCO deployment and shift assignment practices in order to achieve a more efficient and effective allocation of PCOs and to improve the Department"s ability to provide a sufficient level of enforcement services throughout the City.

The implementation of our recommendations would lead to improved coverage of General Enforcement beats and Residential Permit Parking areas, increased turnover of parking spaces, reduced traffic congestion, and better response to complaints. In addition, using overtime rather than regular duty PCOs to provide special event coverage would result in net increased revenues of over $2.1 million annually.

Section 2 Workers Compensation

As part of this performance audit, the Budget Analyst reviewed and analyzed DPT"s workers compensation expenditures and its policies and practices with regard to the filing of workers compensation claims and the use of modified duty assignments for personnel who have temporary disabilities. We found that:

• DPT ranks third behind the Fire Department and the Municipal Railway in workers compensation expenditures per employee. Actual expenditures have increased by an average of 24 percent per year over the past five fiscal years. Projected FY 1998-99 workers compensation expenditures are $2,143,948, or $420,359 more than budgeted expenditures. Currently, DPT spends an average of $7,063 per claim, and 44 percent of DPT"s workforce has at least one active workers compensation claim.
• Additionally, 86 percent of work-related injuries result in lost workdays. Work-related injuries have resulted in 20,836 lost workdays over the past nine years. This corresponds to lost productivity of nearly $4.2 million in salaries and benefits, or an average of $465,867 annually. In addition, this lost productivity negatively impacts service levels, thereby contributing to increased traffic congestion, reduced parking turnover, reduced parking citation revenues, and increased complaints from the public.
• During the period from January 1, 1990 through December 31, 1998, employees with workers compensation claims missed an average of 66 workdays each, with 91 employees missing more than three months of work, including 15 employees missing more than one year of work. One employee missed over three years of work as a result of an injury. We also identified numerous instances of employees filing multiple claims in one year, in successive years at the same time of year, or for the same type of injury, indicating potential abuse of the workers compensation system.

DPT has developed a Workers Compensation Cost Containment Plan. After a thorough review and evaluation, we recommended alterations to the original plan. We now support the funding and implementation of this plan, including improved case management and claims administration. In addition, we recommend that DPT expand its Modified Duty Program (to bring injured employees back to work performing jobs that accommodate their physical impairment) and the use of Industrial Disability Retirements, for employees that can never physically perform the duties of their position, in order to improve worker productivity and reduce workers compensation costs.

The implementation of our recommendations would enable DPT to reduce its workers compensation costs by a total of $2,776,341 over the next five years. This would be partially offset by additional total costs of $1,265,601 over the next five years, resulting in net savings of $1,510,740 in the first five years, with on-going net savings of $1,451,080 per year thereafter.

Section 3 Fleet Management

This section of our report provides a review of DPT"s vehicle assignment practices, maintenance costs and acquisition policies, with a primary focus on the Enforcement Division. The general purpose of this review was to provide recommendations on vehicle assignment policies, vehicle maintenance practices, and a vehicle acquisition strategy which are consistent with the needs of DPT and the City"s budgetary resources. Within this general purpose were specific goals, including: (1) ensuring that an adequate number of vehicles are available for DPT staff; (2) a reduction in the cost of operating DPT vehicles; (3) increased reliability of DPT vehicles; and (4) a regular replacement schedule for DPT vehicles.

As of the writing of this report, the Enforcement Division had a fleet of 261 vehicles, consisting of 217 3-wheel motorcycles (e.g., GO-4s, Cushmans, and Kosmans), 34 Geo Metro subcompact vehicles, five Chevrolet Trackers, and five vans.

DPT"s Enforcement Division currently has a sufficient number of vehicles in its fleet and available for service to meet its daily vehicle needs, and has made significant progress in improving its ability to track vehicle repair costs.

Nonetheless, the average maintenance costs for DPT vehicles are very high. In FY 1997-98, DPT spent $0.39 per mile on maintenance costs (excluding fuel), or three times the manufacturer"s estimate of $0.13 per mile for 3-wheel motorcycles. We identified three principal reasons for this: (1) 65 percent of DPT"s vehicles are at the end or have already surpassed their recommended vehicle life; (2) the practice of repairing rather than retiring and replacing aging vehicles in need of costly repairs; and (3) an inadequate level of preventive maintenance.

For example, we found that the average repair costs for older vehicles was 127 percent higher than the average repair costs for newer vehicles. In addition, we identified several examples of extremely costly repairs: repairs costing $5,625 were done on a seven-year old Cushman with a book value of only $534, while repairs costing $4,789 were performed on another six-year old Cushman with a book value of $1,205. One seven-year old Cushman with a book value of $124 incurred $6,898 in repair costs in one year, while another six-year old Cushman with a book value of $1,752 incurred repair costs of $5,868 in one year.

DPT should implement a regular replacement schedule for its entire vehicle fleet. The estimated cost to replace its 3-wheel vehicle fleet would be $750,545 annually.This level of annual expenditure would not represent an increased cost, however, but would merely stabilize spending. For example, a regular replacement schedule would eliminate the need for large acquisitions that result in a large part of the fleet aging at the same time, thus necessitating further large acquisitions in the future. Regularly replacing vehicles when they can no longer be operated economically would eliminate the need for costly repairs of aging vehicles, thereby reducing DPT"s maintenance costs. If the Enforcement Division can reduce its maintenance costs from $0.39 per mile to the manufacturer"s estimate of $0.13 per mile, this would result in on-going savings of $321,371 annually.

Section 4 Parking Meter Program

DPT"s Traffic Operations Division is responsible for the City"s Parking Meter Program, including the maintenance, repair and collection of revenue from approximately 22,700 parking meters throughout the City. The Parking Meter Program consists of a Parking Meter Maintenance Division, a Parking Meter Collections Manager, parking meter collection services provided by an outside contractor and coin counting services provided by MUNI"s Revenue Department.

DPT is currently preparing a Request for Proposal (RFP) that would replace about 22,700 mechanical parking meters with electronic parking meters. The Department is also considering that a portion of the current Parking Meter Program be managed by an outside contractor.

The Parking Meter Program suffers from poor coordination of staffing and resources. For example, two critical functions, the Parking Meter Maintenance Shop and the Parking Meter Repair Shop, have had until very recently staff vacancy rates of 25 percent and 40 percent respectively. This has contributed to a low revenue collection rate of only 40.9 percent of optimal collections based on a parking meter in-service rate of 85 percent, or $2.21 per day per meter instead of $5.40 per meter per day. Although it can be expected that the introduction of electronic parking meters will improve the collection of revenue, other measures can also be implemented to increase the parking meter revenues to the City even further and to increase the availability of short-term parking.

The Department should consider all options in its pending RFP that would both implement the replacement of its current meter inventory with electronic meters and streamline the current operations of its Parking Meter Program. We estimate that our recommendations, in addition to the conversion to electronic meters, will provide a net increase of $2.9 million annually.

The improper use of Disabled Persons Parking Placards (DPP) has significantly reduced the potential revenue from parking meters. A disabled placard user may park at most parking meters in the City free of charge for the entire day and therefore may reduce the annual revenue from parking meters by an estimated $4.6 million per year. We suggest several steps to mitigate this revenue loss, including:

• The DPT Enforcement Division should maintain its number of enforcement units to its normal strength of two teams, thus increasing its current effort by 100 percent;
• DPT should increase public awareness by expanding efforts to involve the public in providing tips on the misuse of disabled person"s placards. This expansion would increase the amount of information provided to the uniformed PCO teams and would relieve them from some of their time-consuming work, such as initially locating potential violations of the use of such placards;
• DPT should consolidate all of the DPT citations appeals onto one day of the week and to a limited number of hearing officers who would become more familiar with the various appeals and the work of the individual enforcement teams;
• DPT should provide information to the PCO units on those citation appeals that have been ruled in favor of the placard holder. This procedure will provide the PCOs with valuable information as to the reasonableness of the enforcement practices and the thoroughness of documentation for each a citation issued for the misuse of a disabled placard; and,
• DPT should work with our State representatives for changes in State legislation that would make for more equitable provisions, including (a) putting a limit on the number of consecutive hours that a placard user can occupy a parking space, and (b) making it more difficult for placard holders who have had their placards confiscated to be able to immediately obtain a replacement from the Department of Motor Vehicles.

Section 5 Implementation of the PRWT Contract for Parking Citations Processing

The contract for parking citation processing now being implemented by DPT and PRWT Services, Inc.includes no guarantees that projected net revenue increases will be achieved. If the contractor fails to meet the increased revenue collections, the result could be either a reduced expected net gain to the City, no net gain to the City, or even a reduction in net revenue to the City.

DPT should implement specific contract monitoring procedures and management controls to measure the effectiveness of the PRWT Contract for parking citation processing.

The contract should be continuously evaluated to determine whether projected collection rates are being realized and whether new revenues exceed the cost of contractual services.

Additional controls should be put in place to determine whether the contractual services are meeting customer service improvement objectives and achieving expected improvements to parking enforcement.

Section 6 Adult School Crossing Guard Program

The Adult School Crossing Guard (ASCG) Program operated by the Department of Parking and Traffic provides 143 adult crossing guards to protect elementary school children from traffic hazards when going to or from public, private, and parochial schools across streets in accordance with the specific criteria set forth in the State Department of Transportation Traffic Manual.

The ASCG Program is managed by one 1406 Principal Clerk, with administrative support from one half-time 8201 Crossing Guard, which are both inappropriate classification assignments for Program responsibility. The Program"s management and supervision is understaffed. As a result, the ASCG Program is poorly managed and there is no attendance monitoring or field supervision of crossing guards.

The ASCG manual clearly states that crossing guards do not check in with DPT upon arrival for work and, since DPT is unable to conduct field supervision due to limited Program staffing, DPT has no knowledge of whether guards are present or performing properly. The manual states that "You will not be required to report to anyone either in person or by telephone. We will assume that you have gone to your crossing on time, fully equipped and ready for duty." The lack of supervision has created the potential for payroll fraud, poor service delivery, and liability exposure for the City.

In order to improve program management, reduce the City"s liability and provide the service expected by the public, DPT should request a Department of Human Resources review of the 1406 Clerk classification for the ASCG Program Manager position, reclassify a 8201 Crossing Guard working on administrative tasks to an administrative support classification, and fill a vacant 1404 Clerk position authorized in the FY 1998-99 budget. Such staff changes would provide the appropriate skills needed to manage the program and to conduct other needed management duties such as: (1) Establish an MOU for cost sharing with private and parochial schools, (2) Train schools to report attendance and guard misconduct to DPT, (3) Improve crossing guard recruitment, and (4) Establish policies and procedures for monitoring school crossing guard attendance through coordination with Parking Control Officers.

Section 7 City-Owned Parking Garages

In 1993, the Budget Analyst conducted a comprehensive performance audit of the City-Owned Parking Garages which contained 35 recommendations. As part of this current performance audit of the Department of Parking and Traffic, we reviewed the status of the findings and recommendations contained in that prior audit. We found that DPT has implemented many of the recommendations. Since 1994, parking garage revenues have increased, operating costs have been kept under control, and many improvements to the City-owned parking garages have been made. However, certain important recommendations from the Budget Analyst"s 1993 Performance Audit have not yet been fully implemented.

There are currently 18 City-owned parking garages in San Francisco. The facilities provide a total of approximately 14,600 parking spaces. The City contracts directly with the operators of 13 of the 18 parking facilities and leases five of the parking facilities to non-profit corporations.

Our review found that DPT has fallen behind in competitively bidding garage operator contracts when they expire. With regard to the garages leased to non-profit corporations, the operator contracts for such garages have not been competitively bid in 30 to 40 years. Competitive bidding of operator contracts is necessary to ensure that the City is obtaining the best possible service and maximizing revenues. DPT, together with the non-profit corporations where appropriate, should competitively bid each operator contract immediately. In addition, the existing garage operator contracts, which provide for a flat management fee and reimbursement of operating expenses payable to the garage operator, should be converted to fixed rate operator contracts, under which the operator agrees to a level of compensation based on a percentage of gross revenues to cover operating costs and profit when legally and financially feasible. Where a bid based on a percentage of gross revenues is not feasible, contracts should be bid based on a fixed level of compensation that covers operating expenses and profit.

In addition, DPT has not yet completed the conversion of leases to management-type operator contracts for all direct operation garages. Management-type operator contracts, which are based on a percentage of total revenue, are preferable to leases, which provide for a reimbursement of operator expenditures, because management contracts improve revenue control and prevent unnecessary legal expenses in case of operator default. Where legally possible and financially feasible, compensation of the garage operator should be based on a percentage of gross revenues rather than on the basis of a flat fee.

In order to reduce the amount of time required to conduct the operator contract bid process, DPT should submit to the Board of Supervisors a proposed ordinance to streamline the process to allow timely competitive bidding of such contracts, consistent with the procedures for other City leases. On April 19, 1999, the Board of Supervisors passed on first reading an ordinance implementing this recommendation.

Our review found that DPT has begun including more detailed performance specifications in its operator contracts with direct operation garages. Such performance specifications are needed to discourage operators from reducing services in order to increase profits. DPT should add detailed performance specifications, with penalty clauses, to all management contracts with all direct operation garage operators, covering garage personnel, security, maintenance, and signage. DPT should also ensure that performance specifications are being met by developing inspection checklists and conducting twice-monthly inspections.

We continue to recommend that operating expenses should be included in operator contract requirements for garages leased to non-profit corporations, instead of providing reimbursement for operating expenses. Further, the non-profits should include performance specifications and inspection checklists to ensure a satisfactory standard of service.

Our recommendations to implement performance specifications and checklist inspections for all of the garages; competitively bid all garage operating contracts in a timely manner; and implement a competitive bidding process for fixed rate contracts with the non-profit garage operators would achieve efficient garage operation, maintain satisfactory service levels, and maximize net revenues to the City.

Based on the findings and conclusions outlined above, the Budget Analyst has presented 49 detailed recommendations in this performance audit report. The detailed recommendations are presented at the end of each of the sections and subsections with a summary of the benefits, including increased revenues and reduced costs, of implementing the recommendations. Our recommendations are listed below.

Summary of Recommendations Section 1.1 Parking Control Officer Productivity

DPT Administration should:

1.1-1Complete the Department-wide Policies and Procedures Manual, which should contain specific penalties against employees who fail to comply with Departmental attendance standards.

The Enforcement Director should:

1.1-2 Consistently and regularly enforce the Department"s and/or Enforcement Division"s policies and procedures regarding employee attendance.

1.1-3 Consider implementing incentive programs, such as the Police Department"s Wellness Program, in order to reward employees for showing up to work.

1.1-4 Establish a goal to reduce absenteeism (excluding vacation, holidays, compensatory time off, and family leave) among PCOs by at least 25 percent.

Section 1.2 Parking Control Officer Deployment

The DPT Enforcement Director should:

1.2-1 Evaluate opportunities to formally consolidate and/or restructure General Enforcement beats.

1.2-2 Redeploy PCOs in order to provide more consistent coverage of General Enforcement beats throughout the day and on weekends.

1.2-3 Improve the Enforcement Division"s coverage of Residential Permit Parking areas on weekday evenings and weekends.

1.2-4 Request funds in DPT"s FY 199-2000 budget for overtime to provide special event coverage.

Section 2 Workers Compensation

The Executive Director should:

2.1 Request additional funding of $68,412 in FY 1999-2000 for a limited tenure Claims Adjuster position dedicated to handling DPT"s workers compensation claims.

2.2 Request additional funding of $28,500 in FY 1999-2000 to conduct training for managers and supervisors on workers compensation, modified duty and related issues.

2.3 Request additional funding of $107,650 in FY 1999-2000 for temporary salaries to create temporary modified duty assignments for injured employees eligible for the Modified Duty Program.

2.4 Request additional funding of $36,000 in FY 1999-2000 to conduct Worksite Ergonomic Analyses so that more specific information regarding position requirements can be provided to physicians who treat injured employees.

2.5 Proceed with the Special Assistant"s plan to develop performance standards to evaluate the performance of managers and supervisors in controlling workers compensation expenditures.

2.6 Proceed with the Special Assistant"s plan to distribute workers compensation claims and expenditure information to managers and supervisors on a regular basis.

2.7 Proceed with the Special Assistant"s plan to develop an incentive program to reward managers and supervisors for reducing workers compensation costs.

2.8 Request additional funding of $47,921 in FY 1999-2000 for an additional 0.5 FTE Safety Analyst position.

2.9 Continue to dedicate the existing Special Assistant to the Director to coordinating and implementing a Workers Compensation Cost Containment Plan.

2.10 Establish a goal of reducing the growth rate in workers compensation expenditures from an average of 15 percent annually to 5.0 percent annually over the next five fiscal years.

2.11 Approve DPT"s requests for additional funding for controlling workers compensation costs in FY 1999-2000 through FY 2001-02.

2.12 After FY 2001-02, approve continued funding for DPT"s Workers Compensation Cost Containment Plan based on DPT"s ability to demonstrate reductions in its workers compensation expenditures.

2.13 Direct the Workers Compensation Division, the Retirement Board and other City departments to perform an analysis comparing the cost of industrial disability retirements with the costs and benefits of utilizing injured employees in a modified duty capacity.

2.14 Direct the Workers Compensation Division and the Retirement Board to establish protocols for determining whether an employee can be granted an Industrial Disability Retirement, in order to enable City departments to make greater use of the Industrial Disability Retirement provisions of the Charter.

2.15 Evaluate and consider recommendations for improvements to the City"s current strategies for controlling workers compensation costs Citywide.

Section 3 Fleet Management

3.1 Implement a vehicle replacement program for all DPT vehicles and request funding in DPT"s FY 1999-2000 budget to fund this program.

The Enforcement Director should:

3.2 Consider expanding the use of less costly subcompact Geo Metro vehicles instead of 3-wheel vehicles in the Enforcement Division"s fleet.

3.3 Appoint one PCO Supervisor per shift to have access to the vehicle equipment room, to monitor vehicle assignments and returns, and to complete Daily Vehicle Assignment Reports when fleet management staff are off-duty.

3.4 Develop a system to ensure that PCOs are tracking vehicle mileage and bringing in their vehicles for preventive maintenance when necessary.

The Mayor and the Board of Supervisors should:

3.5 Approve funding in FY 1999-2000, and in subsequent years, for a vehicle replacement program for DPT"s entire vehicle fleet.

Section 4 Parking Meter Program

The Department of Parking and Traffic should:

4.1 Fill six vacant positions in the Parking Maintenance and Repair Units so that the Parking Meter Repair Division is at full strength. These include four Parking Meter Repairers in the Maintenance Unit and two Machinists in the Repair Unit;

4.2 Update written policies and procedures for the Parking Maintenance and Repair Units so that the Parking Meter Repairers and Maintenance Machinists know exactly what is expected in the performance of their duties.

4.3 Order replacement parts that would give priority to useful life as well as to the replacement parts overall cost.

4.4 Add one position, Class 1842 Management Assistant, to assist the Parking Meters Collection Manager with the duties associated with collections operations and parking meter security.

4.5 Implement recommendations in this section to streamline the current operation of the Disabled Person"s Placard Enforcement Program.

4.6 Consider other aspects of the City"s Parking Meter Program in the preparation of a Request for Proposal for replacing all existing mechanical meters with electronic meters. These considerations would include privatizing the maintenance and repair functions of the Parking Meter Program.

Section 5 Implementation of the PRWT Contract for Parking Citations Processing

5.1 DPT should compile the necessary data and develop monthly and annual reports providing comparisons with pre-PRWT contract performance as measured by the number of parking citations issued, the number of citations collected and overall rates of collection.

5.2 DPT should develop similar monthly and annual reports providing comparisons for out-of-state and special collection revenues.

5.3 DPT should monitor and evaluate improvements resulting from increased enforcement (such as identification of stolen and abandoned vehicles and parking "scofflaws") and improvements to customer service (reductions in time and effort responding to citizen inquiries, more efficient and timely service to citizens paying or protesting citations).

Section 6 Adult School Crossing Guard (ASCG) Program

6.1 DPT should upgrade the classification for ASCG Program Manager from the 1406 Clerk currently assigned to a higher classification, for example, an 1842 Management Assistant, and the 8201 Crossing Guard should be reclassified to an appropriate classification for field supervision and administrative support.

6.2 Establish a Memorandum of Understanding for sharing costs of the expanded ASCG Program between DPT and the private and parochial schools which benefit from the Program. The MOU should assign responsibility for attendance-taking to the schools.

6.3 Train schools to report attendance and crossing guard misconduct to DPT.

6.4 Improve and expand recruitment of crossing guards to fill vacant positions.

6.5 Develop policies and procedures to reduce absenteeism of crossing guards, including using PCOs to monitor crossing guard attendance.

Section 7 City-Owned Parking Garages

The Parking and Traffic Commission should:

7.1 Complete the conversion from leases to management contracts with garage operators for all direct operation garages. Where legally possible and financially feasible, compensation of the operator should be based on a percentage of gross revenues rather than on the basis of a flat fee.

7.2 Include detailed performance specifications, with penalty clauses, in all management contracts with all direct operation garage operators, covering garage personnel, security, maintenance, and signage.

7.3 Direct the DPT Off-Street Parking Division to monitor direct operation garage compliance with performance specifications through twice-monthly checklist inspections, and submit six month reports to the Parking and Traffic Commission on operator performance and revenues.

DPT together with the Non-profit Parking Corporations should:

7.4 Convert the existing parking operator contracts, which provide for a flat management fee and reimbursement of operating expenses, to fixed rate operator contracts, under which the operator agrees to a level of compensation based on a percentage of gross revenues to cover operating costs and profit when legally and financially feasible. Where a bid based on a percentage of gross revenues is not feasible, contracts should be bid based on a fixed level of compensation that covers both operating expenses and profit.

7.5 Competitively bid the existing fixed rate operator contracts on a regular basis, at least every five years, starting immediately.

7.6 Include detailed performance specifications and reporting requirements with penalty clauses in all contracts with operators.

7.7 Direct staff to monitor compliance with performance specifications, and report to the Parking and Traffic Commission every six months on operator performance and revenues. Finally, a written response from the Executive Director of Parking and Traffic is appended to our report beginning on page 105, as well as comments from the Budget Analyst regarding the DPT response beginning on page 113. In general, the DPT response states that the department concurs with many of the Budget Analyst"s recommendations and disagrees with some. However, in many instances, the department does not describe the steps that will be taken to implement recommendations and does not comment on major sections of the report, such as deployment of enforcement personnel. The Department"s response is annotated in order to key the response to further comments by the Budget Analyst.

DPT"s response states that, based on its own analysis of paid sick days taken since July 1, 1998, paid sick leave represents only 3.9 percent of its payroll expense, which translates to an average of 10.1 days per PCO per year and which meets DPT"s "competent and effective" attendance standards. However, DPT fails to take into account the other types of leave that are contributing significantly to absenteeism and lost productivity. For example, workers compensation, which represents 35 percent of all absences, results in 5,955 absences per year, or an average of 22 absences per PCO. In addition, there are 2,282 absences due to unpaid sick and State disability leave per year, or an average of nine absences per PCO per year. Overall, each PCO misses an average of 41 workdays per year, in addition to absences due to vacation, holidays, compensatory time off, and family leave. As a result, as cited in our report, 60 percent of PCOs fall below acceptable attendance standards.

The DPT response states that the "potential daily average revenue of $5.41 per meter proposed in the performance audit is an overly optimistic number." Our report does not "propose" such a revenue per meter. The optimal daily average revenue of $5.41 per meter used in our report is a benchmark figure of potential revenue reflecting an assumption that 85 percent of the parking meters are in working order and 15 percent are in need of repair. Comparing the collections per meter for San Francisco with the Cities of New York and Chicago, as DPT has done, is a useless exercise unless similar benchmarks are provided for those jurisdictions. Our projected revenue benefit from improving parking meter repair practices is based on an extremely modest $0.50 per meter increase in collections. Such benefits can be achieved regardless of whether the City continues with the use of mechanical parking meters or, as DPT has proposed for over two years, actually implements a conversion to electronic parking meters.

The DPT response states that the number of meters in the City has increased by 16 percent and that the number of meter repairer positions has decreased in recent years. In light of the parking meter repair workload and increased number of meters mentioned in the Department"s response, we cannot understand why 25 percent, or four of 16 meter repairer positions were vacant for up to eight months, as described in our report. We have been informed that DPT has recently hired provisional employees for these vacancies.

The DPT response states that the City would have to maintain 46,000 parking meter keys to implement our recommendation. Our recommendation is to use the same number of keys needed for the collection route but to make the key selection random for each block. The City does not need to increase the number of keys to open the parking meters. The City in effect has at the present time a random key system for each collection route, but for many of the blocks within the collection route, the same key is currently used. With regard to movement of coin canisters, the DPT states that we failed to consider parking meter theft and the use of illegally made parking meter keys. To the contrary our recommendations were developed in consideration of the theft problem and would increase the time needed for such theft and limit the number of meters on a particular block that could be opened by unauthorized persons as a deterrent.

The Budget Analyst would like to acknowledge and thank the management and staff of the Department of Parking and Traffic for their cooperation during the course of this performance audit. Without their willing assistance, our task would have been much more difficult.

Respectfully Submitted,
  Harvey M. Rose
Budget Analyst